An exploration into Maple, a decentralised credit protocol

Greythorn Asset Management
4 min readMay 12, 2023

Maple offers a unique solution for institutions to obtain under-collateralized loans or borrow without high collateral requirements, unlike platforms such as Aave. By using the Maple platform, liquidity providers can lend to premium borrowers instead of any regular DeFi user.

The platform’s pools are managed by experienced investors known as Delegates, who conduct due diligence and negotiate loan terms with borrowers. These Delegates include firms such as Maven 11 and Orthogonal Trading, and borrowers range from Amber, Folkvang, Wintermute, and MGNR.

The Maple Protocol employs a native token, MPL, which serves several purposes such as governance, sharing in fee revenue, and staking insurance to liquidity pools. Holders of MPL tokens can vote on whether to buy back MPL, fund operations and growth, or pay fees as a dividend. To receive protocol revenue, MPL tokens must be staked. The current staking APY on Ethereum stands at 0% as operating expenses exceed revenue..

Lending APYs on Maple currently range from 5–10%, offering an attractive rate of return for liquidity providers. On the other hand, borrowers pay an annualized rate of 0.99% for each loan they take, with one-third going to the Delegate and the rest to the treasury.

The founders of Maple come from Australia and have backgrounds in accounting and finance, particularly in credit markets, having worked previously at NAB and PwC. Overall, Maple’s innovative approach to credit protocol offers a viable alternative for institutions seeking under-collateralized loans and for liquidity providers seeking attractive returns on their investments.

Use Cases:

  • Governance
  • Revenue Sharing
  • Staking Insurance

Token: $MPL

TVL: ~$1.88m

Market Cap: ~$59.6m

FDV: $80.2m

Tokenomics (Initial)

Figure 1: MPL Tokenomics, Source: Greythorn Research Team Data: Protocol Docs

Comparables:

Token: $TRU

TVL: ~$1.86m

Market Cap: ~$63.3m

FDV: $74.4m

Bullish Fundamentals:

  1. It allows crypto institutions to leverage their reputations & gain access to loans at more favourable terms like in TradFi, a service that the mature markets require.
  2. New products surrounding carbon credits are in the process of being introduced.
  3. High Process Quality Score from DeFi Safety.
Figure 2: Maple Finance Score on DeFi Safety, Source: Greythorn Research Team, Data: DeFi Safety

Bearish Fundamentals:

  1. Borrowers have to KYC, which is necessary considering the service, however, ultimately defeating the purpose of DeFi.
  2. Operating expenses exceed revenue, meaning that there is no MPL to purchase & redistribute to stakers.
  3. Aave is looking to enter the space in the medium term, which may affect the market share that Maple holds.
  4. Any black-swan defaults may have consequences on protocol health & downside liquidity as observed during the default of Alameda Research.

Closing Remarks

Maple Finance offers a unique and innovative solution to the challenges faced by crypto institutions seeking under-collateralized loans. Additionally, the team’s experience in credit lending across traditional finance and the platform’s high process quality score from DeFi Safety adds to its appeal. However, there are some potential risks to consider. Borrowers have to go through the KYC process, which may detract from the platform’s decentralised nature. The operating expenses currently exceed revenue, meaning MPL tokens cannot be purchased and redistributed to stakers. Finally, any black-swan defaults can have consequences on protocol health and downside liquidity, as observed during the default of Alameda Research.

References

  • CoinGecko. 2023. Cryptocurrency Prices, Charts, and Crypto Market Cap | CoinGecko. [online] Available at: <https://www.coingecko.com/> [Accessed 16 March 2023].
  • CoinMarketCap. 2023. Cryptocurrency Prices, Charts And Market Capitalizations | CoinMarketCap. [online] Available at: <https://coinmarketcap.com/> [Accessed 20 March 2023].
  • DefiLlama. 2023. DefiLlama. [online] Available at: <https://defillama.com/> [Accessed 16 March 2023]. Maple Finance (2023)
  • Maple. Available at: https://www.maple.finance/ (Accessed: April 25, 2023).

Important notice and disclaimer

This presentation has been prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (Greythorn). The information in this presentation should be regarded as general information only rather than investment advice and financial advice. It is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. In preparing this document Greythorn did not take into account the investment objectives, financial circumstance or particular needs of any recipient who receives or reads it. Before making any investment decisions, recipients of this presentation should consider their own personal circumstances and seek professional advice from their accountant, lawyer or other professional adviser. This presentation contains statements, opinions, projections, forecasts and other material (forward looking statements), based on various assumptions. Greythorn is not obliged to update the information. Those assumptions may or may not prove to be correct. None of Greythorn, its officers, employees, agents, advisers or any other person named in this presentation makes any representation as to the accuracy or likelihood of fulfilment of any forward looking statements or any of the assumptions upon which they are based. Greythorn and its officers, employees, agents and advisers give no warranty, representation or guarantee as to the accuracy, completeness or reliability of the information contained in this presentation. None of Greythorn and its officers, employees, agents and advisers accept, to the extent permitted by law, responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this presentation. This presentation is the property of Greythorn. By receiving this presentation, the recipient agrees to keep its content confidential and agrees not to copy, supply, disseminate or disclose any information in relation to its content without written consent.

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