I’m noticing something about TermMax that feels easy to misunderstand, especially after enough DeFi cycles to know that “protection” can hide a very different equation.
The part that caught me is physical delivery. TermMax says that when liquidation fails to fully recover a loan, the remaining pool can be delivered to FT holders, with the underlying and collateral distributed according to each holder’s share of the outstanding FTs. That is a real backstop. You’re not simply handed a bad-debt receipt.
But I keep thinking about “proportional distribution.” Proportional to what, when it actually happens? Not the price I paid. Not necessarily how early I entered. It comes down to my FT share versus the total outstanding supply at that moment.
That distinction matters. I’ve seen this before in crypto: a mechanism can be real, transparent, and still protect you far less than the headline suggests. If a market gets crowded and several holders reach for the same collateral after a failed liquidation, everyone’s slice gets thinner. The protection doesn’t disappear; the recovery gets shared.
I’m not calling that a flaw. It may actually be more honest than pretending bad debt can just vanish. But I’m not sure yet how this looks in practice. I haven’t seen enough public data showing what FT holders actually recovered in real delivery events. Maybe that’s the missing piece.
@TermMax #termmax
The part that caught me is physical delivery. TermMax says that when liquidation fails to fully recover a loan, the remaining pool can be delivered to FT holders, with the underlying and collateral distributed according to each holder’s share of the outstanding FTs. That is a real backstop. You’re not simply handed a bad-debt receipt.
But I keep thinking about “proportional distribution.” Proportional to what, when it actually happens? Not the price I paid. Not necessarily how early I entered. It comes down to my FT share versus the total outstanding supply at that moment.
That distinction matters. I’ve seen this before in crypto: a mechanism can be real, transparent, and still protect you far less than the headline suggests. If a market gets crowded and several holders reach for the same collateral after a failed liquidation, everyone’s slice gets thinner. The protection doesn’t disappear; the recovery gets shared.
I’m not calling that a flaw. It may actually be more honest than pretending bad debt can just vanish. But I’m not sure yet how this looks in practice. I haven’t seen enough public data showing what FT holders actually recovered in real delivery events. Maybe that’s the missing piece.
@TermMax #termmax