An innovative cryptocurrency lending market suddenly emerged amid last year’s collapse in bitcoin prices and most other assets. By the end of 2021, the market will pass the $2 trillion milestones in terms of global market value. To avoid locking in losses, some holders borrowed against digital assets or deposited coins for a small but passive income with minimal risk. Undoubtedly, the very young market is still tiny compared to its traditional counterpart. Nevertheless, this sector deserves attention, considering its growth and innovation rates, the value proposition of services, and the potential for market infrastructure development.
Ledn Overview
Ledn is a for-profit concern registered under the federal laws of Canada. Ledn is not a primary coin offering. It abides by the strictest consumer protection and privacy regulations. Through its partnership with BitGo, Ledn offers one of the most qualified specialized digital asset stores, as well as one of the most comprehensive insurance policies in the business.
Low fees are also an important benefit of getting credit through Ledn. The platform charges 2.5% per annum of the loan amount from the lender for its services. Getting a loan through the lender’s ad is done without charging a fee to the borrower if the placement of an application on the platform – 0.5% per annum of the loan amount.
The advantage of obtaining a loan through a lender’s ad is the instant availability of funds, through the placement of a loan application on the platform: borrowers can choose when they are ready to pledge. Cryptocurrency can be transferred immediately to secure the application and thus will significantly increase its attractiveness in the eyes of the lender, or the collateral can be transferred already after the lender accepts the application. If the exchange rate of the cryptocurrency increases during the loan period, the borrower benefits because he has to pay back the amount in the currency of the loan. If the bitcoin exchange rate drops, the platform will ask for additional collateral or to pay a portion of the principal. Otherwise, part of the collateral can be sold to normalize LTV.
Ledn.io: A Brief Introduction
Ledn.io was founded on August 3, 2018, by Adam Reeds and Mauricio Di Bartolomeo to create financial solutions that would allow individuals to save on digital assets. Ledn’s portfolio currently consists of three key products. Loans secured against bitcoins are the first. The second is a bitcoin balance doubling service, and the third is bitcoin and U.S. dollar savings accounts. In the segments that follow, we’ll look at each of these three services.
Ledn has partnered with Genesis Capital to offer these high-interest savings accounts. The interest rate on these savings accounts can be as high as 8% APY (annual percentage yield), with account holders receiving interest income each month. In addition to Genesis Capital, Ledn has also partnered with BitGo, probably the most famous trust and digital asset security company.
Bitcoin Secured Loans from Ledn
Bitcoin secured loans from Ledn are a great alternative to selling your crypto assets. The system is set up in such a way that you can simultaneously keep your digital assets and get free funds that can be spent on investing trading, or any other personal needs. Crypto investors often face this problem when they need fiat money but find it difficult to decide to exchange cryptocurrencies or do not want to sell their digital savings because it often involves the loss of further profit. Cryptocurrency loans are primarily aimed at solving this problem.
Instead of selling bitcoin at a disadvantageous rate, you can place an application for a loan against its collateral, specifying the optimal conditions for yourself. The borrower chooses the amount, term, and method of obtaining the money. After the application is accepted by the lender, the pledged cryptocurrency is sent to the vault and the borrower is transferred the loan amount. At the end of the loan period, the loan amount will need to be repaid, or the transferred collateral will finally be written off in favor of the lender.
A cryptocurrency lending scheme implements a mutually beneficial relationship between the borrower and the lender. Concluding a deal of this type has a lot of advantages for both parties:
– an easy way to get free money into circulation;
– opportunity to make money on loans with minimal risks;
– minimum interest rate for the use of credit funds;
– opportunity to choose terms and currencies independently;
– cryptographically secured transactions;
– the absence of intermediaries in transactions.
The demand for this service is also due to the reluctance of investors to part with their assets taken for the long term.
The procedure of applying for a loan
It is necessary to start with the registration procedure. To register on Ledn, you need to provide the platform with the following data: name and surname, email address, and phone number. We have already discussed the documents required to apply for a bitcoin secured loan. In addition, you may need to provide your date of birth and home address.
The process of applying for a Ledn secured bitcoin loan is not complicated. However, it does require you to provide the platform with your personal information. Below are four documents that you need to provide:
– A copy of your government-issued identification document
– A copy of a document proving your address
– Your government-issued ID picture.
