Market Opportunity

Some of our recent research has been focused on projects like Ondo and IXSwap, which we highly recommend you check out. These studies highlight how Real World Assets are becoming a pivotal part of the cryptocurrency industry, with the market expected to reach up to $10 trillion by 2030. Major financial institutions like BlackRock, JP Morgan, and several institutions are already entering this space.

Source: Dune Analytics

A notable recent development was the issuance of a digital bond by the government of Slovenia—the first sovereign digital bond issuance in EMEA. This €30 million short-term bond was issued on the Neobonds platform, one of two digital asset platforms managed by BNP Paribas, France’s largest bank.

Additionally, CoinDesk recently reported that Coinbase is planning to launch a tokenized money market fund, which could potentially offer strong competition to BlackRock’s BUIDL token. Meanwhile, Superstate, a tokenized fund manager, has introduced an on-chain fund that provides basis trade yield. A “basis trade” involves buying a crypto asset in the spot market while simultaneously selling the futures product, locking in the difference.

As the saying goes, “Look at what they do, not what they say.” The moves being made in this sector clearly indicate its potential.

In today’s article, we will delve into Maple Finance, a decentralized credit marketplace that aims to revolutionize DeFi lending for institutional players.

The Protocol

Maple Finance is a platform that offers a concise set of undercollateralized on-chain lending options, allowing institutions and businesses to borrow money directly from lenders without needing a traditional bank. It operates on the blockchain, which means all transactions are transparent and secure. It’s designed to make borrowing and lending more efficient and accessible, especially for credit professionals.

Maple, founded in 2019 and officially launched in 2021, has originated over $4 billion in loans to date. The platform’s TVL has exceeded $300 million, and it has distributed nearly $60 million to liquidity providers. The native token, $MPL, currently ranks #330 on CoinGecko, with a market capitalization of $140 million and a fully diluted valuation of $180 million at the time of writing.

Source: Dune Analytics

Investors looking to earn yield can deposit their funds into Liquidity Pools on the Maple platform. These funds are used to back loans, and in return, investors receive LP tokens, representing their share of the pool and entitling them to a portion of the interest earned.

Pool Delegates, who are experienced credit professionals, manage the lending pools. They vet borrowers, negotiate loan terms, and ensure loans are handled according to the agreed-upon conditions.

Companies or institutions needing capital can apply for loans on Maple by creating a proposal and setting terms like interest rates, loan duration, and collateral. Loans on Maple are typically fixed-term, fixed-rate, and secured by collateral.

Currently, Maple and Syrup lending pools are offering higher yields compared to platforms like Ethena and Aave.

Source: Maple Finance

Lending and borrowing on Maple are governed by smart contracts. Although Maple offers permissioned lending, lenders must complete KYC verification and get approved to participate, ensuring compliance.

Each pool has a capacity limit, managed by the Pool Delegate, to balance the capital with borrower demand.

Borrowers negotiate terms with a Pool Delegate off-chain. Once terms are agreed upon, they submit a loan request on-chain, which the Delegate then funds. Smart contracts handle repayments, allowing borrowers to repay within the agreed terms.

For more details, you can access the technical whitepaper here.

Syrup: Maple’s Trojan Horse for Institutional Yield in DeFi

On May 28, 2024, Maple Finance launched Syrup, a new protocol aimed at bringing institutional yield to the DeFi sector. Syrup offers users permissionless access to secured institutional lending, blending Maple’s established lending infrastructure with the openness of DeFi. It provides real-world yields through overcollateralized loans (around 170%) to institutions, featuring fixed rates and short durations.

Some of Syrup benefits includes:

• Earn risk-adjusted returns from fully collateralized loans to major institutions.
• Access Maple’s robust lending system, which has facilitated $220M in corporate loans.
• Syrup’s LP tokens (syrupUSDC) integrate seamlessly with DeFi, offering additional utility in AMMs, money markets, and more.

Some of the medium-term goals outlined in Syrup’s roadmap include:

• Early Access Launch: Limited early access with sign-up codes, rewarding early users to build initial momentum.
• AMM Liquidity: Establish deep liquidity for syrupUSDC on AMMs like Balancer, enabling instant liquidity and collateral use.
• Expanded Asset Support: Launch additional assets like USDT, increasing Syrup’s utility and appeal across DeFi.
• Broader Integrations: Integrate syrupUSDC with major lending protocols like Aave or Pendle, unlocking use cases such as lending, borrowing, and yield strategies.

