- Maple is a lending-specific web service
- Maple had serviced $1.8 billion in loans
- $300 million lending pool for miners was funded by another firm
A credit-facility-as-a-service platform called Maple Finance made the announcement last week that it had established a brand-new $300 million lending facility for troubled Bitcoin miners.
This means that crypto miners who are having trouble making a profit in the bear market right now can now borrow money.However, borrowing funds to continue operating will cost miners up to 20% for that service.
Maple behaves 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 rate because there are few funding options and traditional banks rarely want to do business with crypto-native businesses.
Maple’s bread and butter is this particular client profile, which Powell refers to as the middle market.
He put it like this:Any business that has raised their first round of venture capital but is still too small.They are not listed in public.
Despite the fact that they are not yet multibillion-dollar businesses, he stated that they could operate in a niche sector like crypto.However, banks really won’t lend to that industry because they are in crypto.
However, Maple Finance’s method of assisting miners obtain liquidity is what makes it interesting.
Even though Maple behaves, looks, and acts like a bank, it is not a bank.Maple, on the other hand, is a lending-specific web service that enables businesses to pool funds and locate borrowers.It is not a financial institution but rather a technology platform.
Powell and his team have found serious traction
Icebreaker Finance, for instance, provided funding for the $300 million mining lending pool.
Icebreaker is referred to as a pool delegate in this scenario, and their responsibilities include 1) screening any potential borrowers and 2) providing capital to 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 makes use of Maple Finance to obtain less expensive 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 conducts extensive due diligence on the market makers.
On MakerDAO, for instance, for every $1 borrowed, users must deposit $1.50 in Ethereum. However, in Maple Finance, the terms agreed upon between pool delegates and borrowers are determined by the amount of collateral pledged and the company’s credit rating.
Although all of it may appear to be esoteric crypto-related topics, Powell and his time have achieved significant traction.Maple had paid off $1.8 billion in loans prior to the Icebreaker pool.
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