On The Brink with Castle Island - Sid Powell (Maple) on Maple's Comeback & DeFi Credit Markets (EP.652)

Episode Date: August 4, 2025

Maple Finance CEO and cofounder Sid Powell joins the show to talk about Maple's huge year so far. In this episode:  Syrup and Maple's evolution into an on-chain asset manager Traditional credit players servicing on-chain finance DeFi's strengths and weaknesses relative to traditional markets

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only is an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated.

The federal government loans American International Group, AI, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. And print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called a Bitcoin. Bitcoin. The story of Maple Protocol is a comeback story that in many ways mirrors the journey of DFI capital markets itself. Mabel founder Sid Powell left his career in traditional debt markets in 2019 to build a more efficient crypto lending platform. At the time, Blockvine Celsius had emerged as early crypto lenders using off-chain underwriting, while Maker and Compound had surfaced as nascent defy market entrance. Powell had seen the inefficiencies of the traditional banking system up close and became interested in the concept of capital formation outside of these

traditional guardrails. Maybe stable coins and smart contracts could remove some of the friction in underwriting and lending, an institutional grade credit could exist on chain with fast-moving capital formation and a far wider set of market participants. Maple launched in 2021 with that vision in mind to offer high-quality defy credit opportunities in a way that felt credible and compliant. For a while, that bet was paying off as Maple gained momentum and delegates, delegates being expert credit underwriters on Maple's platform, and were consistently underwriting loans to trading firms and market makers. Maple was facilitating hundreds of millions and originations, and for those watching from the outside, it felt like the protocol on reach escape velocity. Unfortunately, 2022 proved a

difficult year. The crypto credit contagion unfolded at its scale, from Celsius and BlockFi to the FTC's fallout, and Maple found itself caught in this storm. Major borrowers defaulted, including orthogonal trading and the full structure of the protocol's first iteration was tested all at once. Pool delegates were caught off guard, lenders suffered losses, and TVL suffered. For Powell, the founder of a now-distressed protocol with a live token and real users, the path forward was difficult and opaque. Among great adversity, Powell and the Maple team got to work forging a path forward. That process started with a retrospective of what went wrong, what was salvageable, and what risk parameters would be sustainable over the long-term future.

The team quickly identified areas for potential change. They tightened the underwriting process and implemented stricter requirements for pool delegates. They also launched a new product called Syrup, a permissionless lending primitive that allows users to earn yield on stable coins without relying on a human underwriter, a delegate. Instead of curated delegates, Syrup uses standard risk parameters and smart contract logic to manage loans, making it significantly more scalable and accessible for a wider set of lenders and borrowers. This was a meaningful shift, a move away from centralized underwriting and towards more scalable rules-based infrastructure. This wasn't an overnight turnaround and trust had to be earned back

gradually, keeping in mind that most other lenders from 2022 had completely gone away. Maple initially re-entered the market quietly, with a focus on reliable, stablecoin native credit and institutional grade partners. Over time, TVL began to return and new borrowers came online. Perhaps most importantly, the protocol separated itself from the C-Fi collapse that had defined the previous cycle. In typical slowly than all at once fashion, Maple made its way to $500 million in deposits by late 2024, no small feat, and then found true escape velocity in the spring of 2025.

Today, Maple has over $3 billion in deposits. The platform offering now looks very different from its same. first iteration, more streamlined, risk-aware, and focused. As DeFi credit markets show side of maturity in the backdrop of the ongoing stablecoin boom, Maple is once again at the forefront of defining what institutional capital market formation could look like. In this conversation, Sid and I discuss on-chain credit broadly and Maple's path to becoming a market leader in stablecoin-powered debt markets. I hope you enjoy our conversation. Sid, thank you for joining us today. I wanted to say from the outset, one thing I admire about you and the team at Maple is for as long as I've known you in the protocol, it feels like while there have been inflection points in growth and there have been times when things have been slower, I don't see you guys as having changed attitude in anyway. It seems like you've been fairly consistent in what you've been trying to do throughout.

