Maple Finance expands to direct lending for Web3 firms.

Blockchain-based credit marketplace Maple Finance is expanding into direct lending, aiming to fill the void left by the collapse of centralized lenders like BlockFi and Genesis.

The Maple team will launch its own direct lending desk called Maple Direct, which will underwrite and issue loans to Web3 businesses starting in July, according to a press release issued by the firm on Wednesday.

This marks a significant shift in Maple’s direction. Up until now, Maple has positioned itself as a technology provider developing a blockchain-enabled platform that connects lenders and borrowers through lending pools, each managed by a third-party credit company called a delegate that handles the underwriting of the loans.

Maple’s expansion comes at a time when digital asset firms are facing challenges in securing banking relationships and financing. The sharp decline in cryptocurrency markets last year led to the downfall of several centralized crypto lenders like BlockFi, Celsius, and Genesis, while traditional financial institutions are hesitant to serve digital asset firms, leaving the industry with limited borrowing options.

“There is a significant gap in the market due to the exit of those players,” said Sidney Powell, co-founder and CEO of Maple Finance, in an interview with blockchain. “This is a natural extension of what Maple can do as a protocol.”

Maple Direct

Maple Direct will operate as a separate lending pool on the platform, explained Powell. To do this, the company has established a subsidiary based in Delaware that will act as a pool delegate, underwriting loans and managing the portfolio.

“We have the expertise in-house as we all come from banking and credit backgrounds,” Powell said, noting that they have learned from observing delegates last year.

It is worth noting that lending pools on Maple accumulated $54 million in unsecured bad debt to trading firms affected by the sudden collapse of crypto exchange FTX in late 2022, leaving investors in a state of uncertainty for months. Some of these loans have been restructured, while others are still being pursued as part of Orthogonal Trading’s liquidation process.

The lending pool aims to raise funds from crypto funds, decentralized autonomous organizations (DAOs), venture capital firms, family offices, and high-net-worth individuals. It will provide loans to web3 native businesses in sectors such as asset management, infrastructure, and liquidity providers.

Over-collateralized loans

Maple Direct will initially offer over-collateralized loans, requiring borrowers to lock up assets of greater value than the loan amount. The lending desk will provide 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 using smart contracts, and the terms and loan book will be publicly visible on Maple’s loan dashboard. Powell emphasized that transparency is the reason for conducting these transactions on-chain.

“Clients of centralized lenders never received reporting on the level of collateral securing the loans, the equity protection, or the financial health of the borrower,” explained Powell. “Here, [investors in the pool] receive real-time reporting on all the borrowers, their performance, and the collateral level.”

Edited by Stephen Alpher.