#termmax @TermMax
80% → 85% → 50%: how liquidation works in TermMax?
In TermMax documentation, one detail caught my attention: the protocol uses two LTVs.
🔹 MLTV - 80% - the maximum LTV level to open a loan
🔹 LLTV - 85% - the level after which the position can be liquidated
For example, with $1000 collateral a user can borrow $800. If the collateral value drops to around $941, the LTV reaches 85%—and the position becomes liquidatable❗️
But liquidation also has limits: for debt over $10,000 per single operation, you can repay at most 50% of the debt💰
Additionally, there is a 10% penalty from the liquidated debt:
• 5% - to the liquidator
• 5% - to the protocol reserve
And if, after liquidation, there is still remaining debt, TermMax uses Physical Delivery—creditors can receive a proportional share of the collateral
So 80% → 85% → 50% → 10% aren’t just numbers; they are key parameters of TermMax’s risk management system
In my opinion, these mechanisms are some of the best examples of how TermMax tries to balance profitability and risk control☺️
80% → 85% → 50%: how liquidation works in TermMax?
In TermMax documentation, one detail caught my attention: the protocol uses two LTVs.
🔹 MLTV - 80% - the maximum LTV level to open a loan
🔹 LLTV - 85% - the level after which the position can be liquidated
For example, with $1000 collateral a user can borrow $800. If the collateral value drops to around $941, the LTV reaches 85%—and the position becomes liquidatable❗️
But liquidation also has limits: for debt over $10,000 per single operation, you can repay at most 50% of the debt💰
Additionally, there is a 10% penalty from the liquidated debt:
• 5% - to the liquidator
• 5% - to the protocol reserve
And if, after liquidation, there is still remaining debt, TermMax uses Physical Delivery—creditors can receive a proportional share of the collateral
So 80% → 85% → 50% → 10% aren’t just numbers; they are key parameters of TermMax’s risk management system
In my opinion, these mechanisms are some of the best examples of how TermMax tries to balance profitability and risk control☺️
