Maple reports no increase in bad debt, $10M inflows amid recent market crash

Decentralized credit protocol Maple reported that none of the platform users’ positions were liquidated during the Feb. 2 price crashes, resulting in no bad debt.

It also reported that users deposited $10 million to reinforce their margins over the period to avoid liquidation events. Over $10 billion was liquidated in a single day, as Ethereum (ETH) briefly dropped into the low $2,000 price area and major cryptocurrencies experienced declines ranging from 10% to 30%.

Maple is a decentralized credit protocol in which users deposit assets into a pool that acts as a credit line for institutions. According to rwa.xyz data, Maple managed $2.5 billion in loans as of Feb. 7. 

The report highlighted that Maple’s Blue Chip and High Yield Secured Lending products remained fully overcollateralized during this volatility, attributing this to margin calls issued before collateral levels became critical. 

The High Yield Secured pool saw $2 million in inflows during the massive liquidations on Feb. 2.

Maple’s Blue Chip Secured lending pool only accepts Bitcoin (BTC) and ETH as collateral, held by qualified custodians. Meanwhile, the High Yield Secured pool achieves higher returns by underwriting loans backed by specific digital assets and reinvesting the collateral in staking or secured lending.

Syrup is a pool that combines both strategies to boost yields, consequently presenting more risks. The pool issued margin calls to 35% of its loans, which led to $5 million in new deposits. 

Borrowers posted an additional $7.4 million in collateral and repaid $7.4 million in loans, strengthening Maple’s loan book stability. 

As of Feb. 6, collateralization levels across pools averaged 165%.

The report also highlighted that yield options available in DeFi protocols were withdrawn while their vaults continued to deliver two-digit annual returns.

Aave processes $210 million in liquidations

Aave also operated as intended during the large liquidations on Feb. 2. According to Chaos Labs data, the money market successfully processed $210 million in liquidations while maintaining zero additional bad debt.

Chaos Labs highlighted that Aave’s liquidation mechanisms ensured that positions were settled efficiently. Most liquidations occurred on the Ethereum main instance, minimizing losses to the protocol. 

Despite the scale of the liquidations, Aave’s existing bad debt decreased by 2.7% due to the declining value of debt assets.

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