TLDR

In this episode of BidCast, Jason Kam interviews Sid Powell, co-founder of Maple Finance, discussing the company's evolution from under-collateralized to over-collateralized lending. Sid shares insights on the current lending landscape, the importance of institutional partnerships, and the future growth targets for Maple Finance. The conversation delves into the dynamics of the lending market, the significance of TVL, and the innovative products being developed to cater to both retail and institutional clients. Sid emphasizes the cyclical nature of lending and the strategies Maple is implementing to navigate these cycles while aiming for substantial growth in the coming years.

Chapters / Timeline

• 00:00 Opening

• 00:45 Introduction to Maple Finance and TVL Growth

• 03:45 Transition to Over-Collateralized Lending

• 06:46 Understanding Loan Economics and Revenue Generation

• 09:42 Syrup USDC and Syrup USDT: New DeFi Products

• 12:42 Client Base and Borrowing Trends

• 15:47 Market Dynamics and Future Growth Strategies

• 18:49 Navigating the Credit Cycle in Crypto Lending

• 21:41 Future Projections and Product Development

• 27:31 Understanding Market Risk and Collateral Management

• 28:43 Scaling Bitcoin Staking and Revenue Projections

• 31:19 Funding Strategies and Revenue Distribution

• 33:11 Future Growth and Institutional Partnerships

• 36:17 Navigating Competition and Market Dynamics

• 40:01 Exploring Bitcoin Treasury Lending Opportunities

• 41:09 Building a Sustainable Liability Base

• 46:47 Strategic Focus on Lending and Asset Management

Transcript

<< Jason Kam (00:45) >>:

Anyways, welcome to another episode of BidCast. I'm your host Jason Kam, aka MapleLeafCap Today is May 27th, 2025, 8 p.m. Hong Kong time. BidCast is being livestreamed at BidClub members. Questions are from the members and my own. Today I'm speaking with  Sid Powell. There are two of you, Sid, founder of Maple Finance. Sid, welcome.

<< Sid | Maple (01:10) >>:

Thanks for having me on Jason, great to be here.

<< Jason Kam (01:12) >>:

Yeah, great to be here. I've known you for a long time, actually. ⁓ And there are ⁓ quite a bit of up and downs, and now you are definitely on the up. Maybe to start, why don't you just tell us, like, what brought you from almost no TVL to above $2 billion TVL today? Like, what happened?

<< Sid | Maple (01:33) >>:

It's a good question and yeah, we've known each other a while. think we first caught up back in late 2021 in Lisbon.

But in the time since then, we got down to almost no TVL at around April, May, 2023. We're sitting below 20 mil. And now we're back almost at 2 billion. And I think the big change that we made was we switched to over-collateralized lending. prior to that, we've been doing under-collateralized lending to market makers.

you can only sell something that the market wants to buy and the buy side of the market for that type of product completely fell away. And so we focused on what was within our core skill set and we felt underwriting and credit was still within our core skill set. And we looked around and saw that nobody was doing any lending of any kind. The most contrarian bet you could have made in the middle of 2023 was to say that lending was going to come back. And so we leaned into that.

We were able to then launch that product and get the first few borrowers on. And then it's just been a grind since then. So really from August 2023 until now, we've just been focused on growing the over collateralized lending business. And we now lend to pretty much all the major institutions in the space. And we have a number of high net worths, hedge funds, corporate treasuries, and indeed DeFi protocols who are putting money through our platform to get a yield.

because the thesis on lending and credit on chain has really bounced back since that time. So I'd say the core things were focusing on what we could do differently, where there was a gap in the market. And we actually tried T-Bills for a little while in 2023, but we found that it was so competitive. There were 15 entrants in the space. It was a race to the bottom. Your product was getting commoditized. And it's just, I continue to think it's kind of a horrible business to be in for anyone who's doing that. They make no revenue. They're

It's just a race to the bottom on phase.

<< Jason Kam (03:38) >>:

I think there was a gap that's left in the market on over collateralized standing after Celsius and Genesis and all those guys are dead and ⁓ were you the only one sort of left to fill that gap and you know, yeah

<< Sid | Maple (03:45) >>:

100%. Yeah.

No, mean the market of whores are vacuumed. And so ⁓ if you look at who was around doing lending at the time and who survived, it was  us, Ledn ⁓ Two Prime, and then  new entrants. There were people who were doing some lending but not that much. Like, Galaxy and Coinbase were not massive lenders at the time, and they've since grown to be

probably number two and number three position on the CeFi leaderboard today. Tether was doing lending before, but they wouldn't have been the largest or even maybe a top four or five at the time in 2022. And they've since emerged to become kind of the giant of the lending space today. But if you look, I would say that the space is still structurally under supplied. 2022 total loans outstanding would have been something like $55 billion if you

If you add up Celsius, $26 billion, Genesis, $18 billion, BlockFi, about $12 billion at its height, and then you have others aside from that, so Babel, $5 billion, and a few others, you get to that kind of like $55 bill mark. Today, I'd say the C-Fi loans outstanding are still less than $15 billion. So we're off by almost a factor of four from where we were in 2022. So I think it is still under-supplied. And the largest player today, Tether, is still

you know, around 10 billion or less. So it's still smaller than the three largest who were around in 2022. So I continue to believe that there's a massive runway ahead of growth for the over-collateralized lending space.

<< Jason Kam (05:34) >>:

And sorry and just to break it down for me a little bit like two billion dollars of TVL How does that translate to you know how much loan is outstanding versus capital as just parked there and not being lent out?

