Maple Finance Plots Comeback With New $100M Liquidity Pool for Tax Receivables With 10% Yield
Blockchain-based credit marketplace Maple Finance unveiled on Wednesday a new liquidity pool of trade receivables, the protocol’s first step in a new strategy to bring traditional financial investments onto the blockchain.
The new USDC stablecoin pool will enable firms to receive cash advances with a discount on their tax rebates and funding programs such as Employee Retention Credit (ERC) from the Internal Revenue Service (IRS), the U.S. federal tax authority.
Qualifying firms pledge their receivables as collateral to the loans, and investors in the liquidity pool will earn a return once the IRS transfers the credit.
The target yield of the liquidity pool is 10% annualized, with a minimum investment of $500,000 in USDC and 45-day lock-up period. The pool will be open for accredited investors such as institutional asset managers and decentralized autonomous organization (DAO) treasuries, who must comply with know-your customer (KYC) and anti-money laundering checks.
The pool can scale up to $100 million and AQRU will consider lowering the entry barrier once it reaches a certain size.
Maple provides the blockchain-based technology to set up and maintain the pools. London-based public company AQRU will manage the pool – the so-called pool delegate –, overseeing applying firms and managing the loan book. The loan originator of the pool is Intero Capital Solutions, a financial firm specialized in receivables financing, who will use funds borrowed from the pool to lend to qualified companies in its network.
The new pool indicates that Maple is moving away from uncollateralized crypto lending to crypto trading firms, which resulted in $52 million in bad debt on the protocol and up to 80% losses for select liquidity providers. Those losses came after FTX’s spectacular collapse toppled some of the platform’s largest borrowers.
“Receivables financing is one of the oldest commercial finance products,” and AQRU hopes to get a “first-mover advantage” by bringing this traditional investment strategy to crypto investors who are seeking conservative investments to earn a yield, Phil Blows, chief executive of AQRU, told CoinDesk in an interview.
In September, as the crypto winter weighed on the industry and raising capital became difficult, Maple launched a credit pool aimed at struggling bitcoin miners. The pool has yet to originate its first loan.
Last month, Maple unveiled a major overhaul of its protocol, winding down most of its active lending pools.
Read more: Maple Finance's $54M of Sour Debt Shows Risks of Crypto Lending Without Collateral
Real-world assets in crypto
Maple co-founder and CEO Sidney Powell said that the AQRU-managed pool is the first of a slew of upcoming pools with yield-generating strategies adopted from traditional finance. Maple will soon unveil pools that invest in U.S. Treasury bonds and insurance refinancing, according to the protocol’s representative.
These new pools come as crypto and traditional capital markets are increasingly getting commingled on decentralized finance (DeFi) platforms that tokenize real-world assets (RWAs) on the blockchain.
Analysts have predicted that yield-generating RWAs such as government bonds and corporate credit will be one of the hottest trends in crypto this year.
𝐑𝐞𝐚𝐥 𝐖𝐨𝐫𝐥𝐝 𝐀𝐬𝐬𝐞𝐭𝐬— CoinMetrics.io (@coinmetrics) January 4, 2023
Real world asset (RWA) tokenization is the process of representing physical and traditional financial assets in the form of digital tokens on a blockchain.
RWA tokenization remains a promising area of growth in the crypto market.
Earlier this month, DeFi protocol Ondo Finance announced tokenized funds for U.S. treasuries and high-yield corporate credits offered to institutional investors.