Maple Finance aims to be the Shopify for Crypto Lending

Last week, Maple Finance, a credit facility-as-a-service platform, announced that it had spun off a new $300 million lending facility for troubled Bitcoin miners.

This means that all those crypto miners who are struggling to make money in the current bear market now have a lending hand. However, for that service, it will cost miners up to 20% to borrow money to maintain operations.

Sidney Powell, the company’s co-founder and CEO, said Decrypt on Messari Mainnet 2022 that miners are able to sustain this speed because funding options are limited and traditional banks have rarely been interested in doing business with crypto-native firms.

Powell calls this specific customer profile the “middle market,” and it’s Maple’s bread and butter. He defined it like this: “All companies that are now outside of venture capital raising, but they are still too small. They are not publicly listed. They’re not multi-billion dollar companies yet, but they can operate in a niche sector like crypto,” he said. “But because they’re in crypto, banks don’t really want to lend to that sector.”

But what’s interesting about Maple Finance is not that it helps miners get liquidity, but how it does it.

Maple looks like a bank, walks like a bank and acts like a bank, but it is not a bank. Instead, Maple is a lending-specific online service that companies can use to raise money and find borrowers. It is a technology platform rather than a financial institution.

That $300 million loan pool for miners was financed by another firm called Icebreaker Finance, for example.

In this scenario, the Icebreaker is called a pool delegate, and their job is to 1) fund the pool with capital and 2) process any potential borrowers (much like what a bank does). It is the pool delegate’s job to assess the risk of lending to these borrowers, not Maples.

“I often use the analogy of Shopify, where they provided tools for e-commerce companies just to set up and run their businesses online,” he said. “We give you the tools to run a lending business online. That lending business is really the delegate. That is the role they fill.”

Sam Bankman-Fried’s trading house Alameda Research also uses Maple Finance to borrow cheaper capital for its operations. The pool’s delegates include Coinshares, Abra and AscendEX. And because the delegate performs extensive due diligence on the market makers, these loans are also undercollateralized, a rarity in the DeFi space.

On MakerDAO, for example, users must deposit $1.50 in Ethereum for every $1 borrowed. With Maple Finance, however, terms are established between borrowers and pool delegates based on the amount of collateral provided and the firm’s credit level.

It may all seem like esoteric crypto stuff, but Powell and his time have found some serious traction. Before the Icebreaker pool, Maple had serviced $1.8 billion in loans.