The data and information in this report are intended for informational purposes only, and is subject to change. The data provided are based on the status of the Maple Treasury on the 31st December 2022. All figures are shown in USD and based upon wETH closing price of $1,196.61. For more information, see disclaimer linked below.

In and outside of crypto, investors were risk off and markets continued their contraction. Total active liquidity on Maple decreased from $326M to $58M from Q3 to Q4 as borrower appetite decreased with lower exchange volumes and lenders electing to sit on cash.

Crypto markets are tracking with the downtrend in macro, but with a higher beta given the slew of bankruptcies and scale of contagion. To remain well capitalized through this market cycle, Maple reduced planned protocol operating expenses to increase runway to 16 months in a zero revenue environment.

New revenue generating pool launches are expected in the near term, and existing pools have plans to lend this quarter. We are full-steam ahead executing against our 2023 plan to “build on-chain capital markets infrastructure that provides a diversified set of lending opportunities through strong and reputable Delegates”. Read more here.

There are signs that the space has matured; bad actors have departed, the market has deleveraged, and operating costs have been reduced. Protocols that prioritize business fundamentals and product will prevail through this cycle, capturing opportunities as green shoots return.

MAPLE TREASURY

Maple launched in May 2021 and found product-market fit early on. Revenue to date is $5,031,463.75, whilst expenses to date total $12,106,989. The net loss for the protocol sits at $7,075,525. At the end of Q4, the Maple Treasury held a total of $6.1 million in stablecoins from a mix of revenues generated and treasury sales. Token Terminal displays revenues here.

In Q4 we reduced planned operating expenses to increase our runway to 16 months in a zero revenue environment. Maple recalibrated its expense base by making the decision to retire Maple Solana, reducing headcount costs and refocusing department plans and budgets. Quarterly burn will now be closer to $1.2 million or a monthly burn of $390 thousand, down from a quarterly total of $2.4 million in Q4 22 (excluding one-off and non-recurring charges), with team costs remaining the lion's share.

Q4 2022 REVENUES

Table 1: Q4 Maple Treasury Protocol Revenues

Whilst defaults in pools do not directly impact Maple, they do reduce the fees received by the Maple Treasury. The Maple Treasury receives revenue by way of a ‘Platform Fee’ paid monthly by borrowers until a loan matures, equal to 66 bps annualized. The majority of loan originations were recorded in October ahead of the FTX collapse. Revenues in Nov-Dec increased from the previous quarter as the recurring Platform Fee model came into play, but remained suppressed when compared to the first half of the year.

Table 2: Maple DAO P&L in 2022 and Cumulative Since May 2021 Launch

The Maple Treasury recorded a loss on capital provided as First Loss Capital to the M11 Credit USDC pool at inception. The loss of $151,933 is less than the return generated over time. The capital was liquidated in full, alongside all other capital provided by external parties, upon defaulting Orthogonal Trading loans. Further detail is provided by M11 Credit. First Loss Capital is now solely provided by the Pool Delegate so a loss of this kind will not be recognized again.

We continue to develop our revenue model and fee structure as we grow as a protocol.

Q4 2022 EXPENSES

Table 3: Maple Labs Q4 Actual vs Budget Variance Analysis

Above is a breakdown of Q4 2022 expenses, with an outline of budget vs. actual expenditure. Overall, expenses were 26% over budget with the major variance being legal and insurance and one-off costs. The total budget for Q1 2023 is $1.2 million, with team costs remaining the majority.

Legal and Insurance

In Q4, the Maple Foundation successfully petitioned to have Kroll appointed as liquidator over a defaulted borrower, Orthogonal Trading. Legal costs exceeded budget in part due to the post-FTX restructuring costs for distressed borrowers. Maple has beaten budget in this category to-date and legal costs on borrower matters will be shared with Delegates. We consider these costs necessary to get the best result for Lenders impacted by defaults, and demonstrate the strong repercussions to borrowers that do not uphold their agreements.

