The central theses
- Maple Finance creates an institutional credit market for crypto-native companies.
- The first nine candidates will each receive up to $ 2 million.
- Capital efficiency is a complex problem for DeFi, as undercollateralised loans are impossible without some form of KYC.
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Maple Finance is building a decentralized marketplace for institutional capital and ultimately realizing under-secured loans for crypto-native companies.
Maple Finance goes live
Maple Finance launches a corporate debt market starting with a credit pool of $ 17 million. Lenders include Blockchain.com and Coinshares, while the top nine borrowers include Alameda Research, Framework Labs, Wintermute, and Amber Group. Maple Finance hopes to improve capital efficiency to help crypto businesses grow.
Capital efficiency has always been difficult in DeFi. Due to the lack of KYC, loans usually need to be overcollateralised to prevent users from running away with the funds. This has slowed the development of many ambitious crypto-native projects that require capital.
Speaking to Crypto Briefing, Maple Finance CEO Sidney Powell stated that corporate credit is important as many crypto companies need capital to meet growth goals. He said:
“Crypto-native institutions have since determined that the product market is appropriate. Many have strong balance sheets and hundreds of millions in sales. The managers of these companies have ambitious growth goals and need capital to achieve those goals. “
He added that such companies often struggle to obtain credit from traditional funding sources because many companies are “reluctant to enter the crypto sector.” So you have no choice but to take out over-secured loans from providers like Genesis and BlockFi.
Brian Lee, VC at Alameda Research, said Alameda relies on capital to grow its business. “Alameda needs access to growth capital to expand and the Maple platform provides a sustainable way to access it through the DeFi ecosystem,” he said. “We are excited about the prospect of a long-term credit partnership.”
Although Maple Finance targets large companies like Alameda Research, anyone, regardless of the size of the deposit, can provide liquidity to a pool of loans.
The $ 17 million pool launch marks the first in a series of curated loans in 2021 managed by digital asset trading firm Orthogonal Trading. The company is responsible for approving the terms of each loan, performing due diligence and liquidating collateral if necessary. Orthogonal Trading’s presence sets Maple Finance apart from other DeFi credit protocols in that they rarely have a pool delegate.
Powell told Crypto Briefing that the ability to “borrow from any investor in the world” rather than relying on centralized bank branches will help DeFi projects like Maple Finance to succeed. He also forecast 10x growth in lending over the next year.
Maple closed a $ 1.4 million financing round in January with participants including Framework Ventures and Polychain Capital. The Maple DAO raised $ 10 million. Liquidity providers received the governance token MPL.
Disclaimer: The author owned BTC, ETH and several other cryptocurrencies.
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