Maple Finance is the latest crypto lending platform to face liquidity pressure, the company said on Tuesday.
“There may be instances where there is insufficient cash in the pool,” the company wrote in a note updated Tuesday.
Maple Finance lenders should wait for borrower repayment, the company said.
“As the loan matures in the coming weeks, the borrower will increase the capital available in the repayment pool which can be withdrawn by the lenders,” the note said. “Lenders will continue to earn interest and MPL” [Maple token] Reward in the meantime.”
A spokesperson for Maple Finance said the representative, which manages the liquidity pool at Maple, plans to service all withdrawals in the “coming weeks,” in the same manner as lending at the time of the Terra USD collapse in May. The platform that handled the withdrawals.
“As per the design of the protocol, cash can only be withdrawn when it is available – we have not placed a hold on withdrawals,” the spokesperson said. “As cash flows from deposits and repayments continue, there should be a balance in the near future. [We] It felt important to share the news with protocol participants ahead of time.”
Maple Finance’s lending pool and activity are publicly available, the company said in the note. The company reports debt of just over $1.5 billion since inception.
The news comes as the cryptocurrency lender disclosed liquidity pressures and halted withdrawals following disclosures by others in the space, including Celsius and Three Arrows Capital.
Orthogonal Trading, a cryptocurrency hedge fund, has admitted that Maple has a $10 million loan to Babel Finance from the Orthogonal USD coin pool.
“Orthogonal has been in daily contact with Babel management ever since Babel stopped withdrawals and focused on protecting lenders’ interests,” Maple Finance said in a statement. Tweet Tuesday
Maple’s warning comes as members of the cryptocurrency industry fret over the risks of a potential contagion, which will only increase as liquidity pressures continue and lenders try to avoid it.
“There is no easy solution, but a good start for crypto institutions in more robust liquidity tensions,” said Timo Lehes, co-founder of blockchain infrastructure company Swarms. “The US Fed is conducting its latest banking stress test later this week, a timely reminder that this liquidity is only really settled with some sort of oversight.”
Lehs said the situation highlights the need for more regulatory oversight on the industry.
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