<< Sid | Maple (05:46) >>:

You ⁓ can see on our June dashboard, but roughly TVL outstanding equals loans plus collateral plus the other product we have, which is the BTC yield product, which sits at about $180 billion today. And so the actual loans ⁓ or the deposit book is around

six hundred and twenty mil the loans outstanding is probably around five hundred mil we're currently sitting today on around a hundred mil in cash and so our our goal as a business is to get the cash deployed and to you know and and to try and you know add collateral value on top of the loan book so that the collateral is our protection but the loans are what is earning us money so we don't really want to be sitting on cash we want to be trying to deploy as much as possible at

the best interest rate that we can.

<< Jason Kam (06:41) >>:

and the fees you generate is only on that 500 million dollar loans.

<< Sid | Maple (06:46) >>:

⁓ We generate fees on the BTC yield product as well. So we are generating ⁓ a spread on the 180 mil in BTC. But it's a different kind of spread, because that's not lending. That's staking strategy. But ⁓ on the loan book, yes, we're generating the fees on the 500 mil. And then on the remaining cash, we generally have that deployed in money market-like instruments. So we use SuperState. We use ⁓

Maker, we have bots that will add other DeFi strategies if we think that they are interesting. But predominantly, it's just in money market funds. And so where we really make the money is when we deploy into loans. And the rough economics for us are around 150 to 200 basis points on the loan board.

<< Jason Kam (07:39) >>:

So 150 bips, 200 bips on a $500 million and on a $500 million of cash slash treasury, how much does it take right there?

<< Sid | Maple (07:49) >>:

⁓ on terms of like dollar dollar revenue today or you mean the take right on the treasuries

<< Jason Kam (07:53) >>:

like ⁓

the tick rate on the treasury.

<< Sid | Maple (07:57) >>:

Well, it actually gets blended into the returns on the loan book. it's effectively dilutive to the yield that we're earning on the loans, but it blends together and we take the 150 to 200 basis points on the whole thing.

<< Jason Kam (08:15) >>:

that's a good business. So you're taking on the billing. It's basically a billion dollar loan book, kind of. And you're taking 15 to 20 million dollars a year annualized currently.

<< Sid | Maple (08:25) >>:

We are taking around $10 million annualized, and it's growing. the economics are coming on that $620 million of cash. And then we have some economics on the $180 million of Bitcoin. But we don't make extra economics on the collateral. Really what we take is denominated on the loan book. And so today we're about $10 million in terms of annualized revenue.

<< Jason Kam (08:47) >>:

Got it. And then the hunt. Yeah, good.

God, okay. On a, well, I guess a two billion TVL is kind of double counting because it includes the collateral. So when you think about...

<< Sid | Maple (09:02) >>:

Yeah, it includes the collateral. So we count it as assets under management. mean, if you look at the general practices in counting TVL, if they look at Aave, they count collateral.  And so  we manage the collateral. And that's why we count it in TVL and AUM. But it's not monetized. Really, what's monetized is the loan.

<< Jason Kam (09:27) >>:

Yeah, so the fee generating assets is like ⁓ $1.2 billion, just about. Okay.

<< Sid | Maple (09:30) >>:

Yes.

<< Jason Kam (09:34) >>:

got it. And what's syrup usdc and syrup usdt?

<< Sid | Maple (09:42) >>:

Good question. So if you look at where we were in early 2024, so we had the Insta product. It was all permissioned. So you had to be an accredited investor, high net worth, family office, hedge fund, to come and use the pools. And then we looked around and we saw that we were missing out on a lot of the DeFi distribution. So Syrup USDC and Syrup USDT were our DeFi native product. So we created

these as a way for DeFi users to access the same institutional yield under the hood. So it's set up as an offshore structure. Americans can't access it, but retail offshore can use it, and DeFi protocols can use it.  the additional things that we built in to make the product useful are secondary liquidity. So there's a Uniswap pool and DEXs. So you can instantly redeem. So you don't have to wait for loans to be repaid. You can just go on

Uniswap and swap back to dollars if you want to exit the position. And then that then enabled  it to be used as collateral on borrowing protocols. So we've got it on Morpho. We're in conversations with Euler. But we have actually over 90 mil of it deposited as collateral on Morpho. And that was possible because we had the secondary liquidity. So it could be liquidated if it needed to be. And then  we've also been

 integrated with Pendle so people had an opportunity to hedge or fix their interest rate which was very popular early on when we had the points program and then also we've had it  added as one of the backing assets for Spark so ⁓ the Spark and Sky ecosystem uses it as some of the deployment for its stablecoins as well to generate the yield that  it's trying to make.

across the DeFi space.

<< Jason Kam (11:41) >>:

And so it's offshore non

KYC depositor into your vault that can be deployed into both treasury as well as loans.

<< Sid | Maple (11:45) >>:

Yes.

Yeah, yeah. And so the interesting thing, I mean, the token is yield-bearing, so we treat it,  we call it like a liquid-yield dollar,  but it's kind of like a high-yield savings product in a way. And from here, what we're trying to do is take it cross-chain. So we announced last week that we're going to be working with Chainlink to get it across to Solana, but we want to now take it into other ecosystems and other chains so that they can have

a high yield savings product ⁓ without fragmenting the liquidity. So if we had to deploy all the contracts on different chains, it starts to fragment all of our

<< Jason Kam (12:24) >>:

And

Yes, and so sorry and it's deposited and done and you're starting yield. There's no staking like sUSD Got it That's cool

<< Sid | Maple (12:33) >>:

That's right. You don't have to stake it. Yeah.

Yeah, so it's not trying to be a stable coin. It's trying to be more ⁓ of a conventional savings product or a fixed income product.

