The faster the settlement, the easier it is for risk to hide in those few seconds.
If you break down TermMax’s liquidation module, you can see it clearly tries to reduce the processing time after liquidation is triggered compared with Aave V3. Once the health factor drops below the threshold and the bot takes over, there are hardly any perceptible pauses in between. I agree with this direction, but the downside of moving fast is direct too: the liquidation discount is a bit thin, and in small-scale liquidations the bots that can reliably capture profits are basically only three or four addresses. When concentration is high, “decentralized liquidation” ends up looking more like an arbitrage arena for a small set of players. $NVDAB
In terms of asset return speed, TermMax is more decisive than Compound’s public auction. Collateral doesn’t have to be repeatedly discounted through the auction process. But when I tested liquidations in simulations, I found that in the window before the oracle price updates, collateral valuations are sometimes amplified. This isn’t a fatal flaw—under extreme conditions, once liquidation volume stacks up, bad debt could seep from fringe accounts into the core pool. TERM is used to subsidize the bots’ gas costs. In normal volatility, this design can sustain participation, but in black-swan events, will the subsidy release turn into a second round of selling pressure? I’ll leave a question mark for now.
Taking Euler’s soft liquidations as a reference, TermMax’s hard trigger is closer to traditional liquidation—it lacks the buffering layer of stepwise deleveraging. The advantage is strong execution determinism; it won’t postpone losses. The disadvantage is equally clear: users essentially have no window to self-rescue. If a lending protocol emphasizes liquidation efficiency but doesn’t give borrowers a risk-hedging exit, large capital will find it hard to truly push positions in. The product isn’t bad in terms of completion, but in terms of the risk narrative, it’s still missing a bit of spark. @TermMax #termmax
If you break down TermMax’s liquidation module, you can see it clearly tries to reduce the processing time after liquidation is triggered compared with Aave V3. Once the health factor drops below the threshold and the bot takes over, there are hardly any perceptible pauses in between. I agree with this direction, but the downside of moving fast is direct too: the liquidation discount is a bit thin, and in small-scale liquidations the bots that can reliably capture profits are basically only three or four addresses. When concentration is high, “decentralized liquidation” ends up looking more like an arbitrage arena for a small set of players. $NVDAB
In terms of asset return speed, TermMax is more decisive than Compound’s public auction. Collateral doesn’t have to be repeatedly discounted through the auction process. But when I tested liquidations in simulations, I found that in the window before the oracle price updates, collateral valuations are sometimes amplified. This isn’t a fatal flaw—under extreme conditions, once liquidation volume stacks up, bad debt could seep from fringe accounts into the core pool. TERM is used to subsidize the bots’ gas costs. In normal volatility, this design can sustain participation, but in black-swan events, will the subsidy release turn into a second round of selling pressure? I’ll leave a question mark for now.
Taking Euler’s soft liquidations as a reference, TermMax’s hard trigger is closer to traditional liquidation—it lacks the buffering layer of stepwise deleveraging. The advantage is strong execution determinism; it won’t postpone losses. The disadvantage is equally clear: users essentially have no window to self-rescue. If a lending protocol emphasizes liquidation efficiency but doesn’t give borrowers a risk-hedging exit, large capital will find it hard to truly push positions in. The product isn’t bad in terms of completion, but in terms of the risk narrative, it’s still missing a bit of spark. @TermMax #termmax