#termmax 2 hours — that’s how much time I’d have if I forgot to repay the debt by the due date. ⏰
Honestly, until this point I didn’t even think about checking what happens if you don’t manage to repay the loan on time. But since I’m talking about TermMax, I decided to look at the documentation rather than just hope that “somehow it will work out”.
It turned out everything is laid out pretty clearly. If the borrower doesn’t repay the debt by the due date, the position doesn’t “disappear” and isn’t instantly punished — it’s simply opened for liquidation within a window of exactly 2 hours.
The liquidator who closes the position during that window receives 5% of the debt amount as a reward — so there’s always motivation to do it quickly. Another 5% goes to the protocol reserve as a penalty, so together that’s 10% of the debt amount.
Most interestingly, even the collateral isn’t converted chaotically: both the underlying tokens and the collateral tokens go into the pool at the same time, and FT holders (the ones who borrowed) receive their share proportionally, not on a “who got there first” basis. If the market is illiquid and the collateral can’t be sold quickly, Physical Delivery kicks in — lenders are simply given a share of the collateral itself, rather than trying to sell it at any price.
Have you ever checked similar rules in advance?
@TermMax #TermMax
Honestly, until this point I didn’t even think about checking what happens if you don’t manage to repay the loan on time. But since I’m talking about TermMax, I decided to look at the documentation rather than just hope that “somehow it will work out”.
It turned out everything is laid out pretty clearly. If the borrower doesn’t repay the debt by the due date, the position doesn’t “disappear” and isn’t instantly punished — it’s simply opened for liquidation within a window of exactly 2 hours.
The liquidator who closes the position during that window receives 5% of the debt amount as a reward — so there’s always motivation to do it quickly. Another 5% goes to the protocol reserve as a penalty, so together that’s 10% of the debt amount.
Most interestingly, even the collateral isn’t converted chaotically: both the underlying tokens and the collateral tokens go into the pool at the same time, and FT holders (the ones who borrowed) receive their share proportionally, not on a “who got there first” basis. If the market is illiquid and the collateral can’t be sold quickly, Physical Delivery kicks in — lenders are simply given a share of the collateral itself, rather than trying to sell it at any price.
Have you ever checked similar rules in advance?
@TermMax #TermMax
