Maple Finance Announces Major Overhaul, Ends Lending On Solana
On Wednesday, Maple Finance, a blockchain-backed lending platform, announced a major overhaul of its protocol. According to the announcement, the overhaul aims to solve shortcomings in the protocol’s design.
These shortcomings only manifested in a recent debt saga. Maple is a prominent blockchain-built credit marketplace where investors can offer liquidity to receive a yield on deposits.
Also, institutional borrowers visit the credit pools on the platform to take undercollateralized loans. Notably, a delegate is assigned to every credit pool.
The delegate is a financial company that oversees the loaning process and runs checks on borrowers. Maple’s blog post noted that the new version of the protocol would be known as Maple 2.0.
Additionally, the post said one feature of the Maple 2.0 is improvements in the withdrawal process. There is now an option where users can calculate and schedule withdrawals.
Furthermore, there is no more lockup period for new deposits. The lockup period was why Sherlock, a smart contract auditor, lost $4 million.
Another feature added to Maple 2.0 is “first-loss capital,” a protection mechanism for lenders. This capital helps a lender absorb losses whenever they default on a loan.
Also, only pool delegates can supply money for default insurance. Also, the funds must have the same denomination as the assets in the credit pool.
This action effectively ended MPL staking in the default insurance fund. This was a popular tactic some investors were using to gain interest.
Maple Suspends Lending On Solana
Meanwhile, Walter Teng, VP of digital assets at Fundstrat, noted that stopping staking and removing the MPL token from the pool cover could affect its utility. Users may have fewer reasons to hold the native token, the analyst added.
Meanwhile, the price of MPL has dropped by about 52%. A Maple spokesperson said Maple halted staking rewards due to the volatile market.
The spokesperson also mentioned subdued revenues and Maple’s attempt to strengthen its fundamentals. Alongside the upgrade, Maple Finance also took another decision.
The lending platform has discontinued lending on Solana’s blockchain. Maple will now focus on using just the Ethereum blockchain.
Maple’s blog post stated: “Since we have improved the Maple Ethereum application and Ethereum has switched to the PoS, we believe the Ethereum blockchain will be frictionless. This will benefit future and present Maple protocol users.”
Meanwhile, Maple initially brought lending to the Solana network in April. The company planned to expand its credit pools to about $300 million by the year’s end.
Maple’s latest move is a huge blow to the Solana network. The negative news follows unconfirmed reports that the now-bankrupt FTX exchange was a major investor in the Solana system.
Hence, the FTX collapse is having a huge negative impact on the Solana network.
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