This article follows an update from 9th November: https://maple.finance/news/update-from-maple-and-delegates-regarding-alameda-and-ftx/
Delegates remain confident in the creditworthiness of Borrowers, who held zero or immaterial amounts of FTT and limited positions on FTX. The past 6 months have stress-tested Borrowers, but many remain well capitalized businesses run by professional teams that continue to profit from volatile markets and withstand shocks. Maple and Delegates anticipate that Borrowers will service their loans as expected.
In a testament to the strength of their trading businesses, long-term Borrowers Folkvang and Nibbio closed all loans on Maple early, so as to ensure, according to Folkvang, that “everyone has access to their funds at a time when they most need it” and “to be a force for good in this industry”. A sentiment shared by Maple and Delegates.
Delegates took further steps to protect Lender capital by de-risking the loan book from the unknown second-order impacts of the FTX collapse. Last week 37 loans to 12 borrowers totalled $227M - this has since been reduced to 24 loans to 10 borrowers totalling $129M.
Credora took swift action to recall open-term loans on Maple Solana, and M11 Credit refinanced loans to creditworthy borrowers at 14 day tenors. Extending shorter duration loans that can be refinanced allows for greater liquidity and risk management necessary during these times. Open-term loans, shorter-duration loans and loan refinancing are product features launched with learnings from the ‘crunch’ in June.
Delegates continue to actively manage their loan books through conversations with Borrowers and on-chain data. Risk mitigants combined with strict onboarding criteria and recourse have returned 99%+ of all funds to Lenders across the protocol through a tumultuous 6 month period. As always, you can see all Borrowers, loan terms and status on the WebApp.
Delegates have greatly improved liquidity management since the last ‘crunch’ and withdrawals are expected to process without delay. At the time of writing, the cash balance of each pool exceeds the amount of withdrawals requested and we collectively look forward to welcoming all Lenders back when ready.
Long-term Lenders will notice a decrease in the current APY. Once all withdrawals are processed and Delegates get back to lending, loans are expected to be priced higher, likely in the range of 12-14% due to the scarcity of credit, providing increased risk-adjusted returns to Lenders.
The case for on-chain finance
The recent crash - prompted by what appears to be fraud, misuse of customer funds and lack of credit risk management - should prove the need for transparent, trustless, non-custodial financial services. This is DeFi’s time to shine. The strong credit performance in such a difficult market exemplifies the benefits of combining institutional credit underwriting expertise and the transparency of frictionless lending on Maple infrastructure. The case for on-chain finance has never been stronger.
Join the Community Call
For further information join our Community Call on Thursday 17th November.
Maple and Delegates M11 Credit and Orthogonal Credit will share full details on the steps that led to offboarding Alameda as a borrower months ago and how the loan book has been further de-risked from second-order impacts of the FTX collapse.
We’ll also discuss why the case for DeFi has never been stronger and what’s next for Maple and the pools. Save your seat and we look forward to seeing you there.
Last Edited 16 November 2022