Introducing TermMax V2 - Composable Fixed-rate Layer in DeFi
Since TermMax's launch in April 2025, we’ve achieved a TVL of $34.9M - one of the largest in the fixed-rate lending/borrowing category.
But we are not stopping here.
This blog covers our achievements to date and the capabilities we have in-house for TermMax V2.
V1 Recap
In just 5 months, TermMax has validated the demand for fixed-rate lending in DeFi.
Traction & Scale
- $34.97M TVL ($48.84M including borrowed value) - making TermMax one of the largest players in fixed-rate DeFi
- 10,000+ unique users across Ethereum, Arbitrum, and BNB Chain
- 30+ markets deployed, with Pendle Principal Tokens (PT) markets emerging as the clear product-market fit
Curator Ecosystem
Our curator model has been validated with the successful onboarding of Origami Crypto as our first external curator. We have several additional curators in the pipeline, each expected to bring in significant TVL in multiple USD, demonstrating strong institutional confidence in our approach.
What We've Learned
V1 proved the concept works. But in building it, we discovered three critical bottlenecks holding us back from true scale:
- Liquidity Fragmentation: A vault with 1M USDC must split it across markets (400K here, 600K there) instead of deploying it all where it's needed most.
- Low Turnover: Once borrowed, assets are frozen until maturity. The same ETH that trades 100x daily on Uniswap can only be borrowed once on TermMax.
- Idle Capital: Unmatched assets in vaults earn nothing while waiting for borrowers, dragging down effective APYs.
These aren't bugs - they're opportunities.
V2 transforms each limitation into a competitive moat.
What’s TermMax V2
V2 is not just about features. It's a fundamental rethinking of how fixed-rate protocols can thrive in a DeFi ecosystem dominated by variable rates.
TermMax V2 transforms the limitations mentioned above into advantages through four breakthrough innovations that work synergistically:
- Composable Base Yield ensures that each TermMax vault has a competitive rate, making every on-chain vault manager a potential Curator on TermMax.
- Atomic Order makes TermMax the go-to place for whales to borrow at a fixed rate.
- Smart Unwind transfers TermMax into a DEX, making the yields for vaults more attractive.
- Order Aggregator automatically finds the best rate by optimizing across all order types on TermMax.
- Alpha Zone enables people to open markets permissionlessly on our protocol, allowing new curators to differentiate themselves.
Below is the breakdown of each one of them.
🔁 Composable Base Yield
When curators create a new vault on TermMax V2, they can select an underlying base yield source that continuously generates returns. We will support Aave and ERC-4626 standard vaults, like Morpho, as the base yield upon launch.
This fundamentally changes who can be a curator.
For protocols running ERC-4626 vaults, becoming a TermMax curator is now a no-brainer decision - they can offer fixed-rate lending on top of their existing strategies without moving any capital or changing their current operations.
They differentiate themselves while earning additional revenue.
This feature benefits the lending side:
- Vault depositors earn the base yield selected by the curator, plus additional fixed-rate returns when matched - creating higher composite yields than depositing directly in the underlying protocol
- Lenders automatically earn the base yield on assets in their limit orders while waiting to be matched, ensuring no capital sits idle
⚛️ Atomic Order
In TermMax v1, the liquidity is siloed between each market. If there is 1.1M USDC in a vault, this vault’s curator can only spread the liquidity across multiple markets, such as:
- 250K USDC to lend in USDC/PT-eUSDe,
- 600K USDC to lend in USDC/wBTC, and
- 250K USDC to lend in USDC/wstETH.
This leads to liquidity fragmentation, making it impossible for us to take huge orders.
This will be changed after the introduction of the Atomic Order.
Atomic Orders enable curators to place the same liquidity in a vault across multiple markets. Using the example above, this means:
- 1.1M USDC to lend in USDC/PT-eUSDe,
- 1.1M USDC to lend in USDC/wBTC, and
- 1.1M USDC to lend in USDC/wstETH.
Wait. You might be thinking, "Are we the FED? How can you print money out of thin air?" No, we aren’t. This is where the atomic attribute comes into play.
You see, even though users can see there are 1.1M USDC in each market, each liquidity can only be taken once. Once it’s taken, the liquidity will disappear atomically/simultaneously across the markets in which the order was placed.
Let’s say Alice borrows 500K from the USDC/PT-eUSDe market from the example above; after her transaction (even in the same block!), here are the available liquidity from those markets:
- 600K USDC to lend in USDC/PT-eUSDe,
- 600K USDC to lend in USDC/wBTC, and
- 600K USDC to lend in USDC/wstETH.
This enables TermMax V2 to take borrowers with size.
⌛ Smart Unwind
In TermMax v1, borrowed assets tend to be locked until maturity. If someone borrows 5 ETH for 30 days, that liquidity is likely stuck for the entire period. This means the same 5 ETH that could be utilized 100 times on a spot DEX can only be borrowed once on our platform.
