Maple — the world’s first crypto bond platform. It enables users of DeFi lending platforms to issue crypto bonds (aka Maple SmartBonds) secured by their crypto assets.
As DeFi lending expands, users will be able to create banks which issue bonds to raise money for lending to customers. With one tiny catch: they’re crypto banks, selling crypto bonds to global investors and using the proceeds to give crypto loans to any user with an internet connection. Ethereum will be home to the world’s first crypto capital market.
Maple’s MVP is nearly finalised and is going through private testing. The public Beta product is expected to be released in the next two weeks and will integrate with Compound. With Maple’s protocol, use your cDai as collateral to 1) create SmartBonds to borrow and speculate on interest rates or, 2) invest in SmartBonds to lock in a fixed interest return.
What does Maple actually do?
Marketplace
Maple is a decentralised application which lets users create or invest in crypto bonds (SmartBonds). Maple is a two-sided marketplace with two types of users:
- Supply: Issuers who create the bonds to borrow money; and
- Demand: Investors who buy the bonds to earn interest.
The SmartBonds
The Maple SmartBonds are ERC20 tokens, paid for with Dai, which are 100% collateralised by interest-earning crypto assets. Each issuance of SmartBonds is collateralised by a unique basket of collateral staked by the Issuer (borrower). The Issuer retains Equity in the collateral so they have skin in the game (normally 10–20%) while Investors buy the SmartBonds.
Our MVP is integrated with Compound, so the collateral assets are cDai, which is a digital asset earning interest for the holder.
The Maple smart contract controls the cDai collateral to protect Investors so that it isn’t redeemed until the bonds are due to be repaid. Maple SmartBonds earn fixed rate interest for the Investor with the initial investment plus interest being paid in full when the bond matures. The way it works is that the collateral earns interest, which gets collected by the Maple smart contract, and that interest goes towards paying the Investors their fixed return with the Issuer keeping the remainder as profit.
Big Deal, What’s Magic About It?
Two things:
- Maple replaces lending collateralised by cash with lending collateralised by assets. DeFi needs this! It is not efficient for businesses to set aside cash when they want loans for growth. Maple lets businesses borrow against revenue-generating assets so they can reinvest the debt and grow. We are starting with digital loans as revenue-generating assets but the platform and technology can expand to subscriptions, profit sharing tokens and much more.
- Maple gives Investors different risk grade options. Until now you had one collateralisation level (150%) and one interest rate for everyone supplying on DeFi. Maple changes that. Now, more conservative investors can choose lower risk bonds (more collateral, lower interest) that get repaid first. More adventurous investors can choose medium risk bonds (less collateral, higher interest) getting repaid later.
Current use cases
- Speculate on interest rates: Maple SmartBonds pay fixed interest, while the collateral earns floating interest. Think the Compound rate will rise? Then issue bonds to increase your profit.
- Hedge interest rate risk: Think Compound rates will drop? Buy Maple SmartBonds to lock in a fixed rate.
- Borrow against your DeFi savings: Supplying Dai on Compound? Then borrow against this “savings account” by creating Maple SmartBonds.
- Be a crypto bank: Create Maple SmartBonds to borrow against cDai then reinvest in more cDai (fractional reserve banking). Keep the net interest left after paying Investors.
- Cover multiple platforms: Borrow against your Compound supply then reinvest in Nuo, Uniswap or other DeFi platforms to diversify.
Long term possibilities
Bond markets power the traditional financial system. Maple puts this at the fingertips of DeFi users. Here’s a few ideas of where we can go:
- Create Bond ETFs by basketing multiple Maple SmartBonds with TokenSet.
- Creating crypto banks in countries without a financial system. Wireless internet networks let African countries leap-frog fixed-line infrastructure. Maple powers wireless financial infrastructure, bypassing conventional banks.
- “Assets as collateral” makes more sense for businesses. They have valuable assets but not piles of Ether lying around. Maple can do bonds backed by subscription tokens (e.g. video streaming) and profit-share tokens (e.g. DAOs).
- Form a crypto yield curve with Interest rates on 30/90/180/360 day Maple SmartBonds.
- Multicollateral bonds backed by Compound, Nuo, Nexo, Uniswap and others. Diversifying the risk of a single platform.