In the down market, Aave, Compound and other over-collateralized lending platforms are always safe because the collateral value is always higher than the debt, and the platform and user funds are always safe. Many centralized lending platforms have suffered devastating blows due to their unsecured lending of assets to institutions such as Three Arrows Capital. For example, Celsius, which once managed tens of billions of dollars, has reportedly filed for bankruptcy protection.

This has caused some people in the circle to question the unsecured lending model, thinking that its security seems to have been falsified, but according to PANews, the unsecured lending agreement on the chain has not been greatly affected in this shock, and the main agreement figures have increased this year. As of July 13, the TVL of Maple, TrueFi, and Goldfinch increased by 35.8%, 41.5%, and 191% respectively compared with the beginning of the year, while the TVL of Aave, the representative of the over-collateralized lending agreement, fell by 69.6% over the same period.

Maple: Borrowed $10M from Babel, liquidated

Maple, which currently accounts for the majority of the unsecured lending market, operates through agents and pools of funds, with each agent managing a pool of funds. The agent decides which institutions the funds can be lent to and the detailed terms, such as the interest rate on the loan. This method is relatively centralized, but the professional knowledge of the agent can avoid some risks. Now, private pools for single lenders and single borrowers have also been added to Maple, but participants need to complete KYC first.

During the period from June 13th to June 21st, Maple has repeatedly updated the risks of Three Arrows Capital (3AC, Three Arrows Capital), Celsius, and Babel. The main points are summarized as follows:

1. 3AC has never used Maple for lending; Celsius operates a $20 million WETH pool on Maple, but Celsius is the only lender, that is, Celsius lends to other institutions through Maple; Maple’s Orthogonal pool once lent to Babel $10 million.

2. Maple borrowers have no risk exposure related to UST/Luna, and have relatively small risk exposure related to 3AC and Celsius. Next, they will continue to monitor in real time through one-on-one conversations.

3. Borrowing in Maple is mainly used for market making, Delta neutral strategy or high-frequency arbitrage, and usually does not hold directional positions.

4. All loans can be viewed on the chain, and a loan agreement with legal recourse is signed with the borrower.

It can be seen that Maple's direct risk exposure to Babel, 3AC, and Celsius is $10 million. On the official website, the loan is shown as "liquidated". Maple has signed legally binding contracts with borrowing institutions, and as long as these institutions do not go bankrupt, they need to repay Maple's debts in full. However, it is not confirmed whether any of Maple's borrowers have provided loans to 3AC or Celsius. If Maple's borrowers deposit funds in 3AC or Celsius and cannot redeem them, it may also cause these borrowers to fail to repay Maple's loans on time. loan. But this situation applies to all unsecured lending platforms.

Even if the direct exposure is small, the liquidity shortage and panic did have a negative impact on Maple. As of July 13, the liquidity of Maple's two largest liquidity pools, Orthogonal Trading - USDC 01 and Maven 11 - USDC 01, has been exhausted, and the remaining cash amount is zero. The redemption operation of depositors needs to wait for borrowers repayment. Since the last borrowing operations of these two pools occurred in early June, it can be speculated that the centralized redemption of depositors led to the exhaustion of liquidity.

In cash-strapped situations, lenders must wait for borrowers to repay, Maple's announcement said. As the loan matures in the next few weeks, the borrower's repayments will increase the funds available in the pool, which can then be redeemed by the lender.

Since April this year, Maple has launched a lending business on Solana, and the two fund pools X-Margin USDC and Genesis USDC on Solana have liquidity of USD 1.06 million and USD 610,000 respectively, which can satisfy the redemption of ordinary users need.

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TrueFi: TPS/3AC has a loan and repays it early on June 21

TrueFi is a project launched by the stablecoin TUSD team in 2020, and now there are two lending models. One is from the early stage of the project to the present. Each stable currency is a pool of funds. Anyone can make deposits, and decide whether to agree to lending applications by pledging TRU tokens and assessing the credit of the borrower; the other It is TrueFi Capital Markets, which was launched later. Each borrower corresponds to a fund pool, and depositing into the corresponding fund pool means only lending funds to the borrower.

