Shopify by Crypto Lending – Maple Finance
- Maple is a lending-specific web service
- Maple had serviced $1.8 billion in loans
- The $300 million loan pool for miners was financed by another firm
A credit facility-as-a-service platform called Maple Finance announced last week that it had established a brand new $300 million loan facility for troubled Bitcoin miners.
This means that crypto miners who are having trouble making money in the bear market right now can now borrow money. However, borrowing funds to continue operations will cost miners up to 20% for that service.
Maple acts like a bank, but is not a bank
The company’s co-founder and CEO, Sidney Powell, told Decrypt at Messari Mainnet 2022 that miners can handle this speed because there are few financing options and traditional banks rarely want to do business with crypto-native businesses.
Maple’s bread and butter is this particular customer profile, which Powell refers to as the middle market.
He put it this way: Any business that has raised its first round of venture capital but is still too small. They are not listed publicly.
Despite not yet being multi-billion dollar companies, he stated that they could operate in a niche sector like crypto. However, the banks really don’t want to lend to that industry because they are in crypto.
However, Maple Finance’s method of helping miners obtain liquidity is what makes it interesting.
Although Maple behaves, looks and functions like a bank, it is not a bank. Maple, on the other hand, is a lending-specific web service that enables companies to collect funds and find borrowers. It is not a financial institution, but rather a technology platform.
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Powell and his team have found serious traction
For example, Icebreaker Finance provided funding for the $300 million mining loan pool.
Icebreaker is referred to as a pool delegate in this scenario, and their responsibilities include 1) screening potential borrowers and 2) raising capital for the pool.
The pool delegate, not Maple, is responsible for determining the risk of lending to these borrowers.
Alameda Research, a trading house owned by Sam Bankman-Fried, also uses Maple Finance to obtain more affordable financing for its operations.
Coinshares, Abra and AscendEX are the pool’s delegates. These loans are also undercollateralized, a rarity in the DeFi space, as the delegate performs extensive due diligence on the market makers.
On MakerDAO, for example, for every $1 borrowed, users must deposit $1.50 in Ethereum. In Maple Finance, however, the terms agreed between pool delegates and borrowers are determined by the amount of collateral and the company’s credit rating.
While it may all appear to be esoteric crypto-related topics, Powell and his time have gained significant traction. Maple had paid off $1.8 billion in loans before the Icebreaker pool.
Steve Anderson is an Australian crypto enthusiast. He has been a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralization, understanding the true potential of the blockchain.
