#termmax @TermMax Looking at TermMax’s liquidation docs, the physical delivery rule is clear. If a loan stays unpaid after the two-hour window at maturity, FT holders (and vault depositors) receive a proportional mix of underlying plus the actual collateral. That is the designed safety net for TermMax, $TMX, #TermMax, @TermMaxFi.
What changed for me was how tightly this sits next to the curator constraints. Vaults carry hard capacity caps. Curators can only place orders in pre-approved markets. Parameter changes sit behind timelocks. If adoption grows faster than new curator capacity or whitelist expansion, more volume piles into the existing term markets. When those mature together, any shortfall in liquidators or DEX depth turns the “security” fallback into a forced collateral hand-out.
The design protects principal by delivering assets instead of writing them off. It still assumes the received collateral stays reasonably exit-able. That assumption thins out the moment deposit and borrow demand outruns the curated liquidity layer meant to absorb it.
Next check: how many active vaults currently sit near their stated capacity limits across the main chains.
What changed for me was how tightly this sits next to the curator constraints. Vaults carry hard capacity caps. Curators can only place orders in pre-approved markets. Parameter changes sit behind timelocks. If adoption grows faster than new curator capacity or whitelist expansion, more volume piles into the existing term markets. When those mature together, any shortfall in liquidators or DEX depth turns the “security” fallback into a forced collateral hand-out.
The design protects principal by delivering assets instead of writing them off. It still assumes the received collateral stays reasonably exit-able. That assumption thins out the moment deposit and borrow demand outruns the curated liquidity layer meant to absorb it.
Next check: how many active vaults currently sit near their stated capacity limits across the main chains.