I started looking at RWA lending differently when I realized the hardest part may not be putting an asset on-chain.
It may be recovering value when the loan breaks.
TermMax uses fixed-rate, fixed-term lending, and its liquidation design includes physical delivery when collateral cannot be fully liquidated through the market. Liquidation is tied to the loan reaching its liquidation LTV threshold.
That matters because liquid crypto collateral and real-world assets can behave very differently under stress.
With ETH or stablecoins, collateral can often be sold into an active market. But an RWA may have limited buyers, slower settlement, transfer restrictions, or weak secondary liquidity even when its token exists on-chain.
TermMax’s physical delivery mechanism takes another route. Its documentation describes proportional delivery of collateral in certain liquidation situations instead of relying entirely on an immediate market sale.
But this is where I think the deeper question begins.
Physical delivery does not create liquidity. It changes who has to deal with the lack of liquidity.
The lender may receive exposure to the collateral, but questions still remain around valuation, custody, legal transfer, and finding an actual buyer.
That is why I would judge RWA lending at the point of failure, not only when the market is healthy.
When liquidity disappears, can physical delivery provide meaningful recovery for the lender—or does it simply move the hardest part of the problem from the protocol to the asset holder?
@TermMax #TermMax
It may be recovering value when the loan breaks.
TermMax uses fixed-rate, fixed-term lending, and its liquidation design includes physical delivery when collateral cannot be fully liquidated through the market. Liquidation is tied to the loan reaching its liquidation LTV threshold.
That matters because liquid crypto collateral and real-world assets can behave very differently under stress.
With ETH or stablecoins, collateral can often be sold into an active market. But an RWA may have limited buyers, slower settlement, transfer restrictions, or weak secondary liquidity even when its token exists on-chain.
TermMax’s physical delivery mechanism takes another route. Its documentation describes proportional delivery of collateral in certain liquidation situations instead of relying entirely on an immediate market sale.
But this is where I think the deeper question begins.
Physical delivery does not create liquidity. It changes who has to deal with the lack of liquidity.
The lender may receive exposure to the collateral, but questions still remain around valuation, custody, legal transfer, and finding an actual buyer.
That is why I would judge RWA lending at the point of failure, not only when the market is healthy.
When liquidity disappears, can physical delivery provide meaningful recovery for the lender—or does it simply move the hardest part of the problem from the protocol to the asset holder?
@TermMax #TermMax