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Maple Finance Launches Institutional Loans for DeFi

Alameda Research, Wintermute, Coinshares and Blockchain.com are all part of the first DeFi-native institutional loans.

Shutterstock cover by LiuSol

Key Takeaways

  • Maple Finance is creating an institutional loan marketplace for crypto-native companies.
  • The first nine candidates will receive up to $2 million each.
  • Capital efficiency is a complex problem for DeFi as undercollateralized loans are not possible without some form of KYC.

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Maple Finance is building a decentralized marketplace for institutional capital, finally making undercollateralized loans a reality for crypto-native companies.

Maple Finance Goes Live

Maple Finance is launching a corporate debt marketplace, starting with a $17 million lending pool. The lenders include Blockchain.com and Coinshares, while the first nine borrowers include Alameda Research, Framework Labs, Wintermute, and Amber Group. Maple Finance is hoping to improve capital efficiency to allow crypto companies to grow.

Capital efficiency has always been tricky in DeFi. Due to the lack of KYC, loans usually have to be overcollateralized to prevent users from running away with the funds. This has slowed down the development of many ambitious crypto-native projects that require capital.

Speaking to Crypto Briefing, Sidney Powell, CEO of Maple Finance, explained that corporate lending is important because many crypto companies require capital to meet growth targets. He said:

Crypto-native institutions have now found product market fit, with many possessing strong balance sheets and generating hundreds of millions in revenue. The managers of these companies have ambitious growth targets and need capital to achieve these goals.”

He added that such companies often struggle to obtain loans from traditional finance sources because many firms are “reticent to deal with the crypto sector”. That leaves them with no choice but to take out overcollateralized loans from providers like Genesis and BlockFi.

Brian Lee, a VC at Alameda Research, said that Alameda is dependent on capital to build out its operations. “Alameda requires access to growth capital for expansion, and Maple’s platform provides a sustainable way of accessing this from the DeFi ecosystem,” he said. “We are excited by the prospect of a long-term borrowing partnership here.”

Although Maple Finance is targeting big players like Alameda Research, anyone can provide liquidity to a lending pool, no matter the size of the deposit.

The launch of the $17 million pool is the first in a series of curated loans in 2021 managed by digital asset trading firm Orthogonal Trading. The company will be responsible for approving the terms of each loan, performing due diligence, and liquidating collateral if necessary. Orthogonal Trading’s presence differentiates Maple Finance from other DeFi lending protocols, as 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 is what will help DeFi projects like Maple Finance succeed. He also forecasted a 10x growth in the lending space in the next year.

Maple closed a $1.4 million funding round in January, with participants including Framework Ventures and Polychain Capital. It also raised $10 million through the Maple DAO. Liquidity providers received its governance token, MPL.

Disclaimer: The author held BTC, ETH, and several other cryptocurrencies.

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