The capital pool promises to enable greater access to finance for traditional corporations and institutions seeking to capitalize on emerging opportunities within the DeFi space.
Digital asset lending platform Celsius has become the first pool delegate from the centralized finance market to deploy a crypto-centric lending service on Maple Finance, utilizing the latter’s smart contract and blockchain infrastructure to facilitate a $30 million pool to institutional investors.
Celsius succeeds existing pool delegates BlockTower, Orthogonal Trading, Maven 11 and Alameda Research in partnering with Maple on such an endeavor.
The introduction of wrapped Ether (wETH) is set to complement the existing accessibility to trade Circle’s native stablecoin, USD Coin (USDC), enabling investors to utilize the asset across an array of trading components, including staking, lending and borrowing.
Cointelegraph spoke to Sidney Powell, Maple Finance’s co-founder and CEO, to uncover the prerequisites and financial nuances that interested institutional investors must be aware of before engaging with the pool.
Powell shared that “Institutions work directly with the Celsius team to borrow from this pool. Borrowers have to pass through Celsius’ established KYC and credit assessments,” adding:
“In this instance, digital asset institutions Wintermute and Amber have already been doing business on Maple, so have an on-chain credit reputation, and signed a Master Loan Agreement (MLA) too. This, plus Celsius’ established processes, means onboarding has been streamlined for all parties.”
Maple Finance revealed to Cointelegraph that the initial syndicated loan of $47.25 million issued to Alameda Research in mid-November 2021 has today exceeded $100 million, with the FTX-associated trading firm being the sole borrower in the transaction.
Abra deposited $25 million alongside other projects including the popular play-to-earn horse racing game Zed Run and CoinShares.
“Syndicated loan” is a term that denotes the process by which financial institutions, typically from the banking industry, extend finance to private corporations, either on an individual basis or as part of a consortium. The capital afforded to these corporations is viewed in the form of a loan and, as such, is subject to inflationary payback schemes dependent on the case complexity and evaluated risk.
Over the past few years, a number of prominent banking institutions have participated in blockchain-centric syndicated loans — more recently also traversing over to decentralized finance (DeFi) — including BNP Paribas and ING, which were two of seven major banks to partner with R3 and Finastra in October 2017, and BBVA, which implemented a distributed ledger technology model with British news agency Finextra the following year.
Following its inception just nine months ago, Maple has grown exponentially to register $768million in loans originated, and $649 million in total value locked at the time of writing. Moving forward, it expects to achieve $5 billion in TVL by year-end, alongside $1 billion of loans within the Alameda pool across the same time period.
Powell commented on the necessary due diligence that traditional firms should consider and complete before engaging with the DeFi space:
“Maple was built to disrupt the banking infrastructure that I had to work with within traditional finance. But when it comes to due diligence, the same rules apply!”
He added that asset managers at traditional firms have all the equipment necessary in the DeFi space, “just faster and more efficiently because the information is on-chain information and immutable.”