Applicant information
Name: Maple Finance & Syrup
Pool: https://syrup.fi/lend
Key Information/Summary
- $58M+ TVL in Syrup currently, $300M+ TVL on Maple.
- Maple Finance is the leading institutional lending protocol in the digital asset space. Yield is generated for suppliers of USDC by lending to the largest institutions in crypto on an overcollateralized basis.
- Access: Syrup enables permissionless DeFi access to Maple’s Secured Lending infrastructure which had previously been limited to Accredited Investors. There have been more than $300M loans originated since August 2023 under these strategies, with no losses, and an average net APY of 15.41%.
- Borrowers: KYC’d institutions who complete a full credit underwriting review with the Maple team, and overcollateralize the loan with liquid digital assets.
- Eligible Collateral: Currently BTC, ETH, SOL, eETH, USDe (and Pendle derivatives), held in institutional grade custody solutions. Proposed additions to the eligible collateral list undergo rigorous due diligence before approval, including liquidity considerations and smart contract audits.
- Liquidity: Balancer pool available for instant secondary liquidity.
Primary liquidity available via Syrup redemption: realized average to date has been 23.3 hours. Guidance is that it can take up to several days for redemptions to be processed.- Syrup is open to custom solutions for this new pool to meet Ethena’s liquidity needs, such as minimum cash buffers, and/or allocating a portion of capital to very short duration (3-5 day recall) loans in order to meet liquidity needs.
- Syrup is permissionless and can be accessed by DeFi participants who supply USDC. Not available in the U.S. or sanctioned jurisdictions
- Rewards Program: To align the longer term interests of the protocols, a boost in DRIPS rewards, converting to $SYRUP tokens in Q4 can be considered based on certain volume thresholds.
Expected APY: 15-18% net APY on USDC, plus additional DRIPS rewards for committed capital. (Season 1 ended July 31st : realized 14.8% APY yield pick-up on average).
DRIPS will convert to $SYRUP tokens once the migration from $MPL to $SYRUP is complete in Q4. Yield pick-up based on realized rewards for users based on token price at the end of Season 1.
| Product | Last 30 days |
|---|---|
| syrupUSDC | 16.70% + 14.8% DRIPS rewards |
| AaveUSDC | 6.04% |
| CompUSDC | 6.28% |
Underlying Asset(s): Institutional loans denominated in USDC (or USDT available soon); overcollateralized by BTC, ETH, SOL, and other liquid digital asset collateral that pass a thorough collateral review process.
Collateralization Ratio: 180% collateralization ratio at time of writing, significantly higher than other overcollateralized strategies operating across DeFi.
Minimum/Maximum transaction size: No minimum transaction size and significant capacity to accept the maximum allocation in scope for this proposal.
Current AUM for asset: $58M+ TVL currently, $300M+ TVL on Maple Finance.
Volume Metrics: Above Syrup TVL acquired in ~5 weeks since launch. Dune dashboard covering Maple and Syrup here.
Proposal Summary
Brief outline of the requested allocation of Ethena’s Reserve Fund to your asset/product and benefit to Ethena
- Maple Finance, launched in 2021, is a leading institutional lending protocol in the digital asset space. Maple’s Secured Lending infrastructure generates yield for Lenders by originating and servicing loans to large institutions, overcollateralized by liquid digital assets.
- The team has extensive traditional finance experience in banking, credit and fixed income sales/trading, and leverages this expertise to apply comprehensive credit underwriting. Importantly, Maple issues full-recourse loans to borrowers, giving Lenders additional claims beyond the pledged collateral to the other assets of the underlying institutional borrowers.
- Maple has seen strong inflows from USDC holders in 2024 and has built a robust track record of performance, recently crossing $300M in TVL due to attractive risk-adjusted yields compared to other on-chain alternatives.
- Lenders have earned an average net APY of 15.41% on USDC, with significant protection through overcollateralization. There have been no losses on any Maple Secured Lending strategies since inception in 2023.
- These strategies have consistently generated yields ~500bps higher than other DeFi protocols like Aave, Morpho, and Compound. More information and analysis can be found here.
- About 25% of Maple’s TVL comes from corporate treasuries and DAOs, who typically allocate up to 40% of their assets into these overcollateralized strategies. This allows them to earn a conservative, above-market yield on idle assets to extend runway and passively grow their treasury.
- Maple has launched Syrup, a DeFi protocol, with the aim to make this same institutional yield generation permissionless and broadly accessible.
- Syrup has quickly scaled to $58M+ in TVL in the first five weeks since launch. The yield comes from short-duration overcollateralized loans to institutions at fixed rates - exactly the same strategy driving Maple’s growth over the 12 months.
- We propose that the Ethena Reserve Fund allocates between 20-30% of available stablecoins into Syrup.