Yeah, I think that's pretty accurate. I mean, first of all, thank you for having me on. I've listened for a long time, so it's good to finally be on the show. But I do think we do treat it as kind of a job, right? Like rather than something where you one day, some days you wake up and you have kind of the passion for it and you show up to work and some days you don't and you stay in bed, people always viewed it as a profession. And so we try and show up and do the job, whether we like it, day in or day out. And some days it's worse than others and you don't feel like doing it, but you still put on one boot at a time. and show up and do it to a professional degree. And we did that through the end of 2022 when things are really bad and into 2023. And then we still do it now. We haven't changed kind of the way or the pace that we work at just because times are much better now. Yeah. And a point there I'd highlight is, I don't think there are many teams that have been around for that kind of time span, having had a moment where you had to refocus almost or readjust without having completely pivoted into a different category. Like a lot of these things became restaking protocols one day or went from NFTs to some sort of modularized lending one day. And you guys have really stayed true to the credit in capital markets direction.

Yeah. I think we have tried to do that. Actually, just continuing the thought from the last question. I mean, I think two things that kind of influenced me were I really like this book called what I talk about when I talk about running by Murakami. He talks about how he gets up is he has like a routine when he's writing a book. And, you know, he gets up every morning at like four or five in the morning. and he writes for five or six hours, then he eats, then he goes for run in the afternoon. And it's just like the craft is getting up and just doing that every day, whether he feels like

it or not. But on the pivot side, I think we've always thought that to really be successful, you have to play in where you have an edge. And so the closest we ever came to doing something kind of different was early 2023 when there was the craze around tokenized T-bills. We put out a product that was cash management. So it was still, structured similar to how we do the over-collateralized lending, but the collateral for the loans was T-bills. So the rate you could earn was about the T-bill rate. What we found, though, was that it was very competitive. We had very little way of differentiating ourselves, and it was a race to the bottom on fees. So it kind of went back to our roots, and for us, that is lending and credit, and doing that

to institutions. And what we observed was that the most contrarian bet you could take at the time in early to mid-2020 was thinking that lending was going to come back. Everybody was ready to totally write off the sector. So we more looked at, okay, if we can't do under collateralized lending, which is what we've done before, is there a form of lending we can do? What is the market saying it will buy at the moment that it's not being sold or not being offered? And clearly it wasn't under collateralized lending at the time. So what we did was we looked at, over collateralized lending, where all the main competitors in that segment had blown up or exited the space from the end of 2022. And so we said, okay, we have the skills to do this. Nobody else is

doing it. We can price it appropriately and we can get paid for it. And we think over the long term, what are the odds that lending the oldest service in finance doesn't come back within this space, probably pretty low. So that gave us the confidence, I think, to stick with lending as a segment instead of trying to pivot and become a restaker or a tokenization platform or something else. And I have seen a bunch of teams who pivot repeatedly and sometimes it's good to pivot. Slack was a pivot, but sometimes you actually just want to stick it out and work out a different way to kind of hit your same North Star. It's pretty incredible. I remember a time in there on 2023 when consensus view in the industry was probably that crypto and C-Fi didn't go well together. And you had a coinbase, but in terms of something like lending, there was an intense skepticism around

centralized lending for crypto, which is nearly ludicrous in retrospect. Yeah. Some of the pain points to the criticisms of the centralized lending at the time, I think, were valid. So limited transparency and a lot of opakness around the performance of the loans, were they paying or not? Were they collateralized or under-collateralized? What was the equity of the lending company? So how much buffer do they have to absorb losses?