This will be changed after the introduction of Smart Unwind.
Smart Unwind enables borrowers to set take-profit orders in APR or price terms, turning their debt positions into liquidity sources for our spot DEX or new borrowers.
When creating a position, users can specify their target APR or price for early exit. When market conditions create opportunities, their positions can be taken over by:
- DEX Arbitrageurs seeking to buy the collateral assets at a guaranteed price
- New borrowers wanting to take over existing positions at a premium
For example:
Alice borrows 5 ETH to create a leveraged wstETH position with 15% net APR. She sets Smart Unwind at 20% APR. When the wstETH price against ETH sharply rises, Bob can take over her position at a fixed price. Alice achieves her 20% APR target, Bob obtains wstETH at a below-market fixed price, and the 5 ETH immediately returns to the lending pool for others to borrow.
This significantly enhances capital efficiency on TermMax V2, as the same liquidity can now cycle through multiple times before maturity, thereby dramatically increasing utilization rates for the protocol.
Note: This spot DEX functionality will not be retail-facing. We're integrating with solvers and DEX aggregators - interested parties can DM us on X.
🔹 Order Aggregator
Once the above features go live, there will be numerous types of orders on TermMax:
- Uniswap v3-like range orders in a market
- Atomic Orders with different interest rate ranges across multiple markets
- Limit orders submitted by lenders/borrowers
- Take-profit orders from Smart Unwind users
This could create a UX nightmare if users need to manually select which orders to take. In fact, this is what makes our UI confusing, as users need to manually select an order.
Our Order Aggregator solves this by automatically calculating the optimal order combination for each user. Our aggregator scans across all available liquidity sources, considering factors such as gas fees, order size, interest rates, and market depth to construct the optimal execution path and return it to our UI.
For example, if Bob wants to borrow 2M USDC against wstETH:
- There might be 800K available at 8% from Atomic Orders
- Another 500K at 8.5% from limit orders placed by multiple users
- 700K at 9% from Smart Unwind positions waiting to be executed
Instead of Bob manually piecing this together or settling for a worse rate, the Order Aggregator automatically combines these sources to give him his 2M USDC at around 8.5% in one transaction - better than sending multiple transactions to take an order one at a time.
This same optimization also applies to lenders.
No manual searching. No missed opportunities. Just the best rate, every time.
🌌 Alpha Zone
Alpha Zone transforms TermMax into a permissionless protocol, enabling anyone to create markets in a Uniswap-style manner. These markets serve as a testing ground for new assets before they are integrated into the main protocol.
People can create new markets by selecting:
- a debt/collateral asset,
- an oracle for collateral,
- a maturity date,
- an L-LTV ratio.
The markets in the Alpha Zone will use physical delivery if liquidations fail. This means that as a lender, you could receive collateral assets in return after the maturity date. Sounds risky? This creates a risk-premium market where sophisticated lenders can earn higher yields by accurately pricing the risk associated with collateral.
Curators could create a market for emerging LSTs that are not yet supported in the main protocol, setting custom parameters that reflect their risk profile. If they price it correctly, they earn fees while providing liquidity for new assets.
Token issuers could list their assets on the Alpha Zone from day 1 to provide utility to their tokens and offer token rewards to lenders who provide liquidity.
Alpha Zone markets will also benefit from other V2 features.
- Lenders can earn a floating rate while waiting for their limit orders to be matched,
- Borrowers can set a take-profit order via Smart Unwind to automatically exit their debt positions.
Together, these features create a liquidity flywheel where every participant—curators, lenders, borrowers, and arbitrageurs/DEX traders—benefits from deeper markets and better capital efficiency.
Timeline
We're taking a deliberate, phased approach to V2 deployment - each feature builds on the previous one, creating compounding improvements to capital efficiency and UX.
Phase 1: Foundation (Early Q4 2025)
Composable Base Yield + Atomic Order launch together
Why: These form the liquidity foundation - Base Yield attracts more curators and capital, while Atomic Orders ensure that capital can serve multiple markets simultaneously
Impact: Expect a 5x-20x increase in available liquidity per market
Phase 2: Optimization (Early Q4 2025)
Order Aggregator goes live
Why: With the introduction of the Atomic Order from Phase 1, users need seamless execution across all order types
Impact: Expect a 1.5-3x increase in median borrowing size vs. phase 1
Phase 3: Capital Recycling (Late Q4 2025)
Smart Unwind activates
Why: Unlocks trapped liquidity, turning TermMax into a hybrid lending protocol + DEX
Impact: Expect a 1.5x-5x increase in capital turnover before maturity
Phase 4: Permissionless Expansion (Q1 2026)
Alpha Zone opens
Why: Battle-tested infrastructure ready for permissionless market creation
Impact: Expect a 3x~10x increase in the number of markets across multiple EVM chains
Join the Journey
We'll be sharing development updates, technical deep-dives, and performance metrics as we roll out each phase.