Alameda Research and Maple Finance have joined hands to launch the first syndicated loan in the decentralized finance (DeFi) sector. Alameda Research is a fintech investment firm headed by San Bankman Fried, the CEO of the FTX exchange.
The partnership with Maple finance, an institutional capital marketplace that deals in digital assets, will launch the first syndicated loan in the DeFi sector. Through Maple Finance, Alameda Research will offer loans to accredited non-US financial institutions using the single-borrower DeFi lending pool.
Launching decentralized syndicated loans
Alameda Research will be the sole borrower of the pool. It will leverage its popularity in the market to receive better prices in loans. Some of the lenders who will be involved in this new initiative include CoinShares, Abra and Ascendex.
The firms have already set aside $25 million, and they are planning for this pool to hit $1 billion over the next year. Other firms that have fulfilled AML/KYC compliance will also be included in this pool.
A syndicated loan is worth billions of dollars, and to mitigate risk, it has been spread across different institutions. The lenders of these loans are mainly banks, while the borrowers are usually corporations or government institutions.
Maple Finance is an institution that offers a wide range of uncollateralized lending services for high-risk loans. With this product, institutions will have a better way of borrowing and lending money.
The CEO of Maple Finance, Sid Powell, commented on this development stating that, “What’s really important about it is that it provides firms with a way of directly accessing capital markets and institutional investors so that they can raise debt for themselves.”
Powell further added that these loans will be issued at a fixed interest rate of between 8% to 10%.
Alameda and crypto
Alameda is one of the most reputable firms in the crypto sector. With this reputation, Alameda will issue this loan because it will be under collateralized, with the only security being the capability of Alameda to repay it.
Alameda has made strategic investments in the crypto sector. In 2020, they invested $3.9 million in a software innovation firm mitigating risks in the DeFi sector. The firm was founded in 2017 by Sam Bankman-Fried, the CEO of FTX exchange.
Your capital is at risk.