Well, those are more fairly valid criticisms, I think. But it was taken to kind of an absurd degree, which was that lending is dead and doesn't belong on blockchains in the sector. And they just do it so much better in traditional finance. And if you read enough traditional finance history, you see Citibank blows up every 40 years. So I don't know that they are doing it so much better than we can. And I think in a new segment, you have to kind of make it up as you go along. and you can take lessons from traditional finance,

but you have to adapt it to what is a nascent market. You can't require every company that you deal with in crypto to have audited financials by a big four accounting firm because that just doesn't exist. So the consensus view was obviously very against lending, but that in turn created the opportunity for us. If the consensus hadn't been that lending was terrible and there were a bunch of people coming in,

wanting to offer the same products we do now, then maybe we wouldn't have grown the way that we have over the last, last 18 months. It's like Howard Marxists. You have to be both non-consensus and correct. If you're a consensus and correct, you don't get paid. And if you're non-consensus and wrong, you're toast. You don't make anything. Yeah. Yeah. Yeah. You're right out. How much do you think some of those irresponsible credit activities in 2022, let's say, set us back as an industry? And was that purely a matter of individual actors making brash decisions and some accompanying contagion? Or how do you look back on that period and the mass fallout that we had?

Well, it definitely set us back. I'd say probably the rest of the duration of the Biden administration, right? So certainly at least two years because it's only now that some of the players who initially had their own blockchain and on-chain project teams doing something, all those teams effectively got shuttered. And I would say it's only now that we've kind of come through to the Trump administration where there is more of an appetite for the industry to be based in the US, that those teams are getting restarted or those people are getting rehired again. So I'd say at least two years, but it's always very difficult to kind of run a Schrodinger's cat type scenario on the probability that didn't play out.

But to your other question, I hate it when somebody says, oh, well, the causes are multi-factor. I think it was due in a large respect to individual bad actors, but what kind of creates the condition. And in some cases, people who are otherwise good who just made incorrect decisions at the time. But definitely there were cases of fraud, three arrows, Celsius. But you have to kind of look at the conditions that create that right. And the conditions that created are easy money. Easy money is when more fraud happens. And that is because money was getting pushed into venture and then from venture gas to get pushed into investable businesses. And what happened was that the lending companies got valued based on the size of their loan book. So if you gave out a bad loan,

let's say you gave out $100 million of bad loans, you got valued the same as a company that gave out $100 million of good loans, maybe more because it's obviously easier to give out $100 million of bad loans than $100 million of good loans. It takes longer, more rigorous underwriting. And so those businesses could scale faster. And the game was to get as big as possible so that you could revalue yourself and do another equity round at a higher evaluation. So that bred bad behavior because there was no feedback mechanism to uncover who was swimming naked until the end of 2022 after we had the lunar blow up and that uncovered a bunch of holes in balance sheets.

And to a certain extent, that also drove things like FTX, right? Sam, SBF was doing a new round at 20% higher valuation every two or three months, right? I remember at the start of 2022, I think he was raising it $10 billion, and by the end it was $30 billion, or just before the end of November. So I think the massive amounts of liquidity in the system definitely created distortive behaviors. But this is, as Ray Dalio says, this is what you see in every credit bubble, and this is why it's called a credit cycle. And that's just what you have to watch out for the next time. And I think the key in a lending business is that unlike other businesses, you have to recognize that you never really hit escape velocity from being in a cyclical industry. And so you always have to watch out that at any given cycle, you are still at risk.

Your business still faces an existential risk if you don't control your credit and your underwriting and your risk management. And that's kind of unique to credit and lending businesses in all of finance and startups. It's not really the same in other sectors. Yeah, that said, I do worry about where we'll go to with some of the trends that I'd argue are closer to easy money, like you'd say. Like, I'm sure we'll get a leveraged treasury equity vehicle. for example. Yeah, we used to have those in TratFi, right? They used to lever up T-bills a lot. I think