The annual cost for the insurance policy is recognized in Q4 and cover extends through to Q4 2023. Insurance premiums for all Digital Assets firms have risen and going forward these increased costs will be factored into the annual budget.

Smart Contract Audits

The engineering team worked with three leading audit firms to get Maple 2.0 safely to market in Q4. The total audit cost of $448 thousand, reflects Maple 2.0 being our largest engineering project to-date and ongoing audit expenses will be lower. For comparison, total audit costs from inception to Q3 2022 totalled $475 thousand. We take pride in the smooth liquidity migration to new smart contracts on 14th December - rigorous testing and auditing has to be in place to reduce risks associated with blockchain technologies.

One-off Costs

One-off costs include redundancy payments made as part of recalibrating our expense base and a deferred cost in acquiring Avari.

In January 2022 we acquired Avari protocol to move quickly onto the Solana blockchain. The one-off cost recorded in Q4 2022 is a deferred cost of acquisition. The Maple Solana product and code base are in ‘hibernation’ as we focus on developing a robust product on Maple Ethereum. Maple retains the IP for this code base and can reactivate this if there is demand to borrow and lend in Solana’s DeFi ecosystem in the future.

Q4 2022 LENDING ACTIVITY

This quarter the platform originated $87 million in loan volume across 23 new loans, down from $262 million loans from 35 deals in Q3. The scale of the FTX insolvency caused loan originations to taper off afterwards as the lending market slowed.

Pool Delegates shrank their loan books at the time of the FTX insolvency and accepted early loan repayments. Delegates have prioritized lender demand for withdrawals and all capital accumulated from the remaining active loan repayments has served to facilitate withdrawals. The pools were also closed to new deposits to protect new lender’s capital as defaults occured.

At the end of the quarter there were 6 loans on Maple Ethereum paying fees, and 0 loans active on Maple Solana as the Credora pool winds down. There have been 0 new loans issued from the Orthogonal Credit pool after we severed ties with the parent entity in December. The pool continues to operate with Maple’s smart contract infrastructure and will close as the final loan is repaid.

As a result, Maple closed the quarter with $58 million in total active liquidity, a decrease from $340 million in Q3. Information specific to individual pool performance can be viewed in the below tables.

FOCUS FOR THE YEAR AHEAD

Our three strategic focus areas for 2023 have been documented here and here, and excerpts provided below;

1. Diversify Lending Opportunities

Maple can be the marketplace where Lenders explore and choose from a variety of lending options that suit their risk appetite, term-preferences, and chosen industry vertical. Treasury, reinsurance, staking validators, trade receivables, real estate and infrastructure products represent the first beachheads that new Maple Delegates will push into.

2. Attract new and reputable Delegates

The catalyst to Maple’s scalability is in onboarding more Delegates to the platform to underwrite different credit strategies. We will assist in supporting a full-suite of loan products so any and all Delegates can launch a lending pool, unique to their strategy on Maple.

3. Build Cutting Edge Technology on Ethereum

Custodians, exchanges and other institutional service providers will soon be able to integrate directly with Maple and introduce the diversified lending opportunities of pools on Maple to their customers. Furthermore, we are concentrating our efforts on Ethereum to be able to ship faster than when operating multi-chain. We’re leveraging the interoperability of ERC 4626 so that capital markets participants can easily interact with Maple pools.

ONWARDS

Our vision when we started Maple was to modernize capital markets so that innovative companies and projects can access finance to expand, grow, and push society forwards. Whilst this quarter hasn’t gone to plan, we remain focused on the long-term mission and well-positioned to navigate market conditions and headwinds into 2023. We are grateful for our community and stakeholders that move into the new year with us.

Get in touch with the Maple team.

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Treasury addresses, provided for transparency:

Protocol Revenues: 0xa9466EaBd096449d650D5AEB0dD3dA6F52FD0B19

Maple DAO - 0xd6d4Bcde6c816F17889f1Dd3000aF0261B03a196

Maple Labs - 0x94F98416CA0DC0310Bcaeda0e16903e19307539F