After a disastrous collapse of many crypto lending platforms in 2022, projects are beginning to pop up again to attempt to transform how investors utilize their digital assets.
Offering ways for crypto holders to unlock the value of their cryptocurrency without selling it, Ledn is looking to succeed a with a new approach to financial management where others like BlockFi and Celsius failed.
In a recent discussion, Ledn co-founder Mauricio Di Bartolomeo joined Roundtable anchor Rob Nelson to explore how the company’s loan services are opening up new possibilities for bitcoin holders around the globe.
Nelson starts the conversation by addressing a common challenge for bitcoin holders: Accessing the value of their assets without selling them. He likens it to having a vault full of gold—valuable but untouchable unless sold, which would reduce the asset's overall value. Ledn solves this problem by offering loans backed by bitcoin, allowing holders to borrow against their cryptocurrency while retaining the potential for appreciation.
Mauricio explains that Ledn’s service is simple yet powerful. Bitcoin holders can use their cryptocurrency as collateral to secure dollar loans, much like borrowing against the value of a house. This method preserves the upside potential of bitcoin, enabling investors to meet financial needs without sacrificing long-term gains.
While asset-backed lending is not new, Ledn’s focus on bitcoin makes it unique. Mauricio and his Co-Founder Adam recognized a gap in the market after struggling to secure loans against their bitcoin from traditional banks. This realization led them to create Ledn, which has since become a pioneer in the crypto lending space.
Today, Ledn’s approach is gaining traction, even among traditional financial institutions. Initially skeptical, banks are now partnering with Ledn, driven by the increasing acceptance of cryptocurrencies in mainstream finance. This partnership is particularly valuable in regions like Latin America, where traditional financial services are limited, and bitcoin plays a critical role in personal finance.
Ledn’s loans cater to a wide range of needs, from starting a business to covering everyday expenses. The loans are flexible, with amounts ranging from $500 to $2 million, and can be rolled over if the collateral remains healthy. Mauricio argued that the interest rate, currently around 14% annually, is competitive, when compared to the historical gains of holding bitcoin.
It's worth noting that crypto lending is never without its own set of risks. Former crypto lenders, like BlockFi, Voyager, and Celsius all filed for bankruptcy protection after crypto prices collapsed in 2022. Many users who hadn't even entered into loans saw their assets completely wiped out as the companies became over exposed to counter-parties who could not repay their loans.
Nelson wraped up the discussion by highlighting the appeal of Ledn’s services for some users. By borrowing against bitcoin rather than selling it, investors can avoid significant tax liabilities and potentially cover the loan cost with the asset's appreciation. This strategy, when it works, allows bitcoin holders to access liquidity while maintaining exposure to the und