If you are looking for ways to earn passive income on your crypto holdings that are sitting idle in your wallet without having to sell them, then you must have heard of several crypto lenders, including Ledn and Hodlnaut. But which one of them is the best option for you to earn Bitcoin, Ethereum, Bitcoin Cash, and other cryptocurrencies? That's something we will look at in this article.
What is Ledn?Ledn is a Canadian-based Bitcoin lender, which was founded during the bear market of 2018 by CEO Adam Reeds and Mauricio Di Bartolomeo.
Recently, the global digital asset saving and credit platform raised $70 million in a Series B funding round led by 10T Holdings, which increased its valuation to $540 million. Ledn’s existing venture investors also invested in this round, which included Coinbase Ventures, Alan Howard, Parafi Capital, Susquehanna Private Equity Investments, White Star Capital, Kingsway Capital, Global Founders Capital, CMT Digital, Ascendant Capital, and Hashed.
The bitcoin lender’s client base is in 127 countries, with 44% of loan clients in Latin America. Since the third quarter of 2020, Ledn’s USD loan originations have increased by over 25x, and total assets on the platform have soared 4,0000% during this period to surpass $1.7 billion.
What is Hodlnaut?
Hodlnaut, on the other hand, is a Singapore-based platform founded in 2019 by Bitcoin maximalists Juntao Zhu and Simon Lee. Most recently, the interest-earning platform partnered with a crypto hardware tech firm, Ledger, to launch the limited-edition co-branded Ledger Nano S for its users.
Hodlnaut has almost $650 million in assets under management (AUM) with a month-on-month growth average of more than 20%.
As for what’s ahead, Hodlnaut is working on portfolio management and auto swaps or scheduled swaps feature. The platform also allows its users to vote on future features to be introduced to Hodlnaut.Ledn meanwhile is working on the world's first Bitcoin-backed mortgage, which is currently in pilot mode and slated to be made available to clients in the US and Canada early this year. It already has a growing waitlist for the product and is targeting over $100 million in Bitcoin-backed mortgage originations by the end of Q1 2022.
Ledn vs Hodlnaut: Products
Now, let’s see all the products that these cryptocurrency platforms have to offer you.
A savings account is one of the three main products of Ledn that offer an APY of up to 5.25% on your Bitcoin holdings and an even much higher APY of 8% on your USDC stablecoins. The interest on Bitcoin and USDC is paid out monthly directly to your wallet with compound interest. Ledn has been able to offer high-interest savings accounts in partnership with the digital currency trading, lending, and custody platform Genesis.
There is no minimum balