Huge Risk to Maple Finance due to the Sour Debt of $54 Million

The largest unsecured crypto lending platform, Maple Finance is facing a massive debt of $54 million crisis while upgrading in its system.

Firm merely started in May 2021 to become a decentralized credit marketplace for cryptocurrencies, where both borrowing and lending can take place combinedly. As per the data over Maple Finance official website, it has issued over $1,793,867,764 loans and a total $114,767,101 deposit.

Walter Teng, vice president of digital assets at Fundstrat, a market research company, stated that “Uncollateralized loans in DeFi are still reliant on centralized parties for underwriting, antithetical to the ethos of transparency and decentralization.”

Maple Finance touts about them as, that “On Maple, credit professionals manage fast-flowing lending businesses where pooled capital is lent to a wide range of institutional borrowers to fund business growth and operations. An ever-expanding range of liquidity pools are open to lenders.”

As per the media reports, Maple finance had defaulted almost $36 million of loans along with $18 million distressed in a couple of weeks. Also, it has now total 66% of soured debt unpaid in the Maple’s four active lending pools. Some borrowers felt that the recent situation is due to the bankruptcy filing of Sam Bankman-Fried’s crypto exchange FTX under Chapter 11 on November 11.

An anonymous user complained at the Maple’s Discount channel, that “If arbitrary extensions are given, what is the point of using blockchain tech other than to watch the goal post move?”

A boom in crypto lending has made Maple growing loans amount to all over $900 million this year. Also, the crypto lender became a usual name among crypto trading firms and other market players to facilitate. Maple was also in the limelight in March for raising $1.4 million for its Goodwill in space of DeFi crypto lending platforms.

At the same time, Maple Finance co-founder Sid Powell noted in his statement, that “The launch of our first pool will be a significant moment for DeFi, enabling institutions, sophisticated investors and individuals to gain access to a stable, underlying yield that is generated from crypto-focused companies that are profitable and reputable.”

Previously this year in July, the Luna Terra crash led to the continuation of whopping losses and a crypto credit crunch, with its total loans and deposits going down with a sharp rate. As per the sources suggest, after the FTX crash, the unpaid loans have soared to over $82 million in the last month. “We are far from perfect,” as stated by Maple co-founder Joe Flanagen, “We are continuing to build for the future.”

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing