#termmax @TermMax
Brothers, when Old Ma studied the TermMax documentation, he found that the fixed-rate selling point needs to be broken down. What’s actually locked in is only the interest portion—the risk of the collateral being liquidated is still there.
The core of TermMax’s mechanism is played out with three kinds of tokens. The borrower locks the collateral into something called a Gearing Token, and at the same time issues a Fixed-Rate Token (FT). The FT is split into two parts: principal and interest. The interest portion is sold to the lender in exchange for an XToken. The principal portion of the FT, together with the XT, is then used to redeem the debt token.
For the lender, the玩法 is more like a traditional bond: you buy the FT at a discount, and at maturity you get paid at par. For example, you pay 100 to buy an FT with a face value of 110; at maturity you directly receive 110. The annualized return is effectively locked in ahead of time. This design does remove the risk of interest-rate volatility from the equation.
But Old Ma flipped to the liquidation section and found a line you need to pay attention to: if the borrower doesn’t repay the debt at maturity, the liquidator will come liquidate the position. The liquidation proceeds are then distributed among the lender, the liquidator, and the protocol. This sentence makes it clear that even if the interest rate is locked, the collateral still has to be overcollateralized. Price fluctuations can still trigger liquidation—these two things are fundamentally not the same. Fixed interest solves the problem of the interest variable suddenly spiking; it doesn’t solve the problem that if the collateral price falls, you get forcibly liquidated. The official line about “locking the interest cost to make it controllable” needs to be precise: it only covers the interest portion.
For borrowers, this difference is pretty critical. Previously, the concern was that interest might suddenly skyrocket—this anxiety is indeed gone now. But the string about the collateral price breaking below the liquidation threshold still has to be tightened. Fixed interest isn’t giving you the whole set of insurance; it just “welds” one of the variables shut. The documentation also mentions that TermMax received a 93% DeFi security score, on par with Aave V3, using Hypernative for 24-hour on-chain monitoring. It seems like a lot of work went into the security foundation—but the existence of the security score and the existence of the liquidation mechanism are two things that don’t really go together. Even with a high score, if the collateral is not overcollateralized enough and the price drops below the threshold, you’ll still be liquidated.
Brothers, have you calculated carefully where your collateral’s liquidation line is? Don’t just focus on having the interest locked and relax your guard. Let’s chat in the comments about it.
Brothers, when Old Ma studied the TermMax documentation, he found that the fixed-rate selling point needs to be broken down. What’s actually locked in is only the interest portion—the risk of the collateral being liquidated is still there.
The core of TermMax’s mechanism is played out with three kinds of tokens. The borrower locks the collateral into something called a Gearing Token, and at the same time issues a Fixed-Rate Token (FT). The FT is split into two parts: principal and interest. The interest portion is sold to the lender in exchange for an XToken. The principal portion of the FT, together with the XT, is then used to redeem the debt token.
For the lender, the玩法 is more like a traditional bond: you buy the FT at a discount, and at maturity you get paid at par. For example, you pay 100 to buy an FT with a face value of 110; at maturity you directly receive 110. The annualized return is effectively locked in ahead of time. This design does remove the risk of interest-rate volatility from the equation.
But Old Ma flipped to the liquidation section and found a line you need to pay attention to: if the borrower doesn’t repay the debt at maturity, the liquidator will come liquidate the position. The liquidation proceeds are then distributed among the lender, the liquidator, and the protocol. This sentence makes it clear that even if the interest rate is locked, the collateral still has to be overcollateralized. Price fluctuations can still trigger liquidation—these two things are fundamentally not the same. Fixed interest solves the problem of the interest variable suddenly spiking; it doesn’t solve the problem that if the collateral price falls, you get forcibly liquidated. The official line about “locking the interest cost to make it controllable” needs to be precise: it only covers the interest portion.
For borrowers, this difference is pretty critical. Previously, the concern was that interest might suddenly skyrocket—this anxiety is indeed gone now. But the string about the collateral price breaking below the liquidation threshold still has to be tightened. Fixed interest isn’t giving you the whole set of insurance; it just “welds” one of the variables shut. The documentation also mentions that TermMax received a 93% DeFi security score, on par with Aave V3, using Hypernative for 24-hour on-chain monitoring. It seems like a lot of work went into the security foundation—but the existence of the security score and the existence of the liquidation mechanism are two things that don’t really go together. Even with a high score, if the collateral is not overcollateralized enough and the price drops below the threshold, you’ll still be liquidated.
Brothers, have you calculated carefully where your collateral’s liquidation line is? Don’t just focus on having the interest locked and relax your guard. Let’s chat in the comments about it.