– Details of your bank account to receive funding.
If all of these documents are submitted correctly, loan approval takes less than two minutes.
Savings Accounts
One of the most interesting aspects of these savings accounts is that they do not require a minimum balance and have no lock-in period requirements. Interest payments are paid monthly. You can withdraw your funds at any time convenient to you. Ledn has partnered with Genesis as the primary borrower for its BTC and USDC Bitcoin and USDC savings accounts. It is the largest and most well-known lender in the digital asset industry. Owning a Ledn Bitcoin or USDC savings account has various benefits.
Ledn savings account interest rates and fees
Transferring Bitcoin or USDC to any other Ledn account is completely free. If you use a USDC savings account, you will be charged a 10 USDC fee for each withdrawal. Other than that, there are no additional fees. The 10 USDC fee covers the transaction fee on the Ethereum blockchain as well as the miner’s fee.
The annual percentage yield of a Bitcoin savings account, or APY, can be as high as 5.25%. APY on USDC savings accounts can be as high as 8%. Ledn does not charge any fees for using a Bitcoin savings account; however, when withdrawing funds, the transaction processing fee on the Bitcoin blockchain is automatically deducted from the withdrawal amount.
Once the contract expires, the user can extend it or close the transaction. In the first case, the financing is carried over to a new term. The repaid loan is automatically canceled. The collateral is transferred to the new loan. Depending on the current rate of the coin, it may be necessary to increase it. The terms of the contract are also capable of changing to reflect the market situation.
To close the deal, the client pays back the full amount of borrowed financing and interest. The calculation is done in the currency of the loan. The pledged amount is automatically unlocked by the smart contract, the asset is returned to the owner’s account. If the exchange rate of the coins goes up, a certain percentage of the loan can be repaid and a new loan can be taken. Another option is to sell part of the asset to close the deal and withdraw the rest of the money to the wallet.
Security Ledn
P2P lending secured by cryptocurrency can be called the least risky way to get free fiat money. First, the borrower does not need to worry about lost profits. Naturally, every investor seeks to sell crypto at the most profitable price and seriously fears that the rate may become much lower, later on, leaving the asset at a loss for a longer period, or much higher, depriving potential profit as the coins will already be sold at a lower value.
Ledn’s service is a perfectly safe way to borrow against cryptocurrency. Unlike most of its competitors, this platform does not have physical access to the pledged bitcoins. The administration of the resource does not have the technical ability to see users’ private keys, as they are not linked to the server part of the platform.
Restrictions on the countries associated with the service B2X:
- Iran,
- Libya,
- North Korea,
- Syria,
- USA,
- Africa,
- Uruguay.
A key pair for confirming transactions is generated directly in the browser of a particular username, or the username uploads its public key, which is used to create the multi-signature address. This ensures that access to the collateral is distributed equally among the three parties who control its presence on the multigeniture address in the blockchain. Platforms that use third-party services cannot guarantee and control the safety of their users’ pledges, so they offer deposit insurance in case of theft or hacker attack.
B2X: an instant bitcoin-holding doubling service
Ledn, in addition to savings accounts and loans, offers users a B2X service through which they can increase their savings. The idea is that the user takes out a dollar loan secured by Bitcoin and then buys an amount of BTC equal to the initial investment. In this way, the user holds twice as much BTC.
Whether the B2X method is profitable for you depends only on which direction the bitcoin price is going. You will benefit if the bitcoin price goes up because it will double your bitcoin share. On the other hand, when the price falls, you are twice as exposed.
Features of Ledn B2X: The site has a calculator that you can use to determine how much credit you need to double your bitcoin holdings. You need to enter the initial possible amount, and Ledn will calculate the final amount of cryptocurrency and the required dollar cost.
Summary
Cryptocurrency lending is the best option for investors to get free money and help preserve their capital. It is foolish to deny the fact that, given bitcoin’s potential for growth, selling it to solve current financial problems is not a rational action.
Using Ledn service, crypto investors get an opportunity to kill two birds with one stone: keep profits from owning cryptocurrency and get the necessary financing. Thanks to the well-organized work and carefully thought-out realization scheme, both parties enter into profitable cooperation when making a transaction and do not risk losing their savings. By giving preference to this way of lending, you will not encounter any bonded interest, but, on the contrary, you will be able to get the most profitable loan possible.