<< Jason Kam (12:42) >>:

Got it. That makes

sense. And your typical clients, the $500 million loan books out there and you have some outstanding loans, who's sort of your clients growing the fastest? Who is the biggest borrowers? And where do you think their demand is coming from? Because it blends to a pretty high rate. Is it the same market makers that borrow historically? Who are they?

<< Sid | Maple (13:06) >>:

Funny enough, we actually have no market makers anymore, because market makers won't post collateral. So if you look at their business, their business is being able to transform BTC into dollars and vice versa at the lowest slippage possible. So it's almost never worthwhile for them to post collateral to us to borrow. They would just turn the BTC into dollars if they really wanted dollars. So we don't do business with many market makers. Instead, what we have is primes.

So primes borrow from us. have long balance sheets that are generally long, know, Bitcoin or Solana or something else. And they borrow from us to give margin to their clients and use that in trading and settlements. We also have ⁓ on-chain hedge funds. So they might have yield strategies, and they want to lever up a yield strategy on-chain. So we had some borrow against Pendle PT tokens. And then you have family offices. So you might have somebody who's an OG.

<< Jason Kam (13:46) >>:

Hmm.

<< Sid | Maple (14:03) >>:

They've accumulated a lot of wealth in crypto, but they don't want to sell it for tax reasons. Or they just want to remain long on the market, but they might want to purchase real estate or some other consumptive spending. And so they borrow from us as well. then the other ones that have been interesting and kind of grown for us more over the last 12 months are we're looking at retail lenders. So we would be a wholesale lender to a retail lender. So they might take $50 to $100 million from us.

and then parcel out into $100,000 loans. And we don't want to be in the business of retail lending. It's a totally different operating model. But we're happy to be a wholesale lender to parties like that. We think it's conservative, and we get paid a good yield. And then the other one is centralized exchanges. So some of them now use us to fund their margin books as well. So we've grown to the scale where we can now offer $100 million facilities to people.

And that's helping us to scale up business, but also introduces other fee streams that we can take, like structuring fees and fees that are kind of like quasi-investment banking fees for putting together these facilities.

<< Jason Kam (15:14) >>:

Is there any is there any party that grows the fastest or is there?

<< Sid | Maple (15:21) >>:

I'd say ⁓ it kind of varies. ⁓ the ones that have been growing, or the segment that I think has the potential to grow the fastest at the moment is probably the retail lenders. ⁓ The segment that has historically, know, grows the fastest in response to market upswings is probably the primes. They have very elastic demand, so as soon as Bitcoin starts to rip, borrowing demand goes through the roof from them. And then this

Family offices and high net worths are very sticky, so it's good to have them on your book. They're ⁓ not seeking to return their loans if Bitcoin drops to 105k. And they're generally just good long-term, reliable borrowers. But I'd say the segment we want to grow the most in over the next 12 months, the centralized exchanges and the retail lenders. ⁓

<< Jason Kam (16:14) >>:

Sorry, when you say retail lenders, who are they exactly? are they lenders to crypto retail or?

<< Sid | Maple (16:19) >>:

So think these are names like,

yeah, they're lenders to both crypto retail and I guess normie retail if they happen to own Bitcoin. But think of these as names like Arch, Ledn, there's a couple of others. these people, their client base is doing smaller loans. And they take Bitcoin from them. And then we would do larger loans to these types of players against Bitcoin. So we'd lend $50 million. They break it up into $100,000 chunks or $200,000 chunks.

and lend that out. Same as in conventional home loan lending. A bank will do a $300 million line of credit to a smaller home loan lender and they then parcel it out into $500,000 in charge.

<< Jason Kam (17:02) >>:

And the primes are like Falcon X and Galaxy and Hidden Road those guys.

<< Sid | Maple (17:06) >>:

You've got Falcon X, Galaxy, Hidden Road and an LTP are kind of the four main primes in Crypto.

<< Jason Kam (17:13) >>:

Got it. OK, makes sense. Do you feel like there's room for tick rate to go up, or do you feel like it's pretty stable, or any competition if we're going to?

<< Sid | Maple (17:19) >>:

I think it's kind of stable

at the moment. think you can see take rate going up in a bull market, because everybody becomes less price sensitive. I think ⁓ over the long term, take rate probably comes down slightly, because you would expect that competition kind of competes in a way a little bit, or adds pressure to it. And also, I think if you can be the low cost provider in a space, that's generally kind of a competitive mode. You don't want to get caught as a

<< Jason Kam (17:28) >>:

Sure.

<< Sid | Maple (17:47) >>:

you know as like Grayscale did with the Bitcoin Trust where their take rate was much higher than the others and you know and then so customers switched away. I think you want to try and compete yourself away and get to the scale where you can be the low cost provider.

<< Jason Kam (18:03) >>:

How sticky is this business? it's certainly, in my mind, feels highly cyclical depending on crypto cycles. In your mind, do you prepare yourself mentally for the ups and downs going forward? Do you feel like it's kind of straight line up going forward?

<< Sid | Maple (18:19) >>:

I think I'd be naive if I said it was a straight line up going forwards. This is now our second cycle of operating in the space. And I kind of first got into crypto after the 2018 cycle, but wasn't really operating in the space. And so I think I'm acutely aware that lending is always a cyclical business, right? They call it the credit cycle for a reason. And you're naive if you think that you can escape the credit cycle. And so I think you have to prepare yourself.

<< Jason Kam (18:20) >>:

Ha

<< Sid | Maple (18:49) >>:

for, you always have to have kind of an eye on the market and you have to have a read as to when conditions are getting too frothy. And that's when you want to tighten up your lending criteria and adopt a more conservative or defensive posture in lending. And I think one of the mistakes that the peers who are no longer with us made in 2022 was, I guess they weren't defensive enough ⁓ in how they positioned their loan book back then.