they still do, but you will have, I think, a treasury company that probably leveraged it too much and maybe blows it so far, but that will be driven by very easy accommodative monetary conditions. And so we have an advisor to the company and he's been in the lending business for a long time. And so we catch up with him every few months and we kind of take stock of, on a scale of 1 to 10, where are we in terms of credit conditions? Ten being the worst and one being the most conservative. And our sense at the moment is that we're still in kind of the first half. It's still more like a four rather than like a seven or an eight or a nine, whereas mid-2020, you probably would have said that was more like a nine. I remember at that time, rates borrowing against Bitcoin were

getting down to like two, three percent. Unsecured rates lending Bitcoin were 10 to 20 basis points. and the dollar unsecured rates were 6%. So fully unsecured lending, whereas here today, rates lending against Bitcoin, over collateralized are probably in the 7 to 8 range. So I'd say we're still in a much more conservative set of conditions. And I don't see that kind of frothy euphoria that we did in 2022 yet.

Yeah, I tend to agree. Talking about some of these systems, how did you decide to go and try and build DeFi credit markets or what inspired you to move that direction, given your experience? So my experience was I used to work in Tradfai banking. So I used to be in an area called securitization and debt capital markets. This meant basically we issued bonds and we helped companies to issue bonds. And that was how they borrowed.

So they borrowed large amounts, like let's say 500 million. And then they break that into small chunks and they make $500,000 loans. So I always kind of had lending in the DNA. But I wanted to go to a more entrepreneurial company from there. So I went to a smaller commercial finance company that still exists in Australia today. That was where I met my co-founder. And the initial idea was to do tokenized bonds on chain. So that was really tough.

There was no defy at the time that we started the company. It was kind of five or six teams. Was that for distribution? Or what inspired that? The idea was that if you could lower the cost of issuing bonds, you could make it possible for the longer tail of finance companies to come in and issue them. Because at the time, there was more of the case that was almost not worth issuing securitized bonds if you couldn't do 100 million at a time.

So you can see most companies were taking five years of operations to get there. So you could just bring that forward and help those companies. What we found, though, was there was nothing to tokenuts on chain. So all of defy was maker, set protocol, compound, uniswap. I don't think our RV had not, like, rebranded from EFLend at that point of time. So really, you had a very small on-chain ecosystem. And so what we found was we instead had to go more of a direct lending route and look to just lend to institutions who would borrow. But the initial way that we wanted to do it was back in 2018, 2019, everybody was obsessed with marketplaces.

You had to be an asset light marketplace. God forbid your asset heavy, because you're not going to make the same returns on equity. And so we tried doing that. And that was the initial iteration of Maple was you'd have other credit managers called delegates come on and they would earn a fee, like an independent contractor. And we would earn a platform fee because everybody wanted to be like Stripe or Uber or Airbnb and you clip your platform fee and other people take a portion of the revenue. And then you're kind of neutral. So you can scale much easier because you don't have to hire staff. You just allow other people to sign up and use your infrastructure.

And that was kind of working out to begin with. So we got the delegates up and running. We thought that we would not have any reputational impacts if delegates had credit issues with the loans they underwrote. And we thought we would be able to scale much faster being a kind of asset-like marketplace and you get the asset-light marketplace multiples, right, in terms of how people rate your company. I think what you can see, though, in the time since then, is that actually there's a lot

of value in being asset-heavy. Asset-heavy is kind of a moat. Vertical integration gives you pricing power to be vertical. integrated, you just have to have more blant and equipment and capital. And so that means your asset heavy, but you get the pricing power and the pricing power gives you longevity. And you can see it in Apple. Apple didn't say we want to be an asset light piece of hardware that supports any kind of software, nor do they want to say, we just want to have the app store and it's available on any hardware device. They said, we've got to have the both of them. And you can see

that for them, they make all of the profits in the smartphone sector, right, despite being a minority of the market. And I think you can see it with Tesla as well. They make their software, they make their hardware, and across history, economic history, as well, you can see numerous examples of this going right back to Standard Oil. And so I think that is how our model shifted over 2023. We said, okay, we're going to remove the delegates. We will be the sole kind of underwriter here, and we will therefore control who gets to borrow. And we will actually be the borrower ourselves. So we borrow from people who put capital on the platform and then we lend it out and we keep a spread. But it allowed us to move faster. We doubled our revenue because we weren't paying

