Over the past year, the global market of cryptocurrencies has witnessed outstanding growth and expansion. The year 2020 started with a market capitalization of nearly 193 billion US dollars for all cryptocurrencies combined. By the time we reached the end of January 2021, the market had crossed the mark of 1 trillion US dollars in global market capitalization. This extraordinary growth reflects the trend where more and more investors are becoming increasingly keen to join the crypto bandwagon.
With the increased holding of crypto-assets comes the question of putting the assets to efficient use. Investors and crypto-enthusiasts who have purchased these digital assets would want to earn interest on their idle holdings, access credit against them, or buy more crypto assets to increase their portfolio. Ledn is a platform that helps people to achieve all these objectives. In the coming segments, we would review Ledn, in its entirety, to understand how it adds value to the world of digital cryptocurrencies.
Ledn.io: A Brief Introduction
Founded on August 3, 2018, Ledn.io was set up by Adam Reeds and Mauricio Di Bartolomeo to build financial products that would help people to save on digital assets. As of now, Ledn has three flagship products in its portfolio. The first one is Bitcoin-backed loans. The second one is Bitcoin and USDC savings accounts, and the third one is a Bitcoin balance doubling service. We will discuss each of these three services in later segments.
Headquartered in Toronto, Ontario, Ledn builds in financial products at world-class standards and industry-leading rates - and offers them to clients around the world through Bitcoin and digital assets. Its Bitcoin-backed loans are devised to facilitate access to liquidity to investors that want to ‘hodl’ their assets. The savings accounts help earn interest in Bitcoin and USDC with monthly compound interest payments. Ledn offers these high-interest savings accounts under a strategic collaboration with Genesis Capital. The rate of interest on these savings accounts may reach as high as 12.25% APY (annual percentage yield), where account holders receive their interest earnings every month. Apart from Genesis Capital, Ledn also collaborates with BitGo, probably the most well-known digital asset trust company and security company.
As a commercial entity, Ledn is incorporated under the Federal Laws of Canada. Ledn is not an ICO. It complies with the highest standards of consumer protection and privacy. By its collaboration with BitGo, Ledn offers one of the most qualified purpose-built digital assets storage along with one of the most comprehensive insurance policies in the industry.
Bitcoin-backed Loans by Ledn
The most enticing aspect of Ledn’s Bitcoin-backed loans is that it is a fast and convenient way to access credit without having to sell your Bitcoin holdings. Multiple benefits add to the lucrativeness of this loan.
- First of all, since you do not have to sell your Bitcoins, you get to keep all the upside of your Bitcoin position. As there is no sale involved, you do not create a transactional event that is taxable. Overall, the ownership of your bitcoins remains with you, and it is sent back once you repay your loan.
- There is no reason to worry about you having to keep your Bitcoins in Ledn’s custody. Ledn leverages the services of BigGo, which is the industry-leading custodian of Bitcoin. The custodial services of BitGo are insured by the most comprehensive insurance policy available in the industry.
- The approval process of the Ledn Bitcoin-backed loans is super-fast. You will receive the funds within 24 hours of approval. The repayment schedule does not involve penalties for delay. Neither does it mandate payment through monthly installments. In short, you can pay off your loans at any time without penalties.
The Procedure to Apply for the Bitcoin-Backed Loans
The application process for a Ledn Bitcoin-backed loan is not complicated. However, it does require you to share your personal information with the platform. The four documents that you need to provide are as follows:
- A copy of your government-issued identification document
- A copy of your proof-of-address document
- An image of you holding your government-issued ID
- Your bank account details for funding.
On proper submission of all these documents, the approval of the loan takes less than two minutes.
Bitcoin Loans and Volatility in Bitcoin Prices
- If the price of Bitcoin drops significantly, the platform will ask the borrower to add more collateral into the wallet earmarked for the loan or to pay down some of the principal. In case, the borrower fails to take any action even after being asked to do so, the platform will have to sell off some of the Bitcoin to meet the required levels of the loan-to-value ratio.
