The emergence of Maple Finance brought a different approach to the entire process. This bold DeFi lending protocol requires no deposit of extra crypto tokens as collateral for borrowing.
In the decentralized finance (DeFi) space, cryptocurrency lending came as a means that allows investors access to their preferred tokens. However, they must deposit other crypto coins as collateral before borrowing the given assets. This will help curtail risks and losses for the DeFi lending platform.
Instead, it all lies in the hand of the lending pools to decide on granting the crypto loans or not. They would have to evaluate the borrower’s ability to repay based on his creditworthiness.
Maple Finance Suffers Bad Debts Due To Risks of Uncollateralized Loans
However, the prevailing crisis in the crypto market has given a massive blow to Maple in terms of stress tests since its launch in 2021. The protocol has witnessed a cumulative $36 million of defaulted loans and $18 million distressed in the past fortnight.
Maple’s bad debts represent about 66% of the total outstanding in its four active lending pools. Also, most of the vast borrowers have revealed losses due to their investments in the collapsed FTX exchange.
The outplaying events are creating negative waves for Maple. Already, its native token, MPL, has plummeted to an all-time low as it lost 50% of its value. Most participants and analysts are trying to highlight the wrong footing with the DeFi lending platform.
They intend to x-ray the rules and operations…