I've also seen this as well coming from banking. I was a securitization banker and so we used to do case studies on lending companies that went bust. Typically it's because they ignored the cycle and try and grow in a straight line ⁓ kind of throughout. What we would do from here is we are keeping an eye on whether conditions in crypto credit get too frothy and then we will go more defensive. So more conservative collateral, lower LTVs, ⁓ more borrower diversification.

And I think that's just the best way to position yourself.

<< Jason Kam (19:52) >>:

Hmm. ⁓

<< Sid | Maple (19:54) >>:

The signs of frothiness would be if you start to see loan rates drop too much. Remember in 2022 there was so much VC money and retail money coming into the space that by the end they were lending out Bitcoin at 10 basis points. So the actual interest rates got kind of below what a proper risk adjusted return should have been. And then ⁓ most of the lenders went towards heavy ⁓

heavy concentration of under-collateralized lending. And so some of the things I keep an eye on today are things like Wildcat. How much under-collateralized lending is there in the space? And I think at the moment, leverage is actually relatively low, and there's not a lot of under-collateralized lending. So I don't think that we're at a frothy point in the credit cycle.

<< Jason Kam (20:42) >>:

Hmm and I guess I forgot where I read it but you know, I read a figure somewhere about four billion dollars TVL by your end ⁓ I guess do you have a target for yourself by Okay, okay, how do get there?

<< Sid | Maple (20:54) >>:

That's the goal. That's the goal. That's our target. Yeah.

So from here, if you look at our three main product lines, so we have Maple and Stowe, which is the one where you have to be permissioned and accredited. We have Syrup USDC, Syrup USDT, so the permissionless one. And then we have the BTC yield product. So roughly off the $4 billion, ⁓ we're looking at getting to $1 to $1.5 billion of the BTC yield product.

from, call it a touch under 200 million today. And a lot of that is going to be driven by the release of LST BTC. So you're to have a DeFi yield-bearing version of Bitcoin that can be used as collateral. ⁓ And it'll be cross-chain.

So I think that'll the big catalyst there on the BTC product. On Syrup USDC, that's already over a billion. So, I think the goal will be to get that to probably one and a half to two billions. And so the path there will be more of these DeFi partnership. So, extending the relationship with Spark, Sky, Morpho, Euler and then getting in cross-chain. And so our next big focus will be Solana and we're very excited about getting in that ecosystem.

And we think there's a big opportunity for yield products. I'd say a lot of Solana today has been ⁓ trading, and it has very good representation on the trading side of things. ⁓ But I think the yield ecosystem is kind of still growing there and has a lot of runway to go. So, Syrup will be greater DeFi partnerships and ⁓ getting it cross-chain. And then also, we're actually working on getting it integrated with a lot of the exchange wallets. So we did a program with Binance last week. We got 30 mil in within a day.

And we're going to be expanding more of those partnerships. And then on the insto side, the path is going to be ⁓ expanding, so getting wholesale facilities in from some of these larger balance sheets ⁓ and ⁓ traditional players. So what we'd like to do is take out a wholesale facility of 100 or 200 mil ourselves and start to introduce this product, which I think is

Which I think is very applicable to TradFi investors. BTC-backed lending is like a money market fund that pays 3 % over what money markets pay. It's over collateralized at a 70 % LTV. The BTC is often held in qualified custody. And it's very short duration. So I think of this as like a very good cash management product for TradFi. And if we can get wholesale facilities and then start to

introduce this product to trad-fi investors, whether they be insurance companies, fixed income investors, ⁓ or macro funds, I think that's definitely an area we would like to grow.

<< Jason Kam (23:49) >>:

Do you expect I guess the tick rate on the 1.5 billion of BTC staking that's is that also 150 bips 200 bips and take rate?

<< Sid | Maple (24:01) >>:

No, you can't charge that much on it. ⁓ The reason being is that the BTC product yields about 5 to 6 % or on a normalized basis, it's to yield somewhere between 4 and 6%. So I think you've got scope to charge 10%. So we have, ⁓ call it like 10 % of the gross yield as management fees. ⁓ We have some hedges in place on ⁓ the price of the underlying asset.

which we use for dual staking, which is the core token. Sometimes that yields a bit of P &L. And then we have, we obviously have a vested interest in the growth of the core networks. We receive some incentives that way as well. Because we're their primary partner for distributing the staking strategy. But no, unfortunately you can't charge 150 basis points on a 5 % product.

<< Jason Kam (24:50) >>:

Yeah.

And where does the yield come from for the LST BTC?

<< Sid | Maple (24:58) >>:

It's a good question. So Core is a proof of stake L1 built on top of Bitcoin. So you stake roughly what you do to participate in staking. You take a dollar of BTC, and then you take 10 to 15 cents of $Core tokens, and you dual stake them. And you receive roughly, call it between 4 and 6%, or 4 and 7%, something like that. Call it the mid-single-digit range.

in staking rewards in $core tokens, which we hedge back to BTC. So for one of our clients, what it looks like is you loaned us BTC and you got a yield back, which is denominated in BTC. You didn't have to ⁓ run smart contracts yourself and you didn't face slashing risk, unlike some of the other BTC L1 and L2s that you see today. So think that's why it's appeal to people. They keep their Bitcoin in custody. They're not selling it.

