#termmax @TermMax My personal perspective: RWA is not just a tokenization story
There’s one thing that changed the way I think about lending and RWA after learning about TermMax.
Before, I often thought that the more liquid the collateral, the easier the lending model would work. With ETH, BTC, or stablecoins, when a position runs into trouble, the protocol can liquidate and sell the assets on the market relatively quickly.
But the story turns out differently when the collateral is a real asset.
A token representing real estate, credit, or an illiquid asset can be put on the blockchain. However, if there aren’t enough buyers on the other side, “liquidating” it in practice is still a difficult problem.
And this is the point I find particularly noteworthy in TermMax’s physical delivery.
Instead of requiring every situation to end with selling the asset on the market, this mechanism opens up the possibility of transferring the asset directly to the lender in certain cases.
That made me realize that the RWA problem doesn’t stop at:
“How do we bring real-world assets on-chain?”
It’s also:
“When something goes wrong, how will we handle that asset?”
This is a fairly important difference.
Blockchain can help with tokenization, trading, and programming ownership rights. But blockchain can’t magically create liquidity for an asset that doesn’t have liquidity in the first place.
So I’ve also started looking at fixed-rate lending from a more practical perspective.
Lenders don’t just need to know what the APR is.
They need to know the loan term, the expected cash flows, and more importantly, what they actually have to protect the loan if the borrower fails to fulfill their obligations?
For me, this is the really interesting part of TermMax.
There’s one thing that changed the way I think about lending and RWA after learning about TermMax.
Before, I often thought that the more liquid the collateral, the easier the lending model would work. With ETH, BTC, or stablecoins, when a position runs into trouble, the protocol can liquidate and sell the assets on the market relatively quickly.
But the story turns out differently when the collateral is a real asset.
A token representing real estate, credit, or an illiquid asset can be put on the blockchain. However, if there aren’t enough buyers on the other side, “liquidating” it in practice is still a difficult problem.
And this is the point I find particularly noteworthy in TermMax’s physical delivery.
Instead of requiring every situation to end with selling the asset on the market, this mechanism opens up the possibility of transferring the asset directly to the lender in certain cases.
That made me realize that the RWA problem doesn’t stop at:
“How do we bring real-world assets on-chain?”
It’s also:
“When something goes wrong, how will we handle that asset?”
This is a fairly important difference.
Blockchain can help with tokenization, trading, and programming ownership rights. But blockchain can’t magically create liquidity for an asset that doesn’t have liquidity in the first place.
So I’ve also started looking at fixed-rate lending from a more practical perspective.
Lenders don’t just need to know what the APR is.
They need to know the loan term, the expected cash flows, and more importantly, what they actually have to protect the loan if the borrower fails to fulfill their obligations?
For me, this is the really interesting part of TermMax.