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Institutional Lending Protocol Maple Finance Expands To Solana
Maple is singularly focused on building a $100B company and crypto’s largest capital network.
Himanshu S.
8:07 25th Apr, 2022
Adoption

On a mission to reimagine capital markets through digital assets and blockchain, Maple Finance finally launches on Solana on April 25.

The team unveiled the launch date on April 23 via Twitter. Having launched in May 2021 on Ethereum, Maple has enabled over $1.2 billion in loans to institutional borrowers and generated over $20 million in interest. Moreover, Maple made its first profit in Q1 2022 by leveraging a growing appetite for undercollateralized lending.

Combining Maple's product with Solana's scalability, the company intends to go multi-chain and originate $1 billion in loans this year. Quinn Barry, Head of Maple Solana, shared some of his thoughts about the move in Maple’s blog on March 21:

“Our goals for Maple Solana are clear: combine Maple’s beautiful product with the scalable nature of the Solana blockchain.” writes Quinn. “Make the product accessible to more users through lower fees and onboard new partners to grow value in the Solana ecosystem. Bring a brand-new primitive to Solana, and scale composably through integrations with Solana-native apps.”

Undercollateralized Loans: 100x Upside?

According to a February 23 publication by the Institute of International Finance (IIF), the global debt reached a record high of $303 trillion, of which the vast majority are undercollateralized loans. Considering that 99% of on-chain loans are overcollateralized, DeFi protocols have a massive opportunity to target mainstream lending if they offer a safe and efficient solution that brings undercollateralized lending on-chain.

For this reason, undercollateralized loans might be one of the leading crypto narratives in the next couple of years. Additionally, it could enable DeFi to penetrate the entire lending industry, with applications in mortgages, insurance, credit cards, etc.

On the same note, a thread from Cosmo Jiang explains how Maple solves two significant barriers that slow down the growth of DeFi lending:

“DeFi lending today uses over-collateralization to solve for permissionless lending, but this is not capital efficient. Maple´s de-anonymized underwriting creates credit and allows for undercollateralized lending,” tweeted Jiang. “TradFi adoption of DeFi has been slow because of KYC [Know your customer] requirements. Maple´s permissioned lending/borrowing pools help TradFi GCs [general collaterals], and Risk depts get comfortable.”

There are also risks associated with undercollateralized lending solutions. So far, there have been no defaults on Maple, and it’s yet to be seen how the protocol would react if there is one.

Check out Web3Wire’s interview with Maple Finance to catch up on the exciting things happening with the team, the story about building on Solana, the success on Ethereum, and their ambitious plans for the rest of the year.

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