#TermMax @TermMax I initially linked the liquidation of collateral in TermMax with a sale on the market, and the creditor with receiving the money.
It’s logical and understandable: the asset turns into compensation through a sale.
It turned out that for some collateral this is not the case.
Traditional liquidation mechanisms may not provide the creditor with compensation due to the asset’s insufficient liquidity.
If the market is volatile or the collateral is illiquid, TermMax can transfer the collateral directly to the creditor as compensation.
This option is closely tied to what assets are accepted as collateral in the first place. TermMax supports RWA and illiquid tokens as collateral for loans.
So, when a creditor agrees to accept such collateral, they effectively also agree to a different liquidation outcome. Not guaranteed money, but the asset itself.
This changes what you rely on when assessing lending risk. Not just the amount of the debt, but also what exactly you might be paid with.
Now, when looking at collateral, I ask not only how much, but also with what.
It’s logical and understandable: the asset turns into compensation through a sale.
It turned out that for some collateral this is not the case.
Traditional liquidation mechanisms may not provide the creditor with compensation due to the asset’s insufficient liquidity.
If the market is volatile or the collateral is illiquid, TermMax can transfer the collateral directly to the creditor as compensation.
This option is closely tied to what assets are accepted as collateral in the first place. TermMax supports RWA and illiquid tokens as collateral for loans.
So, when a creditor agrees to accept such collateral, they effectively also agree to a different liquidation outcome. Not guaranteed money, but the asset itself.
This changes what you rely on when assessing lending risk. Not just the amount of the debt, but also what exactly you might be paid with.
Now, when looking at collateral, I ask not only how much, but also with what.