Within just a month of its launch, Syrup has reached $58.2 million in TVL, making up 17% of Maple’s total TVL. Syrup is set to drive significant growth for Maple in the DeFi space.

Source: Dune Analytics

MPL holders can convert their tokens to SYRUP on a 1:1 basis. The Maple Community approved MIP-09 in 2023 and the SYRUP token will adhere to all of the governance and tokenomics that was agreed in that proposal, including the number of tokens and inflation rate.

Currently, the Drips rewards campaign is boosting Syrup’s early growth ahead of the SYRUP token launch in Q4.

Team, Partnerships and Fundraising

The company was co-founded by Sidney Powell and Joe Flanagan.

Sidney Powell, now the CEO, is the visionary behind Maple Finance. With a background in institutional banking and credit markets, he saw the inefficiencies in traditional lending and leveraged blockchain technology to create a more transparent system. Before Maple, Sidney worked in structured credit at a major bank, gaining valuable insights into the needs of institutional borrowers and lenders.

Joe Flanagan, the operational backbone of Maple, brings a strong background in finance and technology, with previous roles including CFO at Axesstoday and Managing Director at Clover Advisory, where he specialized in managing complex financial products and operations.

The executive team also includes Matt Collum as CTO and Ryan O’Shea as COO.

Maple Finance has raised capital through various funding rounds and an Initial DEX Offering (IDO), attracting investors in the crypto and venture capital spaces.

• Seed Round (March 18, 2021) Maple Finance raised $1.4 million in its seed round, led by Polychain Capital. The initial token price was $0.50, achieving a peak ROI of 33.58x.
• IDO (April 28 – May 1, 2021) The IDO on Balancer raised $2.5 million, with the MPL token priced at $5.00. It reached an ATH ROI of 13.64x.
• Undisclosed Round (August 22, 2023) In its latest round, Maple Finance secured $5 million from investors like BlockTower Capital, Tioga Capital Partners, Framework Ventures, and others.

Source: Maple

Maple Finance has formed several strategic partnerships within the DeFi space to enhance its offerings and expand its ecosystem. Some of the most recent collaborations include:

• Jito Foundation (July 23, 2024): Maple partnered with Jito Foundation to allow lenders on Maple and Syrup Finance to access Jito’s MEV rewards.
• Exodus Wallet (July 16, 2024): Syrup Protocol, launched by Maple, partnered with Exodus Wallet, allowing users to earn 18% APY on USDC and double rewards, boosting engagement with high-yield DeFi options.
• Figment (May 14, 2024): Maple collaborated with Figment to introduce Solana and Ethereum staking on its platform, offering lenders additional rewards and more competitive rates for borrowers.
• Zodia Custody (Q3 2024): Maple teamed up with Zodia Custody to securely hold collateral on its platform, boosting security and credibility for institutional clients.
• Circle (November 28, 2023): Maple partnered with Circle to expand USDC adoption by integrating USDC into its lending pools, enhancing the bridge between traditional finance and DeFi.

Competitors

Maple Finance plays a role in the RWA movement in DeFi. This movement aims to bring real-world assets like real estate, commodities, invoices, or corporate debt onto the blockchain, allowing them to be tokenized, traded, and used in DeFi.

Maple Finance focuses on undercollateralized lending to institutional borrowers, such as businesses, sometimes using real-world assets as collateral or funding real-world operations.

While Maple offers lending and borrowing services, similar to Ethena and Aave, each platform has its own unique approach and unique yield strategies in DeFi:

• Maple Finance: Maple focuses on institutional lending, with secured loans backed by digital assets. The Syrup protocol provides broader access to these opportunities. Maple’s Blue Chip Secured pool uses BTC and ETH as collateral for stability, while its High Yield Secured pool generates higher returns by reinvesting collateral into staking and secured lending.
• Aave: Aave offers variable-rate loans to permissionless borrowers, with yields that can be volatile due to market fluctuations. Loans are non-recourse, meaning borrowers aren’t required to cover collateral shortfalls.
• Ethena: Ethena’s yield comes from the difference between spot and perpetual futures on BTC and ETH, making it highly variable and tied to market sentiment.

