A decentralized credit market enabled by blockchain technology is called Maple Finance.
The protocol's claims
According to the protocol's documentation (1), rather than mandating over-collateralization of loans, it permits administrators, referred to as "Pool Delegates," to issue loans from its lending pools based on risk-management criteria. However, the platform saw two significant defaults from platform borrowers after FTX's demise.
On Dec. 1, algo trading and market maker Auros Global missed their payment of 2,400 Wrapped Ether (wETH) following Alameda's liquidation, leading the loan to go into a five-day grace interval. According to a post by lender M11Credit, that grace period has expired, and the borrower has started to be charged penalties. Days later, on Dec. 6, cryptocurrency hedge firm Orthogonal Trading acknowledged that the demise of FTX had "severely damaged" them. This prompted M11Credit to send the fund a notice of default on its $36 million loans.
Introducing Maple 2.0.
— Maple (@maplefinance) December 14, 2022
Maple 2.0 is a fundamental overhaul of the smart contract architecture. The new contracts are modular and robust and will facilitate Maple bringing capital markets on-chain. pic.twitter.com/5GGsMXaXhv
With the "Maple 2.0" protocol upgrade, smart contracts will be upgraded to allow Pool Delegate to manage and settle defaults like this more swiftly. Previously, a borrower could only be declared in default on a loan once the grace period had expired and they had missed a payment. This meant that the collateral could not be sold even if the borrower acknowledged in advance that they couldn't make payments. A Pool Delegate will now be able to announce an early default if a borrower satisfies a condition of default, making the loan instantly due, according to Maple, who explained the platform's new capabilities in a blog post. (2)
Update on @Auros_global:
— M11 Credit (@M11Credit) December 11, 2022
We would like to update lenders in the wETH and USDC (Permissioned) pools on @maplefinance regarding the status of the loans issued to Auros.
All of the loans will enter arrears on-chain and begin incurring penalty interest.
(1/3)
The role of Pool delegates
Additionally, the Delegate can liquidate a loan when a borrower doesn't pay within the grace period, which allows all pooled lenders to suffer a loss right away while recovery efforts are made. There are additional improvements to the lending platform's quality of life features in the latest edition of Maple Finance. Previously, lenders had to wait a minimum of 30 days before requesting a withdrawal; today, withdrawals may be planned, prorated, and requested at any time. Their down payment
Pool delegates now contribute First Loss Capital, making them the victims of default first. The Maple team thinks this will better match the interests of pool delegates with those of lenders. Additionally, it introduces automatic compounding of interest, which means that money collected is immediately reinvested into the pool and eliminates the need for redepositing administration.
Implementing ERC-4626 standards, which permits more decentralized finance (DeFi) connections, collaborations, and better statistics and dashboards, are further enhancements. In response to recent failures, the crypto lending platform Maple Finance has released a significant protocol improvement that should make defaults and liquidation processes easier.
