Maple Finance 2.0 overhaul aimed at speeding up the default process

Maple Finance is a decentralized credit market powered by blockchain technology. Instead of requiring overcollateralization of loans, it instead allows managers, called “Pool Delegates” to issue loans from their lending pools based on a set of risk management criteria, according to the protocol’s documents.

However, in the wake of FTX’s collapse, the platform experienced two major defaults by borrowers on the platform.

On December 1, algo trading and market maker Auros Global missed the payment of 2,400 Wrapped Ether (wETH) following Alameda’s demise, causing the loan to enter a five-day grace period. That grace period has since expired and the borrower has begun to do so incur penalties, according to a post from lender M11Credit.

Days later, on December 6, crypto hedge fund Orthogonal Trading admitted to having been “severely affected by the collapse of FTX”, prompting M11Credit to issue the funds a default notice on $36 million in loans.

The new protocol overhaul, called “Maple 2.0” will upgrade its smart contracts so that defaults like these can be handled and resolved more quickly by the Pool Delegate.

Previously, loans could only be defaulted if a borrower missed a payment and the deadline expired. This meant that collateral could not be liquidated even if the borrower admitted in advance that they could not pay.

In a blog post explaining the platform’s new features, Maple said that in the event a borrower meets a condition of default, a Pool Delegate will now be able to declare an early default, which will bring the loan to pay immediately.

Furthermore, when a borrower fails to pay by the deadline, the delegate can liquidate the loan – meaning all lenders in the pool can realize a loss immediately while recovery is pursued, it added.

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The new version of Maple Finance also includes features intended to make quality of life changes to the lending platform.

Withdrawals can now be scheduled and prorated, and lenders can request withdrawals at any time, whereas previously they had to wait at least 30 days to withdraw after the deposit.

Pool delegates now provide First Loss Capital, making them the first to suffer in the event of a default. The Maple team believes that this will better align pool delegates’ interests with lenders’ interests.

It also introduces automatic compounding of interest so that interest earned is automatically reinvested in the pool, removing the administration of re-deposits.

Other changes include the introduction of ERC-4626 standards, which allow for more decentralized finance (DeFi) integrations and partnerships, as well as improved data and dashboards.

Crypto lending platform Maple Finance has unveiled a major protocol upgrade aimed at making default and liquidation procedures less cumbersome in the wake of recent defaults.