#termmax @TermMax
I used to think lending on the blockchain only becomes truly effective when the collateral is sufficiently liquid. ETH, BTC, or stablecoins can be continuously priced and sold almost immediately when a position runs into trouble. Because of that, I was quite skeptical about putting less liquid assets into lending.
TermMax made me reconsider this when I looked into the physical delivery mechanism. Instead of automatically assuming that all collateral must be sold on the market to handle the loan, this mechanism allows the asset to be transferred directly to the lender in certain cases. That detail doesn’t sound very big, but it made me realize that the RWA problem isn’t only about tokenizing assets.
If a real asset is brought onto the blockchain but secondary liquidity remains limited, how to deal with the loan when things go wrong is just as important as how it’s valued. A token representing a real asset doesn’t naturally become liquid just because it exists on-chain.
From this perspective, fixed-rate lending also starts to take on a different meaning. When a loan has a defined term and a clear interest rate, lenders need to know not only how much they will receive, but also which asset can back the loan if everything doesn’t go as expected.
I’m still fairly cautious about the RWA story. Tokenization can address part of the issues around ownership and trading, but it cannot simply erase the limitations of the underlying assets.
What I want to observe in TermMax is how physical delivery will work when applied to truly illiquid real-world assets. That’s when I think this mechanism will be genuinely put to the test.
I used to think lending on the blockchain only becomes truly effective when the collateral is sufficiently liquid. ETH, BTC, or stablecoins can be continuously priced and sold almost immediately when a position runs into trouble. Because of that, I was quite skeptical about putting less liquid assets into lending.
TermMax made me reconsider this when I looked into the physical delivery mechanism. Instead of automatically assuming that all collateral must be sold on the market to handle the loan, this mechanism allows the asset to be transferred directly to the lender in certain cases. That detail doesn’t sound very big, but it made me realize that the RWA problem isn’t only about tokenizing assets.
If a real asset is brought onto the blockchain but secondary liquidity remains limited, how to deal with the loan when things go wrong is just as important as how it’s valued. A token representing a real asset doesn’t naturally become liquid just because it exists on-chain.
From this perspective, fixed-rate lending also starts to take on a different meaning. When a loan has a defined term and a clear interest rate, lenders need to know not only how much they will receive, but also which asset can back the loan if everything doesn’t go as expected.
I’m still fairly cautious about the RWA story. Tokenization can address part of the issues around ownership and trading, but it cannot simply erase the limitations of the underlying assets.
What I want to observe in TermMax is how physical delivery will work when applied to truly illiquid real-world assets. That’s when I think this mechanism will be genuinely put to the test.