I have been thinking about a less obvious part of @TermMax : who actually absorbs the risk created by liquidity decisions?

The protocol can separate borrowers / lenders / market makers & Curators, which makes the market more organized. But specialization also means someone has to make the difficult calls.

A market maker has to decide where liquidity is worth providing.

A Curator has to decide how much capital should chase yield versus stay available for borrowers.

And that trade-off gets much harder when conditions change quickly.

Too much capital sitting idle hurts efficiency.

Too much capital pushed toward yield can leave a market looking healthy until borrowers suddenly need liquidity.

That is especially interesting for RWA collateral.

If an asset takes time to liquidate, the problem isn’t necessarily solved just because the collateral can eventually be delivered or sold. Timing becomes part of the risk.

That is why I am less interested in simply asking whether TermMax can generate yield.

I want to understand how the system behaves when the easy conditions disappear.

Who takes the loss from a bad liquidity decision?

How concentrated can Curator decisions become?

And what happens when market makers pull liquidity at exactly the wrong time?

To me these are the questions that separate a sophisticated market structure from one that only looks efficient while conditions are good.

The real test of TermMax won’t be how the system works when liquidity is abundant.

It’ll be how gracefully it handles liquidity when everyone suddenly wants it at once.
#termmax
Who should carry liquidity risk?