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One of the biggest verticals yet to be explored properly in #DeFi is Undercollaterlised loans.
Enter @maplefinance ... a decentralised corporate credit market.
Let's jump into what it is, what it does and what problems it solves...
1/12
Enter @maplefinance ... a decentralised corporate credit market.
Let's jump into what it is, what it does and what problems it solves...
1/12
LPs deposit USDC to a liquidity pool. Pool delegates carry out due diligence and agree on terms w/borrowers via smart contracts. MPL holders can stake 50/50 w/USDC in a balancer pool, participate in governance and get a passive fee share (no staking required).
2/12
2/12
Borrowers:
> Can borrow fixed-rate, fixed-term w/ a fixed collateralisation level w/out risk of liquidation or margin call, efficiently + transparently on-chain.
> Could be hedge funds, prop-traders, miners, market makers, exchanges etc.
> 1st pool will fund $15m of loans
3/12
> Can borrow fixed-rate, fixed-term w/ a fixed collateralisation level w/out risk of liquidation or margin call, efficiently + transparently on-chain.
> Could be hedge funds, prop-traders, miners, market makers, exchanges etc.
> 1st pool will fund $15m of loans
3/12
LPs deposit USDC to liquidity pools:
> Earn auto-compounding yield.
> All due diligence is outsourced to pool delegates.
> Liquidity pools can fund a variety of borrowers, to diversify risk.
4/12
> Earn auto-compounding yield.
> All due diligence is outsourced to pool delegates.
> Liquidity pools can fund a variety of borrowers, to diversify risk.
4/12
Pool Delegates:
> Required to stake tokens as first lost capital to cover any defaults (reduces moral hazard)
> Responsibilities include: credit assessing borrowers, agreeing terms, managing balance in liquidity pools to allow withdrawals, assist in special liquidations.
5/12
> Required to stake tokens as first lost capital to cover any defaults (reduces moral hazard)
> Responsibilities include: credit assessing borrowers, agreeing terms, managing balance in liquidity pools to allow withdrawals, assist in special liquidations.
5/12
> Earn performance fees (see image for model)
> Orthogonal trading, a multi-strat digital asset fund, are the first pool delegate (see maple finance blog for more info on them)
6/12
> Orthogonal trading, a multi-strat digital asset fund, are the first pool delegate (see maple finance blog for more info on them)
6/12
MPL holders:
> Can add liquidity to an MPL/BPT pool and stake LP tokens in an insurance pool, in return for yield
> Participate in governance - eventually should be able to vote holders a share of treasury funds.
> Get a fee share (just from holding, entirely passive).
7/12
> Can add liquidity to an MPL/BPT pool and stake LP tokens in an insurance pool, in return for yield
> Participate in governance - eventually should be able to vote holders a share of treasury funds.
> Get a fee share (just from holding, entirely passive).
7/12
Other notes:
>Raised 1.3m in seed round. Backers include cluster capital, Framework ventures, Alameda Research, FBG, One Block, The LAO, Bitscale, Kain Warwick, Stani Kulechov.
> Brings with it a systemic risk to the crypto-ecosystem if adopted as a primitive.
8/12
>Raised 1.3m in seed round. Backers include cluster capital, Framework ventures, Alameda Research, FBG, One Block, The LAO, Bitscale, Kain Warwick, Stani Kulechov.
> Brings with it a systemic risk to the crypto-ecosystem if adopted as a primitive.
8/12
> TAM is enormous: basically all corporate credit and asset management markets.
> I do not know of many competitors. Cream had some/plans some form of under collateralization for other trusted DeFi protocols I believe. Dhedge is a different take on asset management.
9/12
> I do not know of many competitors. Cream had some/plans some form of under collateralization for other trusted DeFi protocols I believe. Dhedge is a different take on asset management.
9/12
> What exactly is the sequence of events in the event of a collateral shortfall? Are incentives properly aligned? Is there scope for risk tranching?
> Heavily contingent on how good the pool delegates are.
> Need further info on team: no published info on them.
10/12
> Heavily contingent on how good the pool delegates are.
> Need further info on team: no published info on them.
10/12
In summary, Maple targets a virtually unexplored vertical decentralised finance. The success hinges on whether the incentive structure is properly aligned between all participants ...
11/12
11/12
... do delegates sufficient skin in the game? Are MPL staking yields high enough to encourage sufficient insurance? Is risk & profit distributed correctly?
Imo Maple has a good shot at being a leader in this vertical. Expect copycats. This is the next frontier.
/end
Imo Maple has a good shot at being a leader in this vertical. Expect copycats. This is the next frontier.
/end
