One of the biggest crypto lending and trading firms, Genesis, announced investing $7.5 million into Maple's Solana-based lending platform. Also, this marks the further expansion of Genesis' presence in the decentralized finance (DeFi) world.
"Maple Solana allows Genesis to combine aspects of traditional finance and DeFi. We are creating financing options for firms who need capital to trade, with the infrastructure required in traditional finance and the efficiency DeFi offers." Genesis co-head Matt Ballensweig commented. "Maple has created a frictionless way to settle loans to these businesses."
With the investment, Genesis has become the first centralized crypto lender to serve as a pool delegate for Maple Solana. Moreover, Genesis will be the sole capital provider with a $75 million investment, making it the largest starting pool size on Maple Finance.
Notably, the $75 million investment is just a tiny fraction of Genesis' total loan book. As of March 2022, it stood above $44 billion. Further, every month the firm originates tens of billions of dollars worth of crypto loans through its subsidiary, Genesis Capital.
Crypto Firms Moving Towards Decentralized Finance
The investment in Maple Finance shows how large crypto firms have started turning to decentralized finance for crypto lending and trading. In this case, it's the Solana network.
Furthermore, Genesis stated that running part of their loan book through Maple's infrastructure considerably lowers their operating costs. This is done by replacing traditional software tools with on-chain ones.
Unlike traditional markets like Wall Street, the entry barrier of Maple's ecosystem is much lower. In fact, any "sophisticated" underwriter can form a pool on Maple. Also, borrowers go through a due diligence process on the platform, overseen by pool delegates to mitigate risks.
Maple founder Sid Powell explained, "We fully expect most of the large CeFi players in crypto to utilize Maple's infrastructure to enhance their on-chain lending businesses over the next year."
The crypto industry is a volatile market, and even Bitcoin's price has declined this year by 30%. However, Maple claims that none of its borrowers have defaulted on interest payments since its inception in May 2021.
What is Maple Solana?
Earlier this year, Maple announced launching an undercollateralized lending protocol on the Solana blockchain, called Maple Solana. It offers undercollateralized loans to institutional borrowers on Solana through a network of pool delegates.
An April blog asserted that it has already "originated over $1.2 billion in loans and currently." Maple Solana aims to "bring Maple's on-chain capital-market infrastructure to scale the Solana ecosystem" and handle the Solana network's finance needs.
Celsius Network x Maple Finance
In March 2022, crypto lending platform Celsius Network announced committing $30 million worth of wETH to Maple Finance's liquidity pool. Celsius aimed to expose its large capital pools to yield generated by firms like Maple Finance from this link-up.
While the liquidity pool started at $30 million, Maple's CEO believes it'll be worth $500 million to $1 billion in a year.