Maple Loans is a platform where users form Communities to Borrow and Lend undercollateralized loans to other Community members.
We built it to showcase how crypto can provide a great lending product to Borrowers.
The protocol takes care of requesting, funding, settling and making repayments allowing Communities to experiment and be creative with identity and risk assessment.
Why did we build Maple Loans?
We were impatient to see more progress in undercollateralized lending. Overcollateralised loans have been great for buying ETH on leverage but we wanted crypto lending being used to buy things people need and can’t afford.
People still debate about how to tackle identity (Sybil fraud, government IDs, Self-Sovereign); credit scores (on-chain possibilities, FICO, other); privacy (zk-snarks); and incentives (undercollateralized borrower, overcollateralized protocol).
We wanted to turn debate into action and experimentation. So we built a platform to allow experimentation with all of these questions.
Think people can find a way to trust their borrowers? Make a Community and test it out.
Have an algorithm for on chain defaults? Make a Community and test it out.
Whatever your hypothesis. Make a Community. Test it out.
Communities are the fundamental primitive of Maple Loans. They’re decentralized, self-organizing groups composed of a Leader, Lenders and Borrowers. We see them being organized initially around Discord, Telegram, Slack or other channels.
Borrowers and Lenders can then coordinate loans in these channels and use Maple Loans to request, fund and manage the loans once the details have been agreed.
The first new members of a Community will probably have some existing relationship, providing a kernel of trust to seed the community. This is natural because the first people you feel comfortable lending to will usually be people you know. This then expands to their friends who don’t know you.
We hope this can then scale beyond 3 degrees of separation as users get more creative in dealing with risk and identity. Think on-chain credit scores, integrations with self-sovereign identities, social media account validation. The potential is there.
How it works
- Leader sets a Community and specifies the collateral required from (0% to 99%).
- Leader starts adding the addresses of Borrowers and Lenders to their Community.
- Borrowers start making Loan Requests (don’t forget to go to Settings and set an Approval limit to make transactions) which get posted to the Community
- Lenders fund as much as they want for any Loan Request and start earning interest.
- Borrowers start making repayments on the Loans | first is after 50 Days (=20 Days for funding + regular 30 Days) | then every 30 Days
- Lenders withdraw repayments to their wallet by Claiming Payment
- Loan is repaid and collateral released
- Return to step 3.
A Blank Canvas to Experiment
Maple Loans is a blank canvas for Communities to conduct undercollateralized experiments.
Here are a few Community ideas to start with:
- Hawk: 0% collateral requirement, but thoroughly assess new members by requiring copies of passports and zoom call before adding them. Borrowers provide two payslips to show income. Targets medium size loans for cars or laptops. Interest generally 5–9% for 18mths.
- Happy Medium: Higher 20% collateral requirement but new members only need to verify a LinkedIn or Twitter using Bloom. No payslips required but Borrower addresses have to show they had at least 1,000 DAI pass through their address last 3 months, APR generally 10–15% for 6–12mths.
- Light Touch: High 33% collateral, no identity validation required, uses algorithm to assess probability of default based on address tx history, small loans of less than 100 DAI, high APR of 40–50%.
Each Community is free to experiment with how it tackles identity and risk assessment. The Community handles these off chain in the Discord/Telegram channel.
How does Maple Loans relate to Maple SmartBonds?
We built and launched the POC for Maple SmartBonds to mainnet in Nov 2019. SmartBonds are crypto bonds which take revenue-generating tokens as collateral. The stream of income from the tokens repays the debt. Also simple!
Our POC was built with cSAI as the first collateral. It had liquidity, was open-source and ERC20. We always planned to integrate other forms of revenue-generating tokens as collateral in our Roadmap.
Maple Loans will be represented by ERC20 or ERC721 tokens and will be revenue-generating for Lenders of Communities. We will integrate Maple Loans as collateral for Maple SmartBonds so that if you’re a Lender, you can borrow against your Maple Loans and sell SmartBonds to continue growing your Maple Loans portfolio.
This will let Communities become decentralized crypto banks because we’re connecting the loans to wholesale debt funding. Maker gave DeFi a central bank, Compound gave it a money market, Maple gives it a capital market.
We see a huge market opportunity for DeFi to scale with undercollateralized lending so we’re testing that hypothesis with Maple Loans. Maple Loans introduces a token which strengthens the use case of Maple SmartBonds by adding revenue-generating assets in need of funding.
Try out the mainnet app at https://www.maple.loans/
Test on Kovan at https://www.etherloans.io/
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