So it's not a taxable event. ⁓ And then they don't face a risk of slashing. And they don't really care about getting back ⁓ yield in other tokens or points. And I think that's been a problem with some of the other programs. They really just want the yield back in BTC. And so the role that we play is we aggregate, we manage the staking infrastructure, and we manage the hedging ⁓ so that they just get their yield back in BTC. The other function we play is we source the core.

which you need for dual staking. If they had to do this themselves, they'd have to go and buy $CORE. What we do is because we have lending pools, we're able to borrow dollars against the BTC that we have. And then we can convert that into $core tokens, apply hedging to protect the downside position, and then sell things back into BTC.

<< Jason Kam (26:43) >>:

interesting. How much is it too short to Hedge Core?

<< Sid | Maple (26:48) >>:

⁓ It ⁓ kind of varies. you have to... The way that you think of it is the hedging cost comes out of the yield that we earn on the core tokens or on the staking position. it's enough to... It's low enough that it can be self-financed by the staking yield. But what we do is we use ⁓ different options, ⁓ OTC counterparties, to hedge the core positions.

<< Jason Kam (27:13) >>:

Okay, got it. And the ratio

between the core needed and the BTC needed to get the yield is how much?

<< Sid | Maple (27:20) >>:

10 to 15%. And so if you think about it, that's kind of the extent of your principal risk. Because the worst case scenario is that core would drop to zero instantly, let's say, and then our options counterparties would default. In that case, the maximum loss would be that 10 to 15%, which was the amount that we had to borrow in order to purchase the core tokens. So that's why we use diversified options hedging counterparties.

<< Jason Kam (27:31) >>:

Yeah.

<< Sid | Maple (27:49) >>:

and that's why we have the hedges in place as well. we're not riding naked ⁓ market risk on the court.

<< Jason Kam (27:53) >>:

Got it.

And then the borrow of the USD is on the same collateral that your clients provided you in BTC.

<< Sid | Maple (28:01) >>:

Correct. Because we have the lending pools and we manage a lending business, we're able to consider the BTC that's staked in the program as collateral, which it is. And then 10 to 15 % LTV is super low in the scheme of things. Ordinary lending would be 70%, right? So it's highly, highly, highly unlikely to ever be margin called. But we are the ones running.

<< Jason Kam (28:04) >>:

It's cool. I see.

Yeah. Yeah. Yeah.

interesting.

<< Sid | Maple (28:30) >>:

that position and kind of managing the collateral. So we can give it credit as collateral, whereas if you were to use an external financier, you wouldn't be able to get credit for the BTC as collateral because you're staking it.

<< Jason Kam (28:41) >>:

Yeah, makes sense. that's about five. Yes. And I guess you're confident it scales to one to 1.5 billion by year end because there is that much demand you have already lined up.

<< Sid | Maple (28:43) >>:

So it's a synergistic business for us.

It's definitely a stretch target, but what we're seeing is that this product has a lot of pent-up demand because there are no good Bitcoin staking products. And we have a number of pipeline conversations that are quite large. So think like thousand Bitcoin or more. So if a few of those tickets start to come together and convert to deals, you actually climb your TVL of that product quite quickly.

<< Jason Kam (29:08) >>:

Hmm.

<< Sid | Maple (29:28) >>:

But also I look at the proxies, right? And so the nearest most successful Bitcoin staking program to date was, of course, Babylon. And at its peak, they had around 6 billion staked. So I don't ⁓ view 1 and half billion as an otherworldly type target, given that we've seen one that's previously gotten to 6 billion. And then we know that we have a number of pipeline conversations that are for 1,000 Bitcoin or more.

<< Jason Kam (29:58) >>:

⁓ And this, guess the tick rate is 10%, so around 50 Bips. And on your target, that's about $5 to $7 million of fees to Maple.

<< Sid | Maple (30:08) >>:

Yes.

<< Jason Kam (30:10) >>:

Got it. then assuming you get the other, I guess that's 1.5, let's say, and then the other 2.5 to 3, a lot of it will be collateral. So about $1.5 billion loan book. then that to you, I guess would be maybe $15 million of annualized fees if you hit your target on that loan book.

<< Sid | Maple (30:36) >>:

on the just the you mean just the Bitcoin product or the loan book as well

<< Jason Kam (30:40) >>:

No,

So the Bitcoin product is 5 to 7, right? And that's 1 to 1.5 billion of TVL. And then of the remaining 2.5 to 3 billion of TVL that is of your target, ⁓ a big part of it is collateral. So I'm guessing it's like 1.5

<< Sid | Maple (30:44) >>:

Yeah.

Yes, you'd say that's

roughly a $1.5 billion loan book. And then if you're making $150 to $200 bips, it's anywhere from $25 to $30 million of additional revenue. I think we want to allow for some kind of compression. But I think the goal would be for us to get, let's say, north of $25 million in revenue by the end of the year. Overall.

<< Jason Kam (31:19) >>:

overall.

Yeah. And then how do you fund yourself currently? Do you have to sell tokens or that 25 to 30 kind of, how does that flow to your equity and your token?

<< Sid | Maple (31:31) >>:

So we don't actually have equity. So we just have the token. ⁓ And I think that gives us a less complicated capital structure. So if you look at other teams in the past that had both, there was always a question of does the revenue flow to the equity or does it flow to the token holders? DYDX is probably good example. ⁓ So ours, there's just the token. And so

⁓ Currently we have 6 million in cash in ⁓ stable coins and that's come from past token sales as well as revenues generated by the platform. now, as of April, we were cash flow positive. So if you look, really the gross expenses of the business are somewhere around the 7-bill mark. They might increase a little bit as we add some people, but we're not looking to blow out.

the team size and add a ton of FTEs. I think we've been through cycles before, and so we want to stay relatively lean. And so at this point, ⁓ we're funded from the past token sales plus internally generated revenues. And going forward, ⁓ now that we're cash flow positive, I think we're just intending to be funded through the gross profits of the business.