out fees to third parties on the platform. And I think over time, you can see that that's kind of proved strategically the correct way to go. Notwithstanding that a number of our venture backers at the time said this is going to prevent you from scaling as fast as you could if you were just infrastructure. And they have pointed to other lending markets. that have grown quite substantially over that period of time. But I would say that there are some of those lending markets who make a lot of revenue and are doing very well. There are some who actually make no revenue, despite being larger in terms of TVL than us. And that's because other parties, they have weak negotiating positions and other parties have effectively taken the majority

of the revenue there. So we have a better negotiating position. And so I think vertical integration rather than just being a pure marketplace is actually in the end the better way to go. I think it's a great point. There was such a push towards being asset light, because I look at it as an existential problem in defy that everyone sees themselves as just capital aggregation layers or a capital marketplace without any actual tie to the capital. But that makes it naturally very fleeting. And then you had this idea of protocol-owned liquidity, which I think made a lot of sense

in that vein of like, okay, you actually have some control of it for the first time. Yeah, I think protocol owned liquidity gave teams about. better balance sheet and wasn't necessarily executed well by some of the teams that did it, like Olympus, but the concept, I think, was sound that getting a balance sheet gives you heft and gives you negotiating power. In the Web 2 world, you can look at eBay, which continued to practice being asset light, and then you can look at Amazon that built its own fulfillment centers, and ultimately the fulfillment centers allowed them to vertically integrate. They could sell the good, and then they could drop it to your house, whereas eBay relied on third part.

parties for that. And so the pricing power eventually finds this way to the third parties. My view is that it's actually very important for teams to kind of vertically integrate so that they get pricing power. They have a balance sheet. They can swing around. And nowadays, we also get pitched a lot of deals where we can get extra spoken incentives and things like that if we're lending to a certain company or counterparty or partnering with them in some way just because we now sort of have that heft in terms of AUM and the pools. So to summarize the conversation with regard to Maple, Maple was started as an on-chain credit marketplace.

Is that how you would describe it today? Or how is the platform evolved and how have you intentionally involved it? So we would have started the marketplace. I think the first thing we dropped was we became more of a lender. And we started marketing ourselves as a direct lender rather than a marketplace. And the latest reimagining of what we are, reimagining is probably not the right word, but the most apt description of what we are today is more of an asset manager. So we call ourselves an on-chain asset manager.

Our primary focus is lending and credit and yield. And we run a couple of strategies. The first and the largest is the over-collateralized lending. So we are a secured lender to institutions. We have a loan book of over a billion dollars. and typically our loan sizes will be anywhere from 5 mil at the low end to 100 mil plus. We actually just did 100 mil one today. And then the other line is we have a BTC yield product.

So it's encompassed within the term asset manager, on-chain asset manager. And if you look, the trad-fied peers or competitors I would point to would be Apollo, Ares, Blackstone. These guys are the largest non-bank lenders in the world, but they don't call themselves lenders, what they call themselves as asset managers. And I think we think about ourselves in the same vein. We're an asset manager with a focus on credit and lending. And ultimately, we want to be competing with them. Our view is that all lending over the next 10 years is going to be done in stable coins. And so we are getting a leg up in kind of surfing that wave. And that will bring with it, cost advantages, distribution advantages, speed advantages that will allow us to take share.

