Maple Finance released version 2.0 a week after a $36 million default on the platform. The model upgrade emphasizes flexibility of borrowers and improved risk management. Unsecured lender Maple Finance has updated its standards in the second version to open up the lending process to more corporate lenders, including non-crypto companies.
With this new update, called Maple 2.0, the team hopes to reduce the risks associated with its work resulting from the concentration of the company. Currently, many lending services in Maple include crypto companies and traders in the digital space, which Maple said exposed the system to the risk of contamination from the failure of the FTX exchange.
Maple Finance is a leveraged system that allows certified businesses to get collateral-free loans. The company’s operation is different from crypto-lending systems like Aave, where each loan is secured by a collateral pass. In addition, Maple does not take credit risk itself since it provides the loan facility while other qualified companies called “Maple delegates” provide the loan pool.
Anyone can invest in Maple Pool and earn interest, but it is up to agents to check the borrower’s credit. Last week, an agent called M11 suffered $36 million from the crypto company Orthogonal Trading, which borrowed from the pool managed by M11 and Maple. Orthogonal said it invested in the FTX currency exchange.
The orthogonal default has raised doubts among crypto industry players about the potential of unsecured lending. However, the CEO of Maple says that unsecured lending is essential to bring players from the multi-billion dollar capital market to the blockchain.
“Maple was designed to focus on corporate lenders and corporate borrowers,” said Maple CEO and founder Sidney Powell. “I know that unsecured lending is not a popular thing in this undivided financial opportunity. But that’s how a lot of corporate finance works, you know, Apple isn’t going to put in a bunch of contracts to use borrowed from the bank.”
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Adjustment of risk parameters
Instead of exiting those lending practices, Powell said Maple will focus on better risk management for its agents, which is the main driver of its latest update. The platform also wants to attract more representatives with different domain expertise.
After the new update, the company said that its representatives – who also work as underwriters – will adopt a better risk system and the ability to monitor capital. “Maple 2.0 is a complete overhaul of our smart contract infrastructure, with a new web application and experience for interacting with those smart contracts,” Powell said.
The update also introduced several technical improvements that were not available before. For example, Maple introduced a new default method rather than immediate. If the borrower fails to meet the terms of the agreement, the pool agent can declare a first default which makes the loan immediate. If payment is not made within the grace period, the agent may default on the loan and all borrowers in the pool will immediately realize a loss while collection efforts continue.
Another improvement is that Maple will allow lenders to deposit money and request to withdraw it from the platform at any time without waiting for the 30 capital lock period to expire. Outside of crypto, Maple’s team sees opportunities to lend to fintech companies looking to make early payments. The company said it is receiving attention from major players in banks and other financial institutions that want to lend money on the platform, but did not disclose specific names.