<< Jason Kam (32:46) >>:

And you just pass a resolution to utilize 20 % of your revenue towards to burn, is that correct?

<< Sid | Maple (32:51) >>:

Yeah, think,

yeah, so I mean, as you're growing a business, there's always this question, right, of do we reinvest the cash flows of the business in profitable growth, assuming that we can achieve a higher return on invested capital than people who holding a token or who could participate in buybacks? And so I think here we've chosen a blended approach. So we want to pay 20%. We want to use 20 % of the revenues as buyback.

And so we do treasury buyback, and then we distribute those bought back tokens to people who are staking syrup. And so that's part of the yield if you're staking syrup today, which I think is around 2.7 to 3%. And then the other portion of revenues can be used for growth of the protocol. So what that would look like if you're in the debt business like us, or ⁓ debt slash asset management, what that would look like is

⁓ taking surplus capital, might use it for first loss capital in a new facility. Like let's say a large bank gives us a facility but wants first loss capital from us. ⁓ Or in reinvesting it in the pools or developing new products. I think we think that there's a lot ⁓ more room to grow still and so it's not worth paying out a high proportion as buybacks.

But we want to pay out something because think fee switches are very rare these days and it's rare to have protocols that are actually earning ⁓ in the economic return.

<< Jason Kam (34:25) >>:

Yeah, so target for year-end may be $20 million plus in overall revenue. $5 million of it goes towards the buyback and not burned, but redistributed to syrup-stakers. Yeah. Yeah.

<< Sid | Maple (34:36) >>:

to syrup stakers. Because I think the burn is inefficient. I think when you buy

back in burn, I don't think the market appropriately says, well, 10 % of the supply is now gone, so what should happen to the rest? So I think it's better for stakers to just get the token, and it then incentivizes more staking.

<< Jason Kam (34:56) >>:

I guess so. And then the 20 million minus 8 million of annualized cost, that's about a 12 million dollar cash build ⁓ towards your 6 million dollar cash pile. So maybe by this time next year, if everything goes well, you should have like a 15 to 20 million dollar cash pile sitting there.

<< Sid | Maple (35:12) >>:

That would be nice, yes.

<< Jason Kam (35:13) >>:

That would be nice. Yeah, that would

be nice. Interesting. Okay, I got the math. I guess, so we kind of talked about the BTC ⁓ effort with Core. We talked about the incremental growth effort to extend and grow your loan book. Is there anything else that excites you, you know, going to the future? Like what excites you the most aside from these two things that we talked about?

<< Sid | Maple (35:37) >>:

That's ⁓ I mean that's plenty of excitement for me, but I think ⁓ I look I I think

the size of our business is kind of bounded by the size of stablecoins. And so I look at the introduction of new stablecoins, like the stablecoin bill, the expansion of existing stablecoins, and that kind of increases Maple's total addressable market. So that's one of things I pay the most attention to. And then I also look at Wall Street and I see traditional players starting to enter the space. know, Cantor announced that they were going to do a $2 billion loan program.

And I think they're just the beginning. There are going to be more coming in. And when we look at institutions today and when we talk to players like Coinbase, what we're hearing is that institutions are mostly focused on just buying Bitcoin. But the way that we've tried to position our business at Maple is ⁓ to cater to the two next things that they think about. So once they buy Bitcoin, they then start to think about how can I get a yield on the Bitcoin? Or then,

they think about how can they either borrow against their Bitcoin or lend against other people's Bitcoin. And so I think Bitcoin structured products is something that I'm very bullish on and I think we're still kind of in the early innings of. And you've kind of seen proxies for it with some of the capital markets activity that Saylor has done, as well as some of these other ⁓ new Bitcoin treasury public offerings, whether it's

Nakamoto or the Cantor 21 1 or Metaplanet. And so I think I'm very bullish on that trend going forward and I find that pretty exciting.

<< Jason Kam (37:23) >>:

What would that mean for your business?

<< Sid | Maple (37:28) >>:

Well, you I would you know Saylor a couple of years ago ⁓ prior to the Silicon Valley and Silvergate bank collapses had a 200 million dollar line of credit against Bitcoin with Silvergate and I see an opportunity for Maple to be doing some of that lending to some of these Bitcoin treasuries over collateralized so fairly conservative but we would be a partner that would allow them to buy the dips on Bitcoin without having to go through a costly

capital markets issuance process. So think about it, I could provide a line of credit of 200 million to them for them to buy Bitcoin opportunistically whenever they like using their existing Bitcoin stack as collateral and then every now and then they can just do a capital markets issuance whether it's convertible debt or pref equity or equity and pay that down and then grow again. And so I think we could be, you know, it could be a very synergistic partnership with some of these Bitcoin treasury strategies. And so

Good for us, we get to grow our loans outstanding. ⁓ We have a high profile partnership and good for them because they have a more flexible facility than a convertible bond issuance.

<< Jason Kam (38:38) >>:

Do they currently work with any banks that offer that kind of loan or none of the banks are willing to do so?

<< Sid | Maple (38:44) >>:

None of the banks offer that. so that's the other thing I look at is how likely and how soon are we going to have competition from the banks. And I think regulation and capital requirements are going to keep them out of the market a while longer. ⁓ And so I think for us from a competitive perspective, we want to try and get bigger sooner so that we can hit economies of scale and ultimately lower our cost of funding and start to tap capital markets.