Source: Maple

In short, Maple’s yields tend to be more stable, while Aave and Ethena’s yields are more influenced by market movements.

Maple’s yields are more stable because they come from secured loans to institutional borrowers, backed by strong digital assets like BTC and ETH. The high-quality collateral and rigorous risk assessments reduce volatility. Maple’s multi-strategy approach, including staking and secured lending, adds further stability, unlike Aave or Ethena, where yields are more affected by market movements.

On the other hand, Maple’s focus on working with institutions and ensuring compliance can limit its ability to offer permissionless access, potentially putting it behind more flexible protocols like Aave in that regard.

Maple vs. Abra: A Comparative Analysis

Abra is a financial platform specializing in cryptocurrency investment services. As a registered investment advisor (RIA), it offers a secure custodial platform where clients can earn yields from DeFi protocols like Aave and Compound. Abra also provides a range of traditional finance services, leveraging its expertise in both DeFi and institutional risk management to assist clients with trading, lending, borrowing, and investing.

Source: Maple

Maple offers higher yields, with some pools delivering 10-20%, compared to Abra’s typical 6-7%, which are sourced from platforms like Aave and Compound. Maple’s non-custodial, fully on-chain model brings more transparency, allowing lenders to directly verify loans and maintain control over their assets. This structure ensures over-collateralization and reduces counterparty risk. However, Maple’s approach can be complex, requiring users to have a good understanding of DeFi and on-chain processes. It’s best suited for those comfortable navigating the DeFi space and managing their own assets.

Abra, on the other hand, offers a more user-friendly experience for traditional investors. Its RIA status is an advantage for users who prefer a hands-off approach and value the security of a regulated entity. However, the custodial nature of Abra’s service introduces an additional layer between the lender and the yield source, potentially affecting returns and transparency. Yields from Abra are generally lower due to the overhead associated with their custodial structure and RIA compliance requirements.

Maple is ideal for those seeking higher yields, direct asset control, and full transparency, though it demands more involvement. Abra, in contrast, is better suited for investors looking for a more accessible, managed experience, albeit with lower returns and less transparency.

Tokenomics

Maple Finance’s tokenomics are designed to support the platform’s decentralized lending infrastructure and incentivize various stakeholders. The Maple ecosystem revolves around its native token, MPL, which plays a central role in governance, staking, and rewards.

MPL Token Utility

Governance: MPL holders can participate in the governance of the Maple protocol, influencing decisions such as protocol upgrades, fee structures, and risk parameters.

Staking: MPL can be staked to earn rewards. Stakers often participate in the protocol’s decision-making process and share in the fees generated by the platform. Stakers who lock up their MPL tokens can claim 50% of the protocol’s revenues in the form of MPL rewards from Open Market Buybacks. While this creates natural buying pressure for the token, it relies on stakers who lock up their funds for yield. For this, Maple launched xMPL, letting MPL holders stake their tokens for xMPL. This gives them a share of protocol revenues and access to features like governance voting and future Pool Cover. However, distribution is paused as revenues aren’t currently covering operating expenses.

Incentives and Rewards: MPL tokens are used to incentivize liquidity providers, borrowers, and lenders on the platform, as stakers are not rewarded in stablecoins or major cryptocurrencies like ETH. These rewards encourage active participation and enhance liquidity within Maple’s lending pools.

Distribution

Initially, Maple’s total supply was capped at 10 million MPL tokens, with no additional tokens to be created. Of these, 5% were distributed via Balancer’s liquidity bootstrapping pool. Currently, 7.83 million MPL tokens are in circulation, representing 78.3% of the total supply. The Token Generation Event occurred on April 28, 2021, and the tokens were allocated among different groups as detailed below.

Source: Maple

However, In September 2023, the DAO approved MIP-009, which introduces 10% new MPL tokens over three years and a 5% annual emission to the Maple Treasury. This move aims to recapitalize the treasury, support growth, and boost MPL’s utility. The token roadmap focuses on commercial growth and new MPL utility, with plans to expand into APAC, LATAM, and Europe to attract institutional clients. Diversifying into trade finance and energy finance, along with partnerships with Web3 services, will help grow their marketplace and lending pools. For MPL utility, they plan to offer ecosystem grants to attract top credit talent, encourage Delegates to buy and stake MPL, provide borrower fee rebates, reduce lender risk through limited guarantees, and enhance token liquidity and utility within DeFi ecosystems.

