Receiving collateral is not the same as receiving the debt asset you originally expected.

TermMax describes a physical-delivery mechanism for cases where liquidation does not fully recover the debt token. FT holders can receive a proportional share of delivered collateral rather than being left only with an unrecovered claim.

That mechanism can improve recovery, but it changes the asset-level risk.

A lender who expected USDC may finish with part of the collateral instead. The value then depends on the collateral price, liquidity and the cost of converting it. For a vault, delivered collateral can also affect withdrawal timing if there is not enough idle liquidity.

I would therefore audit a fixed-rate position in two layers:

1. Payment layer: face value and maturity.
2. Recovery layer: collateral type, LLTV, oracle, liquidation liquidity and delivery rules.

The deeper lesson is that “fixed” describes the contractual rate, not the exact asset composition under every stress scenario.

Sources checked: TermMax Docs — Protocol FAQ; Risks.

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