In decentralized finance, I’m used to interpreting the “Withdraw” button literally: I submit an application — I get my asset back.
But in TermMax vaults, I found a nuance you should know about before depositing funds.
After depositing assets into a vault, the user receives shares of the vault. When they want to exit, those shares are redeemed, and withdrawal requests are processed according to the queue.
So the ability to submit a withdrawal request ≠ a guarantee of receiving funds instantly.
For example, for a large withdrawal, the curator may first adjust open orders or close positions to free up the liquidity needed.
And then there’s an even less obvious scenario.
If after the redemption date the mechanism of physical delivery is triggered and the vault doesn’t have enough liquidity, TermMax documentation describes two options: wait for liquidity to arrive, or redeem your vault share and receive the collateral that has been transferred.
In the second case, it could be a different asset than the one that was deposited in the first place.
For me, this changes the question before entering the vault.
I would look not only at the potential return, but also ask: where will the liquidity come from when I want to exit?
@TermMax #TermMax
But in TermMax vaults, I found a nuance you should know about before depositing funds.
After depositing assets into a vault, the user receives shares of the vault. When they want to exit, those shares are redeemed, and withdrawal requests are processed according to the queue.
So the ability to submit a withdrawal request ≠ a guarantee of receiving funds instantly.
For example, for a large withdrawal, the curator may first adjust open orders or close positions to free up the liquidity needed.
And then there’s an even less obvious scenario.
If after the redemption date the mechanism of physical delivery is triggered and the vault doesn’t have enough liquidity, TermMax documentation describes two options: wait for liquidity to arrive, or redeem your vault share and receive the collateral that has been transferred.
In the second case, it could be a different asset than the one that was deposited in the first place.
For me, this changes the question before entering the vault.
I would look not only at the potential return, but also ask: where will the liquidity come from when I want to exit?
@TermMax #TermMax