Source: Maple

The MPL token operates on the Ethereum network under the contract address 0x33349B282065b0284d756F0577FB39c158F935e6.

Since late 2023, MPL’s price has been bouncing between $10, a crucial support level, and $22, acting as a strong resistance. So far, the fees generated and distributed to MPL holders haven’t been sufficient to drive a notable increase in the token’s value.

Source: TradingView

Bubblemaps confirms that the token distribution remains relatively balanced and fair. Given the recent altcoin crash, smart money holders have started selling MPL, yet the price has managed to stay within its range, indicating that there hasn’t been a complete loss of interest in the project. Here’s a look at the smart money dashboard for MPL on Nansen, highlighting wallets or entities that are highly successful or influential in the crypto space. However, when analyzing smart money, it’s crucial to consider timing, context, and the potential for misinterpretation, as past success doesn’t guarantee future results.

Source: Nansen

Bullish Fundamental Factors

• Maple’s lending pools offer high yields, between 10-20%, which are significantly above many other DeFi platforms, attracting institutional investors seeking strong returns.
• The platform’s Total Value Locked (TVL) has surpassed $300 million, with growing loan volumes and nearly $60 million already paid out to liquidity providers.
• Maple’s non-custodial, fully on-chain model ensures direct asset control and complete transparency, reducing counterparty risk and building trust with institutional investors.
• The platform is tailored for institutional players, offering undercollateralized loans that align with the growing Real World Assets (RWA) narrative, drawing interest from traditional finance (TradFi) institutions.
• Syrup’s introduction has expanded Maple’s offerings by providing institutional yield opportunities in DeFi, driving further growth and attracting significant TVL.
• With a market cap of $141 million and a fully diluted valuation of $181 million, Maple presents an attractive investment for those seeking higher risk-to-reward opportunities. Future listings on larger exchanges could further enhance its reach.

Bearish Fundamental Factors

• Maple’s platform requires users to have a strong understanding of DeFi and on-chain processes, which can be a barrier for less experienced users and may limit broader adoption.
• The focus on institutional lending and compliance restricts Maple’s ability to offer permissionless access, making it less flexible compared to other DeFi platforms like Aave, which offer more open and user-friendly services.
• While Maple’s yields are generally stable, they remain tied to the performance of underlying collateral and the broader DeFi market, making the platform vulnerable to significant downturns that could affect loan repayments and overall stability. Even though Maple has conducted internal and external audits with important firms, as the value held by Maple’s smart contracts increases, the risk of vulnerabilities also grows.
• The recent increase in the MPL token’s supply and reliance on staking for rewards might dilute its value, potentially putting downward pressure on the price, especially if staking rewards do not adequately cover operating expenses. Actually, Maple Finance has not yet reached a point where loan revenues consistently exceed operational expenses. As a result, MPL holders face uncertain value accrual, with most of the network’s value currently benefiting liquidity providers rather than tokenholders.
• Maple’s focus on institutional clients may attract increased regulatory scrutiny, particularly as governments and regulatory bodies become more active in the DeFi space. This could lead to higher compliance costs or operational restrictions, posing challenges for the platform’s growth.
• The RWA market is crowded, with competition from both traditional finance and Web3 companies. While Maple has done well in institutional lending, its future growth depends on continued innovation and finding the right market fit for new services.

Closing Thoughts

Maple Finance emerges as a unique player in the DeFi landscape by addressing the limitations of traditional overcollateralized lending. While platforms like Aave and others offer secure but restrictive loans, Maple’s approach to undercollateralized lending provides institutions with greater access to capital. This model not only enhances capital efficiency but also opens the door for more participants, from individual lenders to crypto-native institutions, to engage in the lending market. Despite the inherent risks of undercollateralized loans, Maple’s rigorous due diligence and support from reputable institutional investors, position it as a promising solution in a highly competitive market. As the DeFi sector continues to evolve, Maple’s ability to innovate and maintain strong partnerships will be crucial for its growth and success in bridging the gap between traditional finance and DeFi.

Disclaimer

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