Crypto Lender Maple Finance Joins List Of Platforms Facing Liquidity Crunch

Maple Finance is the latest member to join the growing list of crypto lending platforms to face liquidity issues.

Bishal Kumar Chanda3 min read
Crypto Lender Maple Finance Joins List Of Platforms Facing Liquidity Crunch

Maple Finance is the latest member to join the growing list of crypto lending platforms to face liquidity issues. On June 21, the company reported, “There may be instances where there is insufficient cash in pools.”

Furthermore, Maple Finance published an update saying, “lenders must wait for borrower repayments.”

Maple Finance Liquidity Problem

“As loans mature over the coming weeks, Borrower repayments will increase the available capital in the pools that can then be withdrawn by Lenders,” the company said. “Lenders will continue to earn interest and MPL rewards during this time.”

According to a spokesperson from Maple Finance, delegates managing the liquidity pools plans to service all withdrawals over the “coming weeks.” Notably, it is similar to how the lending platform handled withdrawals during the Terra ecosystem collapse in May.

Meanwhile, the crypto lender also explained how users could mitigate risks. Maple said in the note that the company’s lending pools and activities are publicly available. Previously, the company reported over $1.5 billion in loans since it started.

Maple Finance’s Exposure to Celsius Network, Babel Finance and 3AC

Maple has assured its lenders of not having any direct exposure to any other crypto firm facing liquidity issues.

In a press update, Maple revealed that Celsius Network does not borrow from its platform. In fact, the now embattled crypto lender Celsius is the only lender in the pool it operates.

Maple's connection with Celsius

Regarding Three Arrows Capital, Maple has determined, “Most borrowers are market/delta neutral and trade market volatility which means we believe they are unlikely to have direct exposure to 3AC.”

However, crypto hedge fund Orthogonal acknowledged giving a $10 million loan to Babel Finance from its USDC pool on Maple. “Orthogonal has been in daily contact with Babel management since Babel halted withdrawals and is focused on protecting the interests of lenders,” Maple Finance Tweeted on Tuesday.

Orthogonal's $10 million loan to Babel Finance

The news comes as investors speculate on the future of embattled crypto firms like Babel Finance, Celsius Network, and Three Arrows Capital. The potential contagion risks will only increase as liquidity pressures rise and lenders try to avoid runs.

“There is no easy solution, but more robust liquidity is a good starting place for crypto institutions under stress,” said blockchain infrastructure company Swarms’ co-founder, Timo Lehes. “The US Fed is holding its latest banking stress test later this week, which is a timely reminder that this liquidity is only really organizable with some sort of oversight.”

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