I put TermMax’s market parameters and oracle documentation side by side. Next to the fixed APR, there’s actually another tick mark that’s easy to miss: borrowing costs can be locked in, but the collateral valuation will continue to change. The Market documentation for @TermMax defines MLTV as a more conservative LTV threshold, used to calculate the maximum amount that can be borrowed; LLTV is the liquidation trigger line. Official materials also state that asset prices depend on an external oracle, with key price sources including RedStone. How interest is calculated and how far the position is from the liquidation line are reflected in two different tables.
I break it down with an arithmetic example that does not assume the current market parameters: assume debt value is 100, collateral value is 200, and LTV is 50%. If the debt stays unchanged but the collateral valuation drops to 150, the LTV rises to about 66.7%. The fixed APR bucket hasn’t moved, but the position is already closer to LLTV. Conversely, if the debt asset appreciates relative to the collateral, the ratio can also worsen. Interpreting “future interest can be calculated” as “position risk is locked too” is the mistake.
It’s not hard for BTC holders to build intuition about this: just because you still hold the asset doesn’t mean that once you use it to back the debt, your remaining collateral buffer stays the same. The official risk page also lists oracle risk separately—an incorrect price can lead to premature liquidation or insufficient collateral—so the interplay between price sources and thresholds is worth examining on its own.
In the ETH ecosystem, users are already accustomed to focusing on LTV and health. When moving to fixed-term markets, this habit still helps, except that the financing cost is locked separately. My conclusion is specific: when evaluating a TermMax loan, at minimum look at the executed APR, the current LTV, the LLTV, and the price sources. What’s even more worth monitoring next is how the distance between the position and the liquidation line changes as the valuation changes, rather than only asking whether the interest rate has jumped.
#TermMax
I break it down with an arithmetic example that does not assume the current market parameters: assume debt value is 100, collateral value is 200, and LTV is 50%. If the debt stays unchanged but the collateral valuation drops to 150, the LTV rises to about 66.7%. The fixed APR bucket hasn’t moved, but the position is already closer to LLTV. Conversely, if the debt asset appreciates relative to the collateral, the ratio can also worsen. Interpreting “future interest can be calculated” as “position risk is locked too” is the mistake.
It’s not hard for BTC holders to build intuition about this: just because you still hold the asset doesn’t mean that once you use it to back the debt, your remaining collateral buffer stays the same. The official risk page also lists oracle risk separately—an incorrect price can lead to premature liquidation or insufficient collateral—so the interplay between price sources and thresholds is worth examining on its own.
In the ETH ecosystem, users are already accustomed to focusing on LTV and health. When moving to fixed-term markets, this habit still helps, except that the financing cost is locked separately. My conclusion is specific: when evaluating a TermMax loan, at minimum look at the executed APR, the current LTV, the LLTV, and the price sources. What’s even more worth monitoring next is how the distance between the position and the liquidation line changes as the valuation changes, rather than only asking whether the interest rate has jumped.
#TermMax