DeFi platform Maple Finance offers syndicated loans to Alameda Research

DeFi platform Maple Finance has created another pool of authorized lending, designed to make it easier for institutional investors to lend money.

This particular lending pool has a single borrower: Alameda Research, which has committed to borrowing $25 million from the pool — with plans to increase that amount to $1 billion within a year. The pool will become visible today but will not start operating until Friday.

Only certain non-US accredited institutions are allowed to lend funds within this pool. This will initially be CoinShares, Abra and Ascendex. These participants must go through KYC and AML procedures before entering the pool.

A syndicated loan is a loan where a group of financial institutions lends money to a single borrower. This is a first for Maple Finance, which typically has multiple parties on either side of the borrowing and lending spectrum.

What is Maple Finance?

Maple Finance is what is called an authorized DeFi platform.

The central idea is to take DeFi and its ability to let parties lend and borrow from each other, and introduce due diligence requirements. This policy is designed to allow institutions that have high compliance requirements to participate.

“There is growing institutional interest in participating in the challenge. They want to get a return but don’t know how to do it in a compliant way and don’t trust the existing protocols for that,” said Sid Powell, co-founder of Maple Finance.

It has worked so far. The total liquidity of all its pools has now passed the $300 million mark. However, this is only a fraction of the permissionless DeFi lending market, where 32 platforms take care of 52 billion dollars in funds.

Maple Finance started with two borrowing and lending pools where anyone can lend, but only to a set of businesses that have passed financial due diligence and KYC procedures. Typically, these loans are under-collateralized as they are lent to established market makers, such as Wintermute, Alameda Research, and Amber Group. Borrowing rates are around 8-12% and 20% interest is charged on fees.

The two pools are identical but are each managed by different pool delegates. These are entities that handle financial due diligence and whitelist borrowers. One pool is managed by Orthogonal Trading and the other by Maven 11 Capital. These delegates receive half of the fee, with the rest going to a staking reserve – funds that can be used in the event a borrower defaults.

In November, Maple Finance launched its first authorized pool, where borrowers and lenders must go through KYC procedures. This is in partnership with BlockTower Capital and Genesis Trading.

This new pool with Alameda goes one step further by limiting the borrower side to just one borrower, Alameda. Maple Finance says this could lead to more competitive pricing and more volume.

“The crypto trading landscape has evolved very rapidly over the past few years, and we expect it to continue to do so. The flexibility that comes with a decentralized on-chain lending platform like this helps Alameda adapt to this landscape, and we look forward to seeing it grow,” said Alameda Research Co-CEO Sam Trabucco.

The platform continues to avoid the United States in its services. As Powell told The Block, “All of our borrowers borrow from non-US entities. Mainly UK, Hong Kong, Singapore, BVI, Caymans.

While authorized DeFi lending is still in its infancy, the competition is starting to heat up. DeFi lending protocol Aave, which manages $14.5 billion in cryptocurrency, is about to launch its own licensed lending platform, known as Aave Arc.

© 2022 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended for use as legal, tax, investment, financial or other advice.

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