Syndicated Loans - The DeFi Way
DeFi Syndicated Loans. A syndicated loan is where a group of financial institutions lend money to a single borrower.
Let’s break down what Maple Finance is and how they are disrupting the syndicate loan market through permissioned lending.
All this model entails is the extensive due diligence requirements a bank conducts and the ability to let parties lend and borrow from each other. This is essentially opening the door for institutions and banks to step into DeFi — a little taste test of you will. This product is revolutionary in the sense that it will keep banks and institutions involved in the innovation currently taking place in DeFi lending and borrowing.
Now Maple Finance's platform handles a little over $300M in total liquidity. Looking at the current DeFi lending market — $52B strong — the institutional lending side will only grow from here. We are looking at a product that is truly in its infancy stages.
Now what is to note is Alameda takes the peer-to-peer lending model and limits the borrowing side to just one borrower, Alameda. Alameda is looking to borrow a total of $1B over the next year and has currently started with $25M.
Breaking down a model that was mostly geared for banks creates a larger and broader market for lending and borrowing. Giving an opportunity for anyone with cash on hand to lend out to accredited borrowers gives greater opportunities for dormant capital to be put to work. If financial institutions don’t match this model of shared lending, there might be a reckoning coming, and I for one cant wait to see the fireworks!
Solana Summer, Luna Winter?
One of the more prominent trends in crypto for much of this year has been exploring some of the new chains. Binance Smart Chain, Solana, Avalanche, Fantom, and many others have seen huge influxes of capital and users ultimately leading to their native token price increasing significantly in price. Although LUNA has also seen an 8000% increase in price this year, I don’t think the train is stopping any time soon. In fact, it might just be kicking into high gear. Over the last few months, one of the main bullish arguments for Luna and the Terra ecosystem as a whole has been the stable yield rate of 19.5-20.5% APY via Anchor Protocol. Sure, this has been able to capture an incredibly large amount of capital to Terra but there are even more exciting things ahead. The two we are going to talk about today are the launch of Astroport and the burning of over 88 million LUNA.
With the understanding that the price of LUNA relies on the use of the Terra ecosystem as a whole, Astroport proves to be a significant factor. Astroport is a new decentralized exchange that is launching in December and it will offer multiple pool types, charting, governance, and a sleek UX as ease of use has been at the forefront of Terra and its products. With this launch of a state-of-the-art AMM, there are estimated to be over 50 projects waiting to launch alongside using Astroport for their liquidity. Many of these projects are as highly anticipated for launch as Astroport, one of our favorites being Mars Protocol. With this many new projects coming I can only imagine the impact it will have on UST supply and ultimately, LUNA price.
Burn baby, burn. Recently it was decided that there would be a burn of the community pool which holds 88,675,000 LUNA. The interesting thing to note is that it is not all at once, but spread across two years and at current prices will provide $1.5B to LUNA stakers. This has had an immediate impact on the staking APY of LUNA, increasing current staking APYs from around 4% to 7%. It is estimated this will settle around 8-10% making it one of the higher APYs for a PoS token. In our opinion, this will be yet another catalyst for LUNA price to increase. If users are able to get a significantly higher yield for staking on the Terra network, a top 15 network by market cap, than some of these other Proof of Stake networks will definitely see users switching over to Terra further driving up the price of LUNA.
Although these are just two fundamental reasons why we expect positive growth for the Terra ecosystem, there are countless others. Be on the lookout for new protocols launching as generally, the early bird catches the worm. With the innovation we are seeing come out of Terra developers, the end of this year and the beginning of next will be exciting for everyone involved. Below are a few projects to keep an eye on.
Written by: Theo White and Ryan Celaj
Mars Protocol - Decentralised bank of the future on Terra
Fan Fury - Welcome to the world of decentralized fantasy sports