How do you create stickiness in the assets that you guys manage? There's a couple of ways you can go. So you can either do pricing or quality, I think. And in lending and asset management, pricing is effectively, do you minimize your own spread or deliver a higher yield to your customers? But the other thing you can do is you can offer a lower volatility, so more stability in that pricing. And so I would say versus DFI peers, we tend to produce a higher yield or return. And a couple of the reasons for that is that we serve institutions who like hosting, BTC and native assets instead of wrapping those assets for a variety of tax, compliance, and smart contract risk reasons. But we can offer that. And your average defy protocol can't

accept native Bitcoin. And so the customers pay a little bit more for that. We can also offer qualified custody because we are more integrated now with CFI providers like Anchorage, BitGo, Coinbase custody, Zodia custody, Fireblocks, and a number of other wallet and custody solutions, copper as well. So that optionality, you also pay a premium for if you're an institutional client. And so generally, we deliver a higher yield than the defy lending protocols. And so that's kind of pricing and quality. But we also tend to be more stable over time because we don't have utilization based rates, we can offer fixed rates. And again, institutions like to be able to lock in certainty on their borrowing cost.

And so our rates don't fluctuate over time. You'll never see a day where the maple rate goes from 6% to 9%, and then the following days back at 4%. Like you do on some of the DeFi protocols. Many of them, I would add. Yeah, it will be a steadier 6.5 to 7% over two months. I've done some research on Apollo and some of these large credit firms. And I would say roughly, let's say, because they're in private credit, some 30, 40% of what they allocate to is investment grade credit opportunities.

How would you compare where Maple is allocating as an asset manager to that set? They are very fundamentally, like we all fall within the ages of institutional credit or private credit. However, they have a $300 billion plus portfolio. So they're naturally going to be doing a wider variety of things. and they've built their business up over 40 years. Apollo was started in the late 80s after Drexel Burnham by some of the alumni from there. And so they've had 40 years to build a very well-diversified business.

And I would say our credit, we fall within the unrated category because the company we lend to our primes, OTC desks, funds, and exchanges. But we do take what I consider to be very good quality collateral. We're taking Bitcoin at trades over $50 billion a day, including Sundays. And so we always have very good liquidity and downside protection when it comes to that. But yeah, so I'd say it's institutional grade quality. It's not rated yet by ratings agencies, but I do think that is going to be a step that comes in in the next one to two years. So my background was securitization. I would love to start securitizing this stuff. And I think

that is ultimately how we're going to go and package Bitcoin-backed loans up and sell them to the next wave of investors who will come in, which will be trad-fi firms. They don't necessarily want to buy an allocation to loans done through a smart contract, but what they might want to buy is a senior trench in a rated securitization vehicle that has 200 Bitcoin-backed loans sitting underneath it. And that's ultimately where I think the puck is going over time. And it brings in more capital, a wider set of investors, and ultimately allows a firm like us to scale. Securitizations is a major way that firms like Apollo and Ares and Blackstone source their capital. It's not just directly raising money into fund structures.

And because you guys are sourcing capital and stable coins and crypto assets, does that give you unique opportunities in terms of who you can work with on the borrower side? Well, I think on the borrower side, there is just a natural preference to borrow in stable coins. most of the firms who borrow today are typically using it for exchange trading or arbitrage strategies. And so you buy and sell Bitcoin in USDC or USDT, you're not doing it in Fiat for the most part, because you'll be doing it on an exchange. And so there is a natural desire to borrow in stablecoins. But the advantage for us as the lender is I have zero marginal cost lending to a trading desk based in Korea versus one in Miami or in London or in Singapore because it's the same cost to send that $10 million of

stable coins through them, which is very little and you can do it any time of day. Whereas if we were sending them fee it, well, if that firm was in Hong Kong, it'd be much harder for me to send it to them. I'm going to have banking infrastructure. It's going to take multiple days to get to them and there's going to be a lot of fees taken by middlemen. So I think stable coins are just so much better in terms of running a loan book. And it's much easier to track as well. It makes a ton of sense. The 24-7 aspect is abundantly clear to me because it's one thing if I want to go buy an asset and the market's closed. It's another thing if some sort of financial service in Hong Kong needs a line of credit instantly and they can't get it because markets are closed.

