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Today, Maple Finance and Alameda Research launch the first on-chain syndicated loan vehicle in the decentralized finance (DeFi) space.
Built by blockchain capital marketplace Maple Finance, the new lending vehicle will be used by quantitative crypto trading firm Alameda Research, (founded in 2017 by FTX’s Sam Bankman-Fried), to lend crypto from a single-borrower lending pool to accredited non-U.S. institutions around the world.
For readers unfamiliar with the concept of a syndicated loan, it’s a loan that is traditionally provided by a group of lenders and coordinated through a bank. But, as readers are well aware, crypto is a decentralized space, so there isn’t a “middleman.”
Alameda Research is the sole borrower in the pool, and because it’s not exactly a plucky startup, the trading firm will be able to leverage its profile to get more competitive pricing in the future, as more lenders throw their hats in.
Alameda’s new platform currently has $25 million in committed capital, but that figure is planned to grow to $1 billion over the next year.
One of the advantages of DeFi over more traditional debt capital markets is the fact that Alameda can expand this figure at any time through more on-chain borrowing, rather than having to wade through months of bureaucracy for one-off transactions to come through.
CoinShares, Abra, and AscendEX are some of the first lenders contributing.
What is Maple Finance?
Maple Finance launched as an undercollateralized lending marketplace for institutional crypto investors. In May, it rolled out its first $17 million pool, which also included Alameda and CoinShares, among others.
The key advantage of Maple Finance over other lending protocols is that borrowers needn't provide more than 100% of the collateral to borrow an asset.
On MakerDAO, for example, users must deposit $1.50 in Ethereum for every $1 borrowed. With Maple Finance, terms between borrowers and so-called "pool delegates" are established based on the amount of collateral put up as well as the firm's level of credit.
Though nuanced, undercollateralized loans are a key piece of DeFi infrastructure. And as the sector continues heating up, attracting more institutions, undercollateralized lending could be crucial for further growth.
The decentralized finance (DeFi) space has enjoyed monumental growth on Ethereum of late alongside the rise of other, smart contract-enabled blockchains like Solana, Avalanche, and Binance Smart Chain.
According to DeFi Llama, Ethereum has a total of $171.84 billion locked up in various projects on the network, including mainstays like Curve, MakerDAO, Aave, and Uniswap to name a few.