Maple Finance, a DeFi Platform for Institutional Lending, Unveils $40M Liquidity Pool

Maple Finance, a decentralized finance (DeFi) corporate credit platform, has added a new $40 million lending pool backed by crypto-native investment firm Maven 11, according to press materials provided to CoinDesk.

The institutional investor-funded pool will provide borrowers with liquidity, a particularly valuable resource during a crypto bear market.

The Maven 11 pool will provide loans to crypto market makers, or large firms that provide enough money to exchanges to stabilize trading. In return, the lenders will receive yield from the market makers. Borrowers for the pool include Wintermute and Flow Traders, Maple originally listed Bastion, Nibbio and Folkvang Trading among the borrowers, but a spokesperson told CoinDesk after publication of this story that those companies aren't participating for now.“Maven 11 was the second pool delegate on the platform,” Maple CEO Sidney Powell told CoinDesk in an interview.

Maven 11 previously backed a Maple pool that lent wrapped ETH (wETH) that was more open and "DeFi native," Powell said.

“They’ve fared particularly well over the recent volatility," Powell said. "They’ve had no defaults to date, which means they’ve outperformed most of the CeFi (centralized finance) lenders.”

The new setup is permissioned with the know-your-customer/anti-money-laundering protections required for larger financial institutions.

Maple provides the blockchain-based technology to set up and maintain the pools. While all borrowers sign a standardized legal agreement that gives them access to loans, Maple leaves the underwriting to the lenders.

In February, Maple unveiled a $30 million lending pool from Celsius Network, the crypto lending platform that filed for Chapter 11 bankruptcy protection last month.

“The pools aren’t commingled, so if something goes wrong in a Celsius pool, it doesn’t impact the depositors in other pools. That’s one of the ways that risk is managed on the platform,” Powell said. “Celsius was lending its own funds. There were no outside depositors.”

Powell noted that the structure of Maple, which holds the loan money on its platform, would have meant that any theoretical outside depositor in the Celsius pool would have received his funds back before anyone else in the Celsius proceedings.

“My take is that there would’ve been fewer detrimental outcomes for depositors if more of CeFi’s business had actually been conducted using DeFi tools,” Powell said.

Institutional investors are coming back to the crypto market, Powell said,

“I think we saw a pullback in the appetite for counterparty risk," he said. "What that manifested in was more of a push for collateralized lending, shifting away from uncollateralized or undercollateralized lending.”

Uncollateralized or undercollateralized lending is common in DeFi, where the usual anonymity of account holders prevents the equivalence of a credit check. Powell said those types of loans tend to favor more speculative businesses.

“Market makers typically wouldn’t borrow overcollateralized. What you saw is that their balance sheets shrunk, which meant less liquidity on exchanges,” he continued. “Now that the last quarter has come to a close, appetite is shifting back toward deploying and getting yield again. We’ve seen lending volumes are starting to grow. People are being enticed by price to come back into the market for stablecoin yields.”

UPDATE (13:40 UTC): Updates dollar amount in pool to $40 million based on fresh information from Maple.

UPDATE (18:51 UTC): Updates borrowers listed in third paragraph.