Maple (MPL): Crypto-Capital Network
The Maple crypto lending platform provides uncollateralized loans for institutional borrowers and yield for both institutional and individual lenders.
By Sidney Powell, CEO & Co-Founder, Maple
Updated October 15, 2023 • 3 min read
Maple is an institutional crypto-capital network built on Ethereum and Solana. On a mission to redefine capital markets through digital assets, Maple expands the digital economy by providing uncollateralized lending for institutional borrowers and income opportunities for lenders. The project is powered by the Maple token (MPL), a utility and governance token that uses Ethereum’s ERC-20 and ERC-2222 token standards.
What Is Maple? Crypto Capital Marketplace
Maple is a capital marketplace powered by blockchain technology. The protocol’s mission is to redefine capital markets by simplifying the process through which businesses access funding. The Maple protocol executes this mission by using smart contracts to remove time and cost frictions, and blockchains for immutability. It provides the tooling for credit-experts to build lending businesses on Maple, which facilitates undercollateralized lending for institutional borrowers and income opportunities for lenders.
Maple’s incentive structure and on-chain operations are enabled by the Maple token (MPL), which enables holders to participate in the project’s governance, share in network fees accrued to the Maple DAO treasury, and help insure Maple’s decentralized lending pools through staking. The result is a capital-efficient option for institutional borrowers that surpassed USD 1 billion in loans in its first ten months after launch in 2021. The Maple protocol has recently become multi-chain, and runs on both Ethereum and Solana.
How to Use Maple
Maple’s uncollateralized lending infrastructure focused on institutional lenders and corporate borrowers are a departure from other decentralized finance (DeFi) lending and borrowing platforms such as Aave and Compound. The latter’s overcollateralized borrowing services feature variable interest rates and are geared toward a broader audience of borrowers.
There are four types of users within the Maple ecosystem:
Institutional borrowers such as hedge funds, exchanges, or market makers use Maple to tap into aggregated financing sources via Maple’s efficient, transparent on-chain protocol. These borrowers leverage their reputation to take out uncollateralized loans in exchange for an “establishment fee” paid to pool delegates and to the project’s Decentralized Autonomous Organization (DAO). During the loan, borrowers will pay interest, of which 10% goes to the Pool Delegate and the rest to Pool Cover providers and lenders to the pool. The Maple DAO controls the project’s treasury funds.
Pool delegates are experienced financial professionals who are responsible for performing due diligence on borrowers by reviewing their reputation and track record and using this information to negotiate specific loan terms. From there on, pool delegates fund loans from a designated liquidity pool based on the agreed loan parameters in exchange for the establishment fees paid by borrowers and ongoing fees. The fees are a percentage of interest yield received. All pool delegates undergo a rigorous whitelisting process conducted by the Maple team.
Lenders on Maple earn a fixed yield through diversified exposure to vetted institutional borrowers by allocating funds to Maple’s pool delegates. More specifically, lenders deposit funds into a pool denominated in that pool's liquidity asset in exchange for interest payments on the funds they loan out. These lenders do not need MPL tokens to participate in lending; they also have the opportunity to earn MPL crypto rewards by participating in Maple’s on-chain ecosystem.
Stakers provide insurance, or “pool cover,” to Maple’s lending pools by staking BPT tokens with USDC/MPL into pools to provide loss capital. These tokens are liquidated and used to cover losses in the event a default occurs, and in exchange for incurring this risk. Stakers receive a percentage of interest earned by the pool from borrowers, in addition to MPL staking rewards.
In terms of practical use of Maple, borrowers start off by creating a profile and submitting their preferred loan terms and a request for quote (RFQ) on Maple for pool delegates to review. If a pool delegate is interested in a borrower’s proposed loan terms, it performs further due diligence. Both Maple and the Pool Delegate will conduct a thorough KYC and AML due diligence.
From there, a loan contract is launched by the borrower once the terms are agreed upon by both parties, which then allows the pool delegate to source funds from lenders who are compatible with the loan’s terms and conditions.
Once the loan has been initiated, borrowers can use the money to run their business, pay interest, and pay back the loan at the completion date. The establishment fee is paid up front and 33% is sent to the involved pool delegate and 67% to the Maple DAO.
Maple Finance is underpinned by the MPL token, which is the project’s native governance and utility token. MPL crypto holders are eligible to participate in the project’s decentralized governance process, earn interest fees, and use MPL to provide Pool Cover by purchasing the BPT token. Holders who want to take a more passive approach can also delegate their voting rights to other ecosystem participants and earn a cut of the resulting rewards.
Maple Finance has a max supply of 10,000,000 tokens. Of this, 5% of the total supply was distributed via Balancer’s liquidity bootstrapping pool. MPL tokens follow the ERC-20 token standard for most standard on-chain activities, but are converted to the ERC-2222 token standard when used for profit distribution from Maple’s treasury.
Soon, Maple will launch xMPL. This will allow MPL holders to stake their MPL for xMPL and receive part of the revenues generated from the Maple protocol as well as other utilities like governance voting and providing single-sided Pool Cover in the future.
The Future of Maple
As the DeFi sector continues to evolve and expand, institutional adoption has become increasingly prevalent. However, many businesses continue to be hampered by the industry’s lack of approachability, which can make it hard for such entities to tap into new forms of funding and liquidity. Some popular DeFi lending platforms such as Aave and Compound are making it easier for businesses to access capital, but these protocols do not extend credit to borrowers because they require their on-chain loans to be overcollateralized. And while this practice helps keep these platforms solvent, they result in more restrictive forms of lending and borrowing.
By contrast, Maple has created a decentralized credit market that allows more capital to be loaned out for every U.S. dollar’s worth of value deposited. Expanded credit solves the need for overcollateralized loans and allows institutions to reinvest efficient capital into their business. Additionally, Maple allows anyone to be a lender or liquidity provider and earn yield from lending to institutional borrowers — thereby giving everyone a reason to participate. While some may argue that uncollateralized loans introduce risk, participating Maple users are confident in the project’s user reputation system and the platform’s ability to improve the capital efficiency of lending markets.
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CEO & Co-Founder, Maple
Sid Powell is the CEO & Co-Founder of Maple. With his Co-Founder Joe Flanagan, he launched Maple in 2021. Sid comes from a background in debt capital markets and institutional banking. During his career in traditional finance, he participated in $3BN+ of corporate bond issuance, established and ran a $200M+ bond funding program, and managed Treasury at a commercial lending FinTech company.
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