Crypto Lending Platform Maple Finance Latest To Warn of ‘Insufficient Cash’ Amid Market Turmoil

Maple Finance is the latest crypto lending platform to face liquidity pressures, the company said Tuesday. 

“There may be instances where there is insufficient cash in pools,” the company wrote in a note. 

Maple Finance lenders must wait for borrower repayments, the company said. That’s to be expected, according to the company, given surging demand for liquidity as investors seek the safe haven of cash amid market turmoil.

The company — which operates as a credit platform and does not originate or underwrite loans directly — operates differently than lenders like Celsius. It’s not in danger of becoming insolvent.

Delegates, who manage liquidity pools on Maple, plan to service all withdrawals over the “coming weeks,” similar to how the lending platform handled withdrawals around the time of Terra USD’s collapse in May, a spokesperson from Maple Finance said. 

“By design of the protocol, cash can only be withdrawn when it’s available — we haven’t frozen withdrawals,” the spokesperson said. “Cash continues to flow in from deposits and repayments, so should balance in the near future. [We] felt it important to share the news with protocol participants ahead of time.” 

“As loans mature over the coming weeks, Borrower repayments will increase the available capital in the pools that can then be withdrawn by Lenders,” the note said. “Lenders will continue to earn interest and MPL [Maple token] rewards during this time.” 

Maple Finance’s lending pools and activity are publicly available, the company said in the note. The company reports just over $1.5 billion in loans since it has started.

The news comes as investors continue to speculate about the future of Babel Finance after the crypto lender disclosed liquidity pressures and halted withdrawals following the unraveling of others in the space including Celsius and Three Arrows Capital. 

Orthogonal Trading, a cryptocurrency hedge fund, has acknowledged a $10 million loan to Babel Finance from the Orthogonal USD Coin pool on Maple. 

“Orthogonal has been in daily contact with Babel management since Babel halted withdrawals and is focused on protecting the interests of lenders,” Maple Finance tweeted Tuesday. 

Maple’s warning comes as cryptocurrency industry members fret over potential contagion risks, which will only increase as liquidity pressures continue and lenders try to avoid runs.

“There is no easy solution, but more robust liquidity is a good starting place for crypto institutions under stress,” said Timo Lehes, co-founder of blockchain infrastructure company Swarms. “The US Fed is holding its latest banking stress test later this week, which is a timely reminder that this liquidity is only really organizable with some sort of oversight.” 

The situation highlights the need for greater regulatory oversight over the industry, Lehes added.

---

Get the news in your inbox. Explore Blockworks newsletters:

• The Breakdown: Decoding crypto and the markets. Daily.
• 0xResearch: Alpha in your inbox. Think like an analyst.