- This can serve as the Fund’s ‘consistent high yield’ allocation, adding a diversified yield source, while maintaining a focus on capital preservation through liquid collateral backed, recourse lending.
- Balancer pool allows for instant secondary market liquidity + primary liquidity via direct redemption from Syrup is generally serviced within a week (~24 hours historical average).
- Maple proposes Ethena allocate a portion of assets to a higher yielding product with a slightly longer liquidity profile to enhance yield, similar to how traditional corporate treasury management would ladder maturities of U.S. treasury bills. This will reduce the volatility of returns, while also increasing the total return.
Additional Documentation:
Basics and background
1. How will this allocation improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?
The Ethena Reserve Fund acts as an additional margin of safety behind USDe to provide a source of capital to pay for periods of negative funding. In order to serve this purpose effectively, the Reserve Fund must operate separately from Ethena’s primary business activity (generating yield on spot/futures basis).
Whilst holding assets in stablecoins achieves this goal to some extent, holding stablecoins idle is not capital efficient. By allocating the Reserve Fund to conservative yield bearing assets, capital efficiency is improved and the fund naturally grows over time as interest accrues and compounds, enhancing Ethena’s safety buffer.
Holding syrupUSDC achieves this goal by providing an attractive yield, sourced from overcollateralized lending (thereby minimizing risk) and allows the Reserve Fund to earn yield from a differentiated source to Ethena’s primary business.
During historic periods of negative funding (such as in early May 2024 and late June 2024), Maple Direct overcollateralized products (including the Syrup pool) continued to deliver consistent yield. This is due to both the structure of the yield source (short term, fixed rate loans) and the type of borrower. Borrowers are all institutions who use the proceeds for working business capital and/or trading operations, which create lower demand sensitivity to spot funding rates. This stickier borrower base is one of the differentiated benefits of Syrup over other variable rate lending protocols.
A common approach that we see corporate treasuries take with Maple & Syrup is to anchor their portfolio of stablecoins with a U.S. Treasury bill yield product, and incorporate up to 40% allocation to overcollateralized lending in order to enhance yield generation, creating an attractive portfolio that balances liquidity with increased risk adjusted yield.
Sample allocation:
| Name | APY | Weight |
|---|---|---|
| Short Dated U.S. Treasuries | 4.9% | 75% |
| Syrup | 16.8% | 25% |
| Weighted Average | 7.87% | 100% |
If Ethena’s Reserve Fund agrees on the benefits of adding overcollateralized lending as a yield bearing strategy, relative yield pickup vs risk-free rate is a primary consideration in choosing a specific partner. We believe there should be a hurdle yield pick up of >400-500bps to compensate for small extension in duration & credit risk. We highlight Syrup’s consistent performance (>10% above risk free rate), and believe Syrup offers superior risk adjusted reward.
2. Please describe any experience your firm has in working with decentralized organizational structures
Firstly, Maple itself is a DAO, operating with a live protocol since 2021, with multiple token holder votes, a Cayman Foundation, and a panel of tokenholders on the DAO multisig. As a result, we naturally have a deep understanding of how decentralized organizations function and have experience in working with governance teams.
Maple’s founders have served on DAO multisigs for other DeFi protocols. They have also angel invested and advised numerous DAOs and actively participated in tokenholder voting.
Around 25% of Maple’s current TVL comes from multiple crypto-native protocol treasuries and other community-run DAOs, who are seeking yield on idle assets.
Maple has also established partnerships with leading DeFi protocols like Jito & Nexus Mutual.
3. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?
The total value locked within Syrup is ~$58M currently - USDC deposits can be found on-chain here, and collateral addresses are displayed for verifiability here.
Maple, which operates other secured lending strategies for accredited investors, has $300M+ in TVL at the time of writing.
Legal design
1. Do holders of your product have any shareholder, investor, creditor or similar rights?
Syrup is permissionless for Lenders and as such, holders do not have explicitly defined creditor rights from a legal perspective. However, we provide more details below on the additional protections afforded to Lenders.
2. Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable.
Whilst Syrup is permissionless for Lenders, all borrowers complete KYC/AML checks, and execute a Master Loan Agreement (MLA) enforceable in UK courts.
We are happy to provide our KYC/AML policy and draft Borrower MLA for review by the Risk Committee.
The MLA crystallizes rights to liquidate the collateral pledged by the borrower, and creates a legal mechanism for enforcement in an event that liquidation does not cover loan proceeds.
This is a key differentiator to other DeFi products - there is additional recourse to the borrower’s balance sheet beyond collateral to make Lenders whole.
Borrowers execute this MLA facing Maple International Operations Ltd., a specific SPV domiciled in the BVI, set up solely for Syrup. The Maple Foundation, a separate Cayman Foundation, acts as Security Agent for liquidation on these loans in an enforcement scenario.