- If the price of the Bitcoin increases, the gain in the value is for you to keep. The only amount that you owe to the platform is the balance amount of the loan.
For its Bitcoin and USDC savings accounts, Ledn has teamed up with Genesis as the primary borrower for its BTC and USDC accounts. It is the largest and one of the most well-regarded lenders in the digital asset space.
There are several advantages of having a Bitcoin or USDC savings account with Ledn.
- One of the most interesting aspects of these savings accounts is that they do not require any minimum balance and has no locked-in term requirements. Interest payments are paid monthly. You can withdraw your funds whenever you wish to.
- Because the savings are in Bitcoin and USDC - both digital coins, your savings are protected from the traditional money-market inflationary woes.
- The interest that accrues on these types of savings accounts is compound interest. It implies that your savings will grow exponentially. Interest accrues daily, and the payout happens in a compounded monthly format in all Ledn savings accounts.
Ledn Savings Account Interest Rates and Fees
The annual percentage yield or APY on a Bitcoin savings account may go up to 6.10%. For USDC savings accounts, the APY can go up to 12.25%.
Sending Bitcoin or USDC to any other Ledn account is free. To use the USDC savings account, you will have to incur a 10 USDC fee per withdrawal. There is no additional fee except this. The 10 USDC fees cover the miner’s fee, paid to process the transaction fee on the Ethereum blockchain. Ledn does not charge any fees to use the Bitcoin savings account - for withdrawals, the fees to process the transaction on the Bitcoin blockchain is deducted automatically from the amount of the withdrawal.
Ledn Savings: Earning Mechanism of the Platform
As noted earlier, Ledn has collaborated with Genesis Capital as its primary borrower. Therefore, Ledn earns interest by lending the Bitcoin and USDC to Genesis. In addition to that, Ledn also earns from the bitcoin-backed loans backed with Bitcoin held in Ledn’s custody in a 2:1 ratio.
As far as the protection of the funds kept in a savings account is concerned, Ledn follows a stringent protocol. The platform collaborates with best-in-class industry partners in its attempt to minimize the risk of operations. But, it should also be noted that the USDC held in the savings accounts are not covered by the Canada Deposit Insurance Corporation or any other deposit-protection insurance policy.
B2X: Instant Bitcoin Holdings Doubling Service through a Ledn Loan
B2X is a unique service that Ledn has launched to assist its users to make the most out of their Bitcoin. Using this service, you can obtain a dollar loan and subsequently purchase bitcoin equal to the value of your initial holdings. Resultantly, you hold twice as much Bitcoin compared to what you started with, along with a bitcoin-backed loan.
It works as an opportunity for users who believe that the value of Bitcoin will increase over time. B2X helps you to double your exposure, so you get a chance to double your gains.
The Risk-Quotient of B2X
Whether adopting the B2X strategy would be profitable for you or not will only depend on which way the price of Bitcoin goes. Since it doubles your Bitcoin exposure, it is beneficial for you if the price of Bitcoin goes up. On the other hand, it exposes you to double the risk when the price goes down.
Like the platform does to maintain the LTV ratio in case of a Bitcoin-backed loan, it will ask the borrower to deposit more Bitcoin or to pay down some of the loan principal if the price of Bitcoin is on a downward spiral. The platform is also within its rights to start selling off your Bitcoin holdings in case you fail to take any of the two prescribed actions.
B2X Registration and Repayment Process
B2X is easy to access. All you need to do is open an account at Ledn.io and verify your user profile. You are free to deposit whatever amount you want to use for your B2X loan into your Bitcoin Savings Account. Once you have made the deposit, you can go to the B2X product page to make whatever selections you like.
Repayment of the B2X loan is hassle-free. You can repay your B2X loan any time you want. There is no provision of penalizing the borrower for out-of-schedule repayment. The interest accrues daily. It gives relief to the borrower as the borrower is charged interest only for the days they have the loan open.