TrueFi’s borrowing records can be queried on the chain. In the recent risk events of 3AC and Celsius, Celsius has not borrowed from TrueFi. 3AC has two records of borrowing from TrueFi, the first being February 25, 2022 The first 60-day loan of 1.71 million TUSD will be repaid after maturity; the second is a 90-day loan of about 1.99 million USDT starting on May 21, 2022. The displayed borrowers are all "TPS Capital/Three Arrows Capital". Less than a month after the second loan was initiated, 3AC was reported to be short of funds, but even if the loan in TrueFi had not expired, 3AC The repayment was also completed one month after the loan was initiated. Therefore, TrueFi did not directly suffer financial losses in the thunderstorm of 3AC and Celsius.

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Clearpool: Loan applications through TPS on June 9, close on June 19

Clearpool operates as "Single Borrower Pools". First, X-Margin, a third-party data platform cooperated by Clearpool, will rate borrowers and give a loan limit; then Clearpool will add new borrowers at the front end; users can freely choose which borrowers to lend funds to.

Clearpool had allowed TPS Capital to solicit funds from users on its platform.

On June 9, Clearpool announced that it would increase the borrower pool of TPS Capital (TPS Capital was then called "Three Arrows Capital's OTC division"), allowing TPS Capital to borrow up to $17.3 million from Claerpool users.

On June 19, Alex Svanevik, the founder of Nansen, questioned TPS Capital's borrower rating as A on Twitter. At this time, the risk of Three Arrows Capital has been exposed.

On June 19, X-Margin quickly responded by disqualifying TPS Capital for borrowing and removing TPS Capital from the Clearpool platform. X-Margin said it "ensures that TPS repays the loan and that Clearpool's lenders have no loss of funds".

It can be seen that TPS sought to borrow from Clearpool only when there were already problems, and it was approved. After the risk was exposed, after discovering the problem, X-Margin and Clearpool responded quickly and suspended the loan line of TPS.

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Goldfinch: Lending to real-world businesses with less correlation to crypto market volatility

Goldfinch operates by combining the primary pool and the advanced pool. The primary pool is a pool of single borrowers, and the invested funds will obtain higher returns, but also need to bear greater risks; the liquidity of the advanced pool will be allocated to each single borrower pool , the income is low, but the repayment of the borrower will give priority to returning the principal and interest of the senior pool. Whether the loan application is approved requires an auditor (participating through pledged GFI) to be evaluated, and the auditor is randomly selected by the protocol.

Since Goldfinch's borrowers are usually not encrypted institutions, and the USDC loans obtained are usually converted into legal tender, Goldfinch is basically not affected by the fluctuations in the encrypted market.

summary

summary

The business carried out by various unsecured lending projects is getting closer and closer. For example, TrueFi, which has only one fund pool for a stable currency, has increased the fund pool corresponding to a single borrower; Maple operates a fund pool model from each agent. , which allows a single borrower or a single lender to operate a pool of funds. More and more businesses require KYC to participate. The borrowers of Maple, TrueFi, and Clearpool have a large degree of overlap, which increases systemic risk.

The impact of unsecured lending projects in the down market is lower than that of DeFi's over-collateralized lending and centralized lending, which shows the effectiveness of this set of credit evaluation and risk management solutions. Of course, this is partly because unsecured lending typically only supports lending in stablecoins, while protocols like Aave include volatile assets like ETH, WBTC, and even stETH.

Some unsecured lending agreements also face liquidity problems, such as Maple's Orthogonal Trading and Maven 11 pools, the liquidity is completely exhausted, and it is necessary to wait for the loan to be redeemed after it is due for repayment. The high capital utilization rate also brings about the problem of low liquidity.