Maple Finance is pivoting to direct lending

Cryptocurrency lender Maple Finance is introducing Maple Direct — its first direct lending arm, which is geared toward institutions.  

Maple Direct is positioned to capitalize on growing demand for capital market solutions for Web3 projects, Maple CEO Sid Powell told Blockworks via email. 

​​“While institutional investors can gain from their participation, they lack the expertise to underwrite individual blockchain and web3 projects,” Powell said. 

In positioning itself as capable of closing that knowledge gap, Maple in a statement pointed to its “history of working with institutional investors” leading up to the “launch of this new business division.” 

Maple Direct’s first direct lending product, set to go live next month, is designed to provide loans to Web3 infrastructure companies, asset management firms and liquidity providers. 

In an effort to mitigate counterparty risks, all interested parties will be subject to strict KYC and AML standards in order to participate, the company said. 

Maple will continue to operate all existing services, with the new direct lending arm falling under the oversight of its founders. 

Previously known as an uncollateralized lender, Maple Finance’s move into direct lending comes shortly after the protocol had to wind down operations of its active lending pools due to liquidity pressures after its client, Orthogonal Trading, failed to meet loan repayments following the collapse of FTX last year.

Another client, Auros, had missed payments that racked up to $2.8 million in the same lending pool. 

Maple’s latest direct lending product will be, accordingly, overcollateralized, secured by BTC and ETH collateral, held in segregated accounts and managed by qualified custodians, Powell said. 

Unlike CeFi lenders Genesis and Celsius, who filed for bankruptcy earlier in the year, Powell emphasized there will be no rehypothecation of collateral.

“DeFi’s transparency provides further advantages of the CeFi lender’s previous offerings since lenders can see all loan terms, status, and collateral levels through the application,” he said. “Maple Direct picks up where CeFi lenders left off — the lessons learned created a more secure platform with increased risk mitigation, which draws upon the innate strengths of DeFi.”

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