Pro
Maple Finance: Sweet and Steady
Key Insights
- Maple Finance is a leading decentralized finance (DeFi) protocol that provides undercollateralized on-chain loans to crypto institutions.
- Counterintuitively, Maple’s undercollateralized loans have had lower write-offs than most centralized finance (CeFi) lenders. This is because Maple’s due diligence has been more prudent without the safety net of collateral, while collateral held by CeFi was illiquid during the market crash.
- Lenders have the highest risk at the top of the market and the lowest risk at the bottom. With the worst hopefully behind us, Maple Finance has the pieces in place to succeed if and when the crypto market turns around.
Maple Finance is a lending protocol that allows large-centralized institutions to borrow undercollateralized loans from crypto lenders. Since its launch in May 2021, over $1.8 billion worth of loans has been originated through the protocol, with only a single default of $10 million in Q2 2022. Considering this year's events, with multiple centralized lenders having suffered significant losses, this is an incredible performance.
Protocol Design
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Kunal previously worked in equity research and now considers himself a financial analyst in crypto. He specializes in valuation and bottom-up analysis for Layer-1 and DeFi protocols because he has yet to learn of a way to value NFTs.
Mentioned Assets