Last updated: 14.00 EST 6/21/22
This article covers:
Steps taken by Orthogonal since 06/17/22 regarding Babel
Steps taken since 06/15/22 regarding 3AC
Steps taken since 06/13/22 regarding Celsius
Orthogonal has been in daily contact with Babel management since Babel halted withdrawals and is focused on protecting the interests of lenders. Celsius and 3AC do not borrow from Maple. Delegates continue active conversations with all Borrowers on their asset composition, and are confident with their exposure to 3AC and Celsius.
Published 14.00 EST 6/21/22
Update on Babel
Orthogonal acknowledges there is a $10M loan to Babel from the Orthogonal 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.
Orthogonal will share updates as there are material developments and Maple will continue to communicate transparently as we have throughout the past month.
Babel released a statement on 06/20/22 regarding their situation and liquidity planning: https://babel.finance/article-views.html?id=51
Published 12.30 EST 6/15/22
1. Update on Celsius
Celsius does not borrow from Maple. Celsius only lends capital from its own balance sheet. Over the past 72 hours we have determined that many borrowers on Maple have no or minimal exposure to Celsius. The ones that do, have borrowed from Celsius largely on an unsecured or undercollateralized basis, as a low portion of their book, with credit available elsewhere. Thus, we believe counterparty risk/contagion is mitigated.
2. No direct 3AC exposure
Over the past 24 hours, Maple and the pool delegates have reached out to borrowers regarding exposure to 3AC. Most borrowers are market/delta neutral and trade market volatility which means we believe they are unlikely to have direct exposure to 3AC. Thus far, borrowers we've spoken to have confirmed minimal exposure to 3AC. We will continue real-time monitoring through 1-1 conversations. As a next step, we will gather updated financial statements from borrowers for month end in line with our standard practice.
3. How Borrowers are assessed
Borrowers from Maple must meet rigorous underwriting criteria.
First, proceeds are mainly used for market/delta neutral strategies or high frequency arbitrage, meaning borrowers are trading large, highly liquid coins and generally does not take directional positions on market direction.
Second, borrowers must meet minimum balance sheet and equity size requirements. Pool Delegates are laser focused on determining borrower use of leverage, equity cushion, historical performance, cash flows and access to capital. Delegates will decline borrowers that do not meet these requirements.
Third, all borrowers are required to execute a Master Loan Agreement that that provides a venue for enforcement in the event of a default.
4. Maple mitigates risk in 4 ways
All loans are viewable on-chain. All loan terms and repayment statuses are shared here: https://app.maple.finance/#/earn. Important to note that there have been no missed payments across the loan book to date.
All pools operate independently from each other. Lenders in one pool do not have exposure to lenders or loans in another pool.
Pool Delegates do thorough financial due diligence and apply credit underwriting standards to manage loans to market/delta neutral borrowers with strong balance sheets and cash flow positive businesses.
Each borrower enters into loan agreements with legal recourse.
Published 16.00 EST 6/13/22
1. How Celsius uses Maple
Celsius does not borrow from Maple. Celsius only lends capital from its own balance sheet. Celsius has always been the single lender, and the pool has always been closed to outside depositors. The pool does not interact with or connect to any other pools on the platform. The Maple team provided an update on Twitter and community channels on 06/12/22 and will continue to update that thread and this article.
The pool can be viewed here: https://app.maple.finance/#/earn/pool/0xa1fe1b5fc23c2dab0c28d4cc09021014f30be8f1
2. Health of the loan book and steps taken by the Maple team
Pool delegates diligently underwrite and manage loans to market/delta neutral borrowers with strong balance sheets. These borrowers weathered March 2020 and May 2021 when Bitcoin and crypto markets fell over 50%, and many made substantial profits because they trade volatility. In more recent times, borrowers from Maple had no material exposure to UST/Luna and the Maple team and Pool Delegates monitored and managed that situation and provided rolling updates here.
Pool Delegates and the Maple team have and will continue to request additional information from borrowers over the coming days regarding their exposure to Celsius, stETH/liquid staking derivatives and recent performance. Updated financials have been requested and updates from borrowers continue to come through. At the time of writing, early indications point to a stable loan book.
We are diligently monitoring all activity, all borrowers have been communicative and forthright in providing information. All loans, loan terms and their repayment status are viewable on the WebApp: https://app.maple.finance/#/earn
3. Managing liquidity across the protocol
Market conditions are driving an increased demand for liquidity for both borrowers and lenders.
This behavior is expected as want for liquidity becomes greater in these markets.
Lenders request withdrawals to cover liabilities and/or jump at market opportunities, and the borrower set of market-makers request loans to trade volatility in the market.
Pool delegates managed liquidity through UST/Luna and all withdrawal and borrow requests were honored during that period.
Maple and the pool delegates are monitoring all requests, and are focused on growing capital available and sourcing the necessary liquidity for all protocol participants.
4. Risk-mitigation is built into the Maple protocol
DeFi is not without its risks, but Maple is built to mitigate risks and has rigorous due diligence processes in place to protect users of the protocol.
First, all pools operate independently from each other, lenders in one pool do not have exposure to lenders or loans in another pool so counterparty risk is mitigated.
Second, pool delegates uphold industry leading credit underwriting standards to underwrite and manage loans to market/delta neutral borrowers with strong balance sheets and cash flowing businesses.
Third, Maple loans are issued and viewable on-chain. All loan terms, and repayment statuses are shared here: https://app.maple.finance/#/earn. Important to note that there have been no payments considered late or missed across the loan book to date.
Last, and perhaps most importantly, each borrower enters into loan agreements with legal recourse.