This research memo is for educational purposes only and not an inducement to invest in any asset. Subscribe to Blockcrunch VIP to receive in-depth project analysis, interactive token models and exclusive AMAs from our research team - all for the price of a coffee ☕ a day.
In the aftermath of the fallout of FTX, more skeletons are falling out of the proverbial closet in crypto.
The latest one concerns a well-known trading firm in crypto, and DeFi darling Maple Finance. Orthogonal Trading, a trading firm based in Australia, has borrowed vast sums on uncollateralized lending protocol Maple Finance, and is now allegedly unable to pay back their loans, putting lenders at risk.
In a previous memo, we discussed how Maple represents the likely path for DeFi to scale by incorporating the efficiency of centralized lending desks in DeFi.
With the recent blow up, one is tempted to ask: is the CeDeFi thesis and/or Maple at risk? A broader question: if DeFi can’t reliably grow beyond its clunky, over-collateralized status quo without introducing more trust assumptions - what is the point of DeFi at all?
This week, we will examine:
How Maple Works - A Quick Recap
What Happened in the M11 Credit USDC Pool
Orthogonal Trading’s Impact on DeFi
Lessons for CeDeFi protocol Design
Impact for Maple Finance