But I look at the banks and I think if they were to do lending against Bitcoin, the capital requirements are going to be so punitive on them that it's never going to be a profitable business line for them. So they may not actually ever enter.

<< Jason Kam (39:26) >>:

Sorry, holding Bitcoin on their asset side as collateral. just can't.

<< Sid | Maple (39:32) >>:

So if you're a bank, have

Basel capital requirements. And they determine how much of your equity you need to hold against loan positions that you have outstanding. And the lowest requirements that you have are for rated public companies and ⁓ what are called high quality liquid assets. But think of these as like senior R &BS type positions or just resi mortgages. ⁓ The worst positions that you can have are lending to unrated companies.

and types of personal lending like this. I think Bitcoin is going to get the worst capital treatment for some time. And so they're effectively going to have to hold $0.001 of equity against it instead of $0.05 to $0.10 of equity against it. And it means that the return on equity for them is much lower on lending against Bitcoin. And that means that they'll probably just be kept away from that line of business for quite a while.

<< Jason Kam (40:17) >>:

Terrible.

Got it. But I guess for you, when you lend to, let's say, MicroSailor, he's going to drive a pretty tough bargain. I guess because they don't have alternatives at the moment, you can still get the same rate that you charge. But is that true? And then secondly, how far along are you with these Bitcoin vehicles?

<< Sid | Maple (40:44) >>:

We're in early stage conversations around these types of facilities. Remember that a lot of these didn't exist, you know, four months ago. So it's a relatively new phenomenon since the Trump admin came in. I can't have seen a lot of people, I couldn't see a lot of people wanting to launch, you know, Bitcoin treasury vehicles under the Biden admin. So it's a relatively new phenomenon. So, but you are correct that these type of players will try and look for like low cost of capital, but

If you look at their cost of capital today, issuing equities are expensive. Even issuing pref equities are expensive. A lot of the reason that Saylor got away so many convertible bonds is because he underpriced them. He priced them at a lower implied volatility than they had, and that's why the hedge funds snapped them up. So think without us being under...

a reasonable return for ourselves, can be a good partner that is still relatively cheaper than other forms of capital that they have today.

<< Jason Kam (41:46) >>:

How and how fast do you think you can you can deliver and is that in your four billion dollar guidance? Yeah

<< Sid | Maple (41:50) >>:

Well, I'm sitting on 100

million cash today, so I think I can deliver it pretty quickly. ⁓ think the main thing, yeah, yeah, if they said yes, I think it's going to depend on the parties on the other side of the table.

<< Jason Kam (41:54) >>:

if they say yes.

Interesting. And I guess it will be more of a floating facility than them actually levering up requiring the US dollar to pay back because they're going to just yanking into buying Bitcoin. And ideally, on the other side, there's

<< Sid | Maple (42:13) >>:

They will,

yeah, you look at these businesses, they want to be permanently long Bitcoin. so what I mentioned at the start is we're effectively going to be a of bridge facility that they tap when they want to make opportunistic purchases. And I would see them paying us back through capital markets issuances. So we're effectively always going to get refired back to zero. And they're going to tap a convertible bond issuance or a prefect equity issuance or something else.

And they're going to do that once they're in the money on their Bitcoin purchases, or once they've hit a size where it makes sense to go to capital markets. Whereas I think what we allow them to do is to go and buy 10 or 20 or 50 mil in Bitcoin at a time. Now that's not going to be material for a sailor who's got thousands and thousands of Bitcoin. I think it was at 55,000 or something last time I checked.

But for somebody who's got 200 to 500 mill of Bitcoin, that's where we can slot in and be a good partner with a $100 to $200 million facility.

<< Jason Kam (43:21) >>:

Got it. And that's not in your TVL guidance of four billion.

<< Sid | Maple (43:26) >>:

Well, that had helped me get to the four billion.

<< Jason Kam (43:28) >>:

Yeah, got it. Makes sense. Interesting. The last thing is that the maple syrup migration is complete by now. ⁓ I guess as for now, how much syrup do you and the team owns? I think that the previous concern I always had is you guys don't own enough. ⁓

<< Sid | Maple (43:47) >>:

Well, I would say relative to most teams that now have 95 % or 92.5 % of their token and circulating supply, we probably actually own quite a healthy amount. I think most of those teams by that stage probably own, the team altogether probably owns less than 10%, whereas I would say the Maple team now, so founders, core team members, probably owns closer to 25 % to 30 % of the

protocol, which I'd say is higher than almost any team that has 90 % of their token outstanding. I think most people are selling down. ⁓ I can say I've never sold any tokens so far. ⁓ And the migration's complete. We ended up with around, ⁓ call it 8 % of the token remaining ⁓ that was not migrated. And so the plan is for that to go to the Treasury. And that would be used to support liquidity.

because it's now on more exchanges, so it does require a bit more inventory there, ⁓ as well as rewards for syrup stakers and other kind of strategic initiatives for growth, whether it be a points program or incentives on other chains or something like that. But it's all going to be owned by the treasury and used for the growth of the protocol.

<< Jason Kam (45:07) >>:

Got it. That makes sense. And the last question I have ⁓ is, are you guys planning to build any businesses beyond the current lending business that you have? Is there anything on the roadmap?

