When collateral can’t be sold immediately, the most critical issue in liquidation is not whether there is a “smooth-looking exit story,” but how the final settlement is executed. TermMax’s Physical Delivery provides a clear path: if, under the rules, the remaining assets are not directly converted into the debt asset that should be delivered, then the remaining eligible collateral can be handed over to the lender. What this addresses is the determinability of the settlement action—not the certainty of asset value.
You can break the process into three steps. First, liquidation runs into insufficient market depth, so the assets may not be sold at the ideal price in the moment. Second, the system confirms delivery of the remaining collateral according to the rules. Third, the receiving party gets an asset—not cash that is automatically realized. In this way, the lender at least knows where the assets go in stress scenarios, but cannot interpret “something is deliverable” as “the loss has already disappeared.”
Be especially mindful of this distinction for RWA or tail-end assets. Pricing can be affected by the market, the time horizon, the universe of buyers, and the disposal channels—and even after receipt, it may still require waiting, transferring, or absorbing valuation volatility. Physical Delivery makes the timeline clearer: from insufficient liquidity, to rule-based delivery, to the receiver managing the asset on their own; it does not replace the lender’s need to make the final price judgment.
So when evaluating such financing mechanisms, you should separate whether the “settlement path is clear” from whether the “received asset is easy to dispose of.” The former answers what the system will do in failure scenarios; the latter answers what the lender faces after receiving the collateral. The design focus of @TermMax is not to hide an incomplete market-based liquidation, but to put the delivery boundary in plain sight; ultimately, the risk still comes back to the asset price and disposal capability.
#TermMax
You can break the process into three steps. First, liquidation runs into insufficient market depth, so the assets may not be sold at the ideal price in the moment. Second, the system confirms delivery of the remaining collateral according to the rules. Third, the receiving party gets an asset—not cash that is automatically realized. In this way, the lender at least knows where the assets go in stress scenarios, but cannot interpret “something is deliverable” as “the loss has already disappeared.”
Be especially mindful of this distinction for RWA or tail-end assets. Pricing can be affected by the market, the time horizon, the universe of buyers, and the disposal channels—and even after receipt, it may still require waiting, transferring, or absorbing valuation volatility. Physical Delivery makes the timeline clearer: from insufficient liquidity, to rule-based delivery, to the receiver managing the asset on their own; it does not replace the lender’s need to make the final price judgment.
So when evaluating such financing mechanisms, you should separate whether the “settlement path is clear” from whether the “received asset is easy to dispose of.” The former answers what the system will do in failure scenarios; the latter answers what the lender faces after receiving the collateral. The design focus of @TermMax is not to hide an incomplete market-based liquidation, but to put the delivery boundary in plain sight; ultimately, the risk still comes back to the asset price and disposal capability.
#TermMax