I don't know if you ever heard about the MoonPay story when Trump coin launched where they had to source I did. They had to source it at like insane interest rates. It launched on Friday night. Right. Yeah. And so lending in stable coins is basically the only way you can fund a business like that when you have that short-term capital desire. We from time to time do get pitches like that from payment processing firms. That's not a line of business we do just yet because you're effectively funding against receivables. So there are things that can go wrong. But that kind of short duration, really short notice, urgent, obviously you can make a lot of money if you have the cash when those sorts of opportunities come up. And having stablecoins is that easier way to deploy it. One topic we've ran into is I think we'll get scenarios like that, especially in crypto as you have FX systems, stable coin systems. But it seems like a lot of businesses would potentially prefer a revolving line of credit because they have excess needs maybe at a certain moment when they have a lot of

users on ramping to an influx of payments. And I imagine that wouldn't be the preferred structure for someone like you guys. So how do you think this shakes out? Do you think that will be the need or demand of payments companies will be to have a revolving line? I think I want a revolving line. The challenge with those, so I used to do them when I was in banking, is you're going to pay an undrawn facility fee while you've got it. Because if you want to have the undrawed line of credit for me, I've got to set aside that capital so that I can send you the loan. if you want to draw it down. And it's really good for a lending company if you're at scale. So if I have just a billion dollars in cash lying around and I have a bunch of these firms

who want $50 million lines of credit and I know that most of the time they're not going to be drawn and that really like I'm always going to have kind of $200 million of cash spare, then I'm totally comfortable doing this because it's just decreed to my bottom light. Like I had the cash there anyway. I may as well get paid something for keeping it there. Whereas we tend to run at a higher drawn level. So my opportunity cost of keeping aside this 50 million cash for these guys is that I could have been out there lending it for 7 or 8%.

So that's typically where the undrawn lines of credit get challenging. As we get bigger, we will do things like undrawn lines of credit because we'll start to have scaled in order to be able to do so. and there's naturally demand for it because everybody wants the ability to call down capital at short notice without having to pay an arm and a leg for it. And if they have to borrow it, then they're going to pay 7 to 8 percent or higher, depending on what they collateralize it with. And if they can keep it undrawn, then they're only paying 1 to 2%. As Maple scales and maybe even say as on-chain asset management or capital market scale,

who have been the folks willing to deposit from early on and be early adopters? And how do you think the adoption curve migrates? I think the early adopters within the crypto space are always a combination of high net worth individuals. And that can be in the form of known folks who sign documents with you, or it can be in the form of some of those DAOs. There are certain groups like DeFi Wales, Turtle Dow and others that are kind of now acting as almost cap intro or aggregators for some of these high net worths. But I'd say high net worths. And then the other one is on-chain, yield hedge funds. So they will run more complex strategies and effectively they are getting paid by their LPs to be able to navigate the complexities of smart contracts and some of these on-chain

yield offerings and manage the downside risk and do looping strategies where they can. But that's the other core group who kind of deposits into things like what we're offering, particularly when we had things like points programs, token incentives, that type of thing. And then over time, As your product matures and you can show a track record of not hitting losses and being able to meet redemptions and things on time, where it migrates to is corporate treasuries, family offices, protocol integrations, because they're more comfortable putting their brand on top of yours, and they're comfortable they can stand behind the risk of your platform. And so nowadays we have more corporate treasuries who use our product.

We have protocols who integrate with us. We are now across Salana as well, and so we're active on Salana lending markets, and our product syrup USDC is now accepted as collateral on multiple lending markets. And that's because it's viewed as a relatively safe asset compared to other more volatile ones out there. It's exciting to see the waves of comfort, and you always have that early adopter base, like you said, that can be individuals, people are familiar with crypto. So in the scope of a lot of the directions you guys have gone that we've talked about, how much has been influenced or informed by regulatory policy and sentiment?