<< Sid | Maple (45:19) >>:

So I think we just announced our rebrand last week. And how we've positioned ourselves is more as an asset manager. So whenever I look at the TradFi world, the comparison that I make for Maple is Apollo or Aries. They are ⁓ the world's largest alternative lenders, but they are also asset managers. So they have an asset management business, but with a credit and fixed income focus. And that's kind of how I think of Maple today. So we have the lending and the credit part of the business, which is

Maple, Syrup USDC. And then we have the yield side of the yield asset management side of business, which is the BTC yield product. I don't see us going into venture, trading, that type of thing. I think if you do too many things, you kind of lose your focus and your priorities. And so I think our strategy in our Northstar at the moment is we want to be the biggest lender. And so we're focused on kind of climbing that ranking. I would say we're kind of the fifth.

fifth or sixth at the moment. And so with Tether, Galaxy, and Coinbase ⁓ being the top three. And so think we want to kind of climb that ladder, but really focus on lending and fixed income asset management as our core business so that we don't suffer from distractions and we don't go into something where we don't have a core competency or an edge over our competitors.

So I you shouldn't expect us to be launching tokenized equities anytime soon.

<< Jason Kam (46:47) >>:

to some extent.

Yeah, I suppose the competitors difference is they have a bit of more of a sticky deposit base or maybe they even fund it through prop where if there's a cyclical downturn, they don't expect the lending capacity to go away. They'll just be tighter. Whereby for you, like, am I correct to say that most of the TVL is actually leased? Like these people would just yank in the downturn. So do you feel like there's a better way to build this liability base that you currently utilize?

<< Sid | Maple (47:19) >>:

I think that's the question of every financier, right? Up until 2023, you would have said that banks have a relatively sticky deposit base, and then the universe would come and throw you Silicon Valley Bank or Silvergate or First Republic. So I think Apollo has a very nice sticky deposit base because they also have the Athene business, which provides them effectively insurance premium capital for life insurance policies, which are very long dated.

So I think there's always a question of how do you lengthen your liability side so that you can withstand business shocks. And we're no different to other parties. If you look, what we're looking at doing at the moment, Jason, is getting in place some of these wholesale facilities that would be a year or more where it's $100 million ticket plus for a year. So that would give us a relatively sticky liability side of the business that would be able to ride out the business cycle.

short-term shocks. So we want to move away from our  deposits.

<< Jason Kam (48:18) >>:

And what are these kind of wholesale facilities?

Are they kind of like JPMorgan Chase type of facilities or are they kind of like Galaxy type? Are they crypto native or are outside of crypto?

<< Sid | Maple (48:31) >>:

It's a mix at the moment. So we have one who's outside crypto, and then we have two that we're talking to who are inside crypto. And then we also are looking at some of these facilities actually from the DeFi space. And that's where I'd say ⁓ we have a really good differentiator from some of those other CeFi providers. As far as I know, we're the only one able to tap DeFi capital at scale, whether it comes from talking to these stablecoin issuers or some of these other yield and money market protocols.

And so ⁓ we're now, as well as foundations, but we're now approaching these parties seeking to lock up more stable long-term capital. But if you look, know, Ledn, Two Prime, Galaxy, Coinbase, these guys are not, like they have no ability to tap DeFi capital. It's all, you know, either other wholesale facilities or their deposit base. So I think that actually gives me some, ⁓ greater degree of diversification in Maple's liability side.

<< Jason Kam (49:28) >>:

Would you do uncollateralized lending again?

<< Sid | Maple (49:31) >>:

I think internally there's still little bit of PTSD over it and so there's definitely reluctance to do it on our side. And there's also a sense that it takes a lot more labor to do an undercollateralized underwrite and then a lot more labor to continue to monitor it than it does the overcollateralized stuff. And we see that there's a really long, steep runway in just continuing to do the collateralized business and focusing on Bitcoin, ETH, Sol, XRP as kind of like

good large cap collateral. So I think you shouldn't expect to see us get back into under collateralized lending any time soon. Instead what we would focus on is just maximizing the scale of our existing business and focusing on that side of things. I think we will continue to observe the under collateralized lending market for signs that it's picking back up or signs that the crypto credit space is getting frothy again. we don't have any great desire to get

to jump back into it right now.

<< Jason Kam (50:32) >>:

Got it. That makes sense. Well, let's see if the members have any questions. This is going three seconds.

I don't think so. Is there anything we haven't covered yet that you really want to say?

<< Sid | Maple (50:47) >>:

No, think this has been pretty good. ⁓ We will have an announcement coming out later this morning about a partnership between ⁓ us and Cantor, which we're really excited about. So stay tuned for that. But I think that will mark this turning point where you're starting to see the bridging of TradFi and DeFi. And so we're really excited to be a part of that. But for us, that's part of what we're talking about is how do we scale our business?

we're going to have to get more institutional capital in. I can see that other people in this space are thinking the same thing, right? Ethena partnering with Securitize to ⁓ tokenize and wrap  the USDe basis product and try and sell that to traditional investors. I think everybody recognizes that the pie within crypto hasn't grown over the last couple of years. So we're going to have to bring traditional money and institutions in.

if we really want to scale out businesses.

<< Jason Kam (51:48) >>:

It would seem like it's just a better... like if you can just tap into the institutional desk and all of a sudden the hedge funds can lend through a prime broker to you, like a click, and that... but I guess it'll take a while but Cantor could start.

<< Sid | Maple (52:04) >>:

Yeah, it will take a while. These things, it's like an S-curve. They're really slow at the start and then you hit an inflection point, it moves really quickly, and then it kind of tapers off again. But I still think we're in that very early part of the curve at this stage.

<< Jason Kam (52:16) >>:

Very exciting.

⁓ Good luck with Cantor It's a good start and maybe there will be more to come. But Seth, thank you so much for your time.

<< Sid | Maple (52:22) >>:

Awesome.

All right. Thanks for having me, Jason.

<< Jason Kam (52:26) >>:

Thank you.