3. How would the proposed allocation be treated in a bankruptcy or insolvency situation?
As per the above, Syrup operates out of its own SPV and enforcement is carried out by the Maple Foundation. This means:
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Lender’s risks are ringfenced from a bankruptcy/insolvency event of Maple’s operating company or any other Maple pools, each of which operate out of their own SPVs.
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Enforcement on borrowers can be carried out even in an event where Maple is insolvent.
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All loans are issued on-chain through smart contracts and deposits are made on a non-custodial basis. As Syrup is a smart contract, the Maple team has no ability to withdraw Lender funds - we can only approve loans from the pool of capital to whitelisted institutional borrowers. This ensures that Lenders’ assets are protected through on-chain secure mechanisms.
When Lenders deposit into Syrup, they receive an LP token representing their share of the pool (syrupUSDC). Borrowers must repay loans on-chain to the pool in order to meet their obligations under the Master Loan Agreement. If they do not do so, their collateral can be liquidated by the Maple Foundation.
In this way, Lender rights to Borrower repayments are immutably memorialized on-chain through the LP token.
Smart Contract/Architecture
1. How many smart contract audits have been completed with respect to your tokenized product? Please name the auditors and provide a copy of reports.
Maple has been audited 7+ times and facilitated over $4B in loans since inception in 2021, with no exploits. These audits have been completed by top-tier firms like Spearbit/Cantina, Three Sigma, and 0xMacro. All of these audit reports are publicly available here.
Syrup utilizes Maple’s smart contract infrastructure that has been built over the last 3 years by experienced engineers, including a former lead engineer at MakerDAO. Additionally, the Syrup Protocol’s main contract, the Syrup Router, has undergone an audit by Three Sigma, which is linked here.
2. Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?
Syrup is permissionless. All wallets go through an AML screen from TRM Labs to ensure addresses have not interacted with sanctioned individuals/entities. Not available to users in the USA, Australia and sanctioned jurisdictions.
3. Is the asset/product present on several chains? Are there any cross chain interactions?
Syrup is currently live on Ethereum Mainnet only.
4. Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem.
SyrupUSDC is currently used in a Balancer pool to enable immediate liquidity for lenders.
Syrup also announced a DeFi integration with Ajna, enabling users to borrow USDC against syrupUSDC. This integration is facilitated through the SummerFi interface, and Block Analitica are responsible for reporting on risk metrics.
Over the course of the next few months, there will be additional partnerships announced to further proliferate syrupUSDC across the DeFi ecosystem.
5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?
Maple’s team is responsible for the below items with regard to Syrup. The team has built up a strong track record of robust performance over the past 12 months, underwriting to a 0% default rate.
- Onboarding Borrowers: Completing KYC/AML checks.
- Credit Due Diligence: Detailed underwriting of the borrower, including a review of financials, use of proceeds, credit history, management interviews, etc. More details on the process can be found here.
- Legal: Maple creates the legal structure described in this proposal and ensures appropriate documentation with each borrower.
- Commercial: Maple negotiates loan terms with each borrower, including interest rate and relevant LTV thresholds.
- Collateral Management: Maple monitors and manages the loan book, including automated margin calls and liquidations when necessary. More details can be found here.
Syrup’s offering operates in a trustless, decentralized manner.
- Lenders access Syrup permissionlessly through non-custodial smart contracts ensuring that Maple never has direct access to lender capital.
- The product is built on market leading smart-contract infrastructure, which has been live and open-source since 2021 without exploit and originated over $4bn in loans.
- These smart contracts automate the entire end-to-end loan issuance process - i.e. the aggregation of capital from Lenders, the issuance and settlement of loans, the calculation of interest due by borrowers, payment cycles and maturity dates, the distribution of fees, and each lender’s respective share of the pool/accrual of interest.
- Because the loans are issued on-chain, Syrup is able to provide transparency and verifiability to Lenders in order to minimize trust assumptions.
- Users can independently confirm the yield is generated as represented, rather than “trusting” Maple. At this page, you can view a a full breakdown of all loans issued and associated addresses where collateral is held.
- Rather than regular reporting being required, Ethena can verify performance and adherence to the strategy in real time on-chain.
6. Is there any custom logic required for your token/product? If so please give any details.
No, it is a standard ERC-20 with the ERC-4626 extension that increases in value as it accrues compound interest over time.
Conclusion
Syrup is excited to submit this proposal and the potential to partner with the Ethena Reserve Fund. Syrup recognizes the importance of liquidity and is willing to work on custom options for the USDe pool, such as minimum allocations to cash equivalents or short term (1-5 day) loans to enable recall of Ethena’s funds within a few days. Syrup is also open to adopt custom portfolio construction parameters including borrower and collateral concentration limits. Details on the yield impact vs current Syrup strategies can be reviewed once specifics are agreed.
Finally, in consideration of building a long term relationship, Syrup can offer a boost in DRIPS rewards for this new USDe pool.