The more I look at TermMax, the more I think its biggest challenge isn't creating markets.
it's making sure those markets actually matter.
TermMax can create a market around an asset with its own:
— collateral
— oracle
— LTV parameters
— maturity
— rate
that's powerful because a new asset doesn't have to wait for a large lending protocol to support it.
but there's a trade-off i don't see discussed enough.
creating a market is easy compared with creating two-sided demand.
you need borrowers who actually want that specific maturity and financing cost.
you need lenders willing to take the other side.
and you need enough activity for the market to remain useful after the initial liquidity arrives.
otherwise you can end up with something that looks impressive on a dashboard but doesn't generate much economic activity.
that's also why i think TermMax's fee model is worth watching.
if protocol revenue mainly comes from actual market activity rather than simply having capital deposited, then TVL alone becomes a weak measure of success.
i'd rather see:
capital → borrowing → trading → repayment → fees
happening repeatedly.
because that's the difference between a protocol that has liquidity and a protocol that actually has a business.
and this creates an interesting test for TermMax:
can permissionless market creation producemore useful markets—
or justmore markets?
i think that question will tell us much more about TermMax's long-term potential than another TVL screenshot.
#termmax @TermMax
it's making sure those markets actually matter.
TermMax can create a market around an asset with its own:
— collateral
— oracle
— LTV parameters
— maturity
— rate
that's powerful because a new asset doesn't have to wait for a large lending protocol to support it.
but there's a trade-off i don't see discussed enough.
creating a market is easy compared with creating two-sided demand.
you need borrowers who actually want that specific maturity and financing cost.
you need lenders willing to take the other side.
and you need enough activity for the market to remain useful after the initial liquidity arrives.
otherwise you can end up with something that looks impressive on a dashboard but doesn't generate much economic activity.
that's also why i think TermMax's fee model is worth watching.
if protocol revenue mainly comes from actual market activity rather than simply having capital deposited, then TVL alone becomes a weak measure of success.
i'd rather see:
capital → borrowing → trading → repayment → fees
happening repeatedly.
because that's the difference between a protocol that has liquidity and a protocol that actually has a business.
and this creates an interesting test for TermMax:
can permissionless market creation producemore useful markets—
or justmore markets?
i think that question will tell us much more about TermMax's long-term potential than another TVL screenshot.
#termmax @TermMax
