Crypto lender Maple Finance latest to warn of ‘insufficient liquidity’ amid market turmoil

  • The news comes as Orthogonal Trading admits there is a $10 million loan to Babel Finance from the Orthogonal USD coin pool on Maple
  • Maple Finance lent more than it borrowed – the company reports just over $1.5 billion in loans and about $929 million in deposits

Maple Finance is the latest crypto lending platform to face liquidity pressures, the company announced on Tuesday.

“There may be instances where there is insufficient liquidity in the pools,” the company wrote in an updated note Tuesday.

Maple Finance lenders must await repayments from borrowers, the company said.

“As loans mature over the coming weeks, borrower repayments will increase available capital in pools which can then be drawn down by lenders,” the note said. “Lenders will continue to earn interest and MPL [Maple token] rewards during this period.

Delegates, who manage the liquidity pools on Maple, plan to handle all withdrawals over the “coming weeks,” similar to how the lender handled withdrawals when Terra USD crashed in May. said a Maple Finance spokesperson.

“By design of the protocol, money can only be withdrawn when it is available – we have not frozen withdrawals,” the spokesperson said. “Cash continues to flow in from deposits and redemptions, so it should balance out in the near future. [We] felt it was important to share the news with protocol participants in advance.

Maple Finance’s loan pools and activity are publicly available, the company said in the memo. Currently, Maple Finance has lent more than it has borrowed. The company reports just over $1.5 billion in loans and about $929 million in deposits.

The news comes as investors continue to speculate on the future of Babel Finance after the crypto lender revealed liquidity pressures and halted withdrawals following the collapse of others in the space including Celsius and Three Arrows Capital.

Orthogonal Trading, a cryptocurrency hedge fund, has acknowledged that there is a $10 million loan to Babel Finance from the Orthogonal USD coin 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 said in a statement. Tweeter Tuesday.

Maple’s warning comes as members of the cryptocurrency industry worry about potential contagion risks, which will only increase as liquidity pressures continue and lenders try to dodge. avoid shopping.

“There is no easy solution, but more robust liquidity is a good starting point for struggling crypto institutions,” said Timo Lehes, co-founder of blockchain infrastructure firm Swarms. “The U.S. Fed is holding its final banking stress test later this week, which is a timely reminder that this liquidity is only really arrangable with some kind of oversight.”

The situation highlights the need for greater regulatory oversight of the industry, Lehes added.


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  • Casey Wagner

    blockages

    Senior Reporter

    Casey Wagner is a New York-based business journalist who covers regulation, legislation, digital asset investment firms, market structure, central banks and governments, and CBDCs. Prior to joining Blockworks, she reported on markets at Bloomberg News. She graduated from the University of Virginia with a degree in media studies. Contact Casey via email at [email protected]

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