And how is that open doors for you? How is your trajectory mirrored effectively what you can and can't do? It's a good question. Your regulation kind of sets the boundaries of what you can and can't do in certain markets. And it also acts as a bit of a speed break, if you will. And so the core business, like Maple Insto, which we have two strategies, blue chip and high yield, those are only offered to accredited investors within the US. So you have to onboard with us, sign documents, show that you are an accredited investor.

And that was really driven by regulation. And then we had an offshore product, which was set up to be more defy-friendly, integrated with defy protocols. You can take the LP tokens and move them around defy. And that was set up in the middle of last year, but walled off from the US. and that was because of the regulatory clampdown on defy within the US and the generally more hostile posture that was in place. So that kind of effectively shaped this bifurcation where we have two key product lines and one that is not available in the US at all. So the regulation definitely plays a large role in shaping things.

But I would say, you know, it's like on the bowling lane. It kind of sets the guard rails. You're still trying to get to the pins at the end. you just have to kind of know your boundaries there. And so for us, it didn't slow us down from trying to grow the lending business. It just meant that when we launched this more DFI-friendly version of the product, we couldn't make it available in the U.S. and had to take a different approach there. Given your expertise in the segment, a lot of people seem to believe we're on the breakout of institutional great assets coming on chain in large form beyond what we've seen in the past.

Are you aligned with this, or do you think there is an element of overblown expectation or how do you view that potential phenomenon? I have a mixed view of it. So I think empirically, yes, you're seeing more institutional assets coming on chain. Biddle is minting more, tokenized T-bills. And Robin Hood is going to be bringing equity-like derivatives for private companies on chain. And folks like Ondo are going to be tokenizing things like Tesla. So Cracken is already doing that. So empirically, yes, we are seeing that happening.

But I think is that going to trigger a wave of, let's say, massive new AUM coming on chain? I think that's where I have more of an issue because they're taking an asset that's already widely available off chain and just trying to sell it to the on-chain investors who presumably made their way on-chain because they were looking for something else, right? A lot of people on chain are still high net worth in developed markets, right, as it is to say. say because they were early on to adopting new technology, and it is generally investors in developed markets that go and adopt new technology first. So a lot of those folks already had access to Tesla stock or other institutional great assets. They can call up a Morgan Stanley banker and get access to private equity. So I don't know that's the answer. And I think what we're seeing

is that there is a buy-side problem there where there's just not that much demand to buy or hold these assets on chain. We're taking the other approach, which is we're saying, actually we think a lot of tradfine investors would be interested in Bitcoin backed loans because it's a very good yield pickup versus T-bills. It's pretty short dated and short duration so you can get your money back quickly. The collateral and the downside protection is really good. Trades 50 billion plus a day, even on Sundays. And this is actually a pretty interesting asset that they can't ring up a mortgage Stanley banker and get. And so maybe if somebody's going to sell it, why shouldn't it be us? And why shouldn't they want to buy it? Canter decided, that Bitcoin-backed loads are interesting enough to start originating. And we think that other firms are going to see what they saw and move in that direction as well. So we're actually taking the inverse approach. We think more trad-fired money will come on-chain or choose on-chain underlying assets like Bitcoin-backed loans done in stable coins. But the stampede that everyone expected to see of people buying equities on chain, I think that's going to be slower to materialize.

I like that view and I completely agree. It's as if there's business. to be an on-chain that hasn't been taken advantage of by Wall Street versus vice versa. Yeah, you've got to find a niche, right? That's kind of the key to competition or rather to avoiding competition. Yeah. Sid, thank you for joining us and for the insights. I'm glad we had a chance to finally have you on. Me too. My pleasure, White. Thanks for having me on. Appreciate it. Thanks for listening to another episode of On the Brink with Castle Island. To find out more about Castle Island, visit castle island. Visit castle island. V.C. To listen to all of our podcast episodes, please go to On the Brink dashpodcast.com or just click on the tab in our website.

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