B2X: Country Restrictions
At present, Iran, Libya, North Korea, Syria, United States, Africa, and Uruguay have B2X service-related restrictions.
Privacy of the Platform
Ledn is a privacy and security-centric platform. It takes a holistic approach and addresses all possible layers that may fall prey to security threats. As far as the online site is concerned, apart from following the standard protocol involving HTTPS and passwords, it also encrypts its information using AES-256. They also leverage the two-factor authentication method for login and some specific actions on the platform. Regarding privacy, the confidential data of the users remain safe as Ledn is declaredly not in the business of monetizing client data. It does not store your data on the local servers. Client data is only stored in private networks protected by strong security protocols.
To sign up for a Ledn account, the data that you need to provide to the platform includes your first and last name, your e-mail id, and phone number. We have already discussed the documents you need to apply for a Bitcoin-backed loan. Apart from that, you may need to provide your date of birth and home address.
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Frequently asked questions about Ledn
We’ve compiled some answers to questions we often get. Should you have any other questions, feel free to reach out below in the comments.
What Services Does Ledn Offer?
When you open a Ledn account, you gain access to a suite of products, permitting you to take the greatest advantage of your digital assets. The platform's savings products provide customers with extra yield.
Ledn's credit products permit customers to HODL their Bitcoin while still accessing dollars to purchase more crypto holdings.
How Does Ledn Wallet Work?
Ledn Wallet is a segregated wallet address for on-chain, real-time verification, or proof-of-reserves. Ledn offers insurance on user's assets through BitGo Insured Custody. As a result, you can rest assured your assets are safe with Ledn.
How Secure Is Ledn?
What about security? The website relies on multiple layers of protection to keep its users safe.
These include the use of passwords and HTTPS. All data deemed sensitive is encrypted with AES-256 and controlled by a set of strict internal security policies.
What's more, the platform requires additional two-factor authentication and login actions to verify users' authenticity. Ledn keeps collateral Bitcoin in cold storage offline in vaults rated institutional-grade. These are located throughout Canada.
What Steps Does Ledn Take to Protect User Privacy?
Ledn doesn't monetize or sell any of its customer data to third parties, which is a significant relief for those using this platform. This approach to privacy means a reduced risk of data breaches, which is fantastic, no matter how you slice it.
What data does Ledn require from users? Only what's needed to meet compliance requirements. That said, the company never overreaches beyond requests for absolutely necessary information.
Can I Withdraw Assets at Any Time?
With a Ledn Savings Account, you can withdraw funds without any penalties at any time. You may also pay off your loan without any early payment penalties.
Withdrawal requests get processed quickly, and the platform strives to have your Bitcoin in your wallet within 24 to 72 hours.
How Does Ledn Store User Data?
They store this data on private networks, blocked from public IPs. You may also request that Ledn delete this data at any time, making it an excellent option from a privacy standpoint.
Pros and cons of Ledn
- No "utility" tokens
- Bitcoin focused company
- Cold-storage and proof-of-reserves
- No monetization of users' data
- Two-factor authentication
- Data stored on private networks blocked from public IPs
- Bitcoin offered through BitGo Custody
- Minimal personal information requirements to open an account
- In-house KYC and AML verification
- No penalty fees for deposits and withdrawals
- New company, two years old as of August 2020
- Limited choices, offers a standard loan plan
- No mobile app, only accessible in a web browser
- Not available to individuals sanctioned by Canada
- Not open to residents of New York, Connecticut, Washington, and Wyoming
Overall, Ledn offers you an excellent set of avenues to put your digital assets to good use. Not only can you earn up to more than 12% of annual interest on your idle assets, but you can also obtain loans against them at 1% monthly interest. If you are a Bitcoin enthusiast and believe in the growth potential of Bitcoin, the platform also rewards you with the opportunity to double your exposure.