Blockchain-based credit marketplace Maple Finance expands to direct lending, aspiring to fill the vacuum that the implosion of centralized lenders like BlockFi and Genesis created.
The team behind Maple will start its own direct lending desk called Maple Direct to underwrite and issue loans to Web3 businesses starting in July, the firm announced in a press release Wednesday.
The new operation means a significant change in Maple’s direction. Until now, Maple has defined itself as a technology provider developing a blockchain-enabled platform to connect lenders and borrowers via lending pools, each managed by a third-party credit company called delegate underwriting the loans.
Maple’s expansion comes at a time when digital asset firms face challenges to secure banking ties and financing. The sharp downturn of cryptocurrency markets last year wiped out multiple centralized crypto lenders such as BlockFi, Celsius or Genesis, while traditional financial firms are wary of servicing digital asset firms, leaving the industry with limited options for borrowing.
“There’s a big gap in the market because of the exit of those players,” Sidney Powell, co-founder and CEO of Maple Finance said in an interview with CoinDesk. “This is like a natural extension of what Maple can do as a protocol.”
Maple Direct
Maple Direct will work as a separate lending pool on the platform, Powell explained. To do so, the company created a subsidiary domiciled in Delaware that will act as a pool delegate to underwrite loans and manage the portfolio.
“We have the expertise in-house as we all came from banking and credit backgrounds, Powell said, adding that they “learned the lessons from last year observing delegates.”
Notably, lending pools on Maple accrued $54 millions of unsecured bad debt to trading firms hit by the sudden collapse of crypto exchange FTX late 2022, leaving investors in limbo for months. A part of those loans has been restructured, while still pursuing recovery for assets as part of Orthogonal Trading’s liquidation process.
The lending pool aims to raise funds from crypto funds, decentralized autonomous organizations (DAO), venture capital firms, family offices and high-net worth individuals, and will lend to web3 native businesses in sectors including asset management, infrastructure and liquidity providers.
Overcollateralized loans
Maple Direct will start with offering overcollateralized loans, Powell said, meaning that borrowers must lock-up more assets in value than the size of the loan. The lending desk will give loans in USDC and USDT stablecoins, and will accept bitcoin (BTC), ether (ETH) and staked ETH as collateral.
The loans will be executed on the blockchain with smart contracts, while the terms and loan book will be visible on Maple’s public loan dashboard. The reason for doing this on-chain is transparency, Powell said.
“Clients of centralized lenders never got reporting on the level of collateral backing loans, the equity protection and financial health of the borrower,” Powell explained. “Here, [investors in the pool] get reporting in real time on all the borrowers, how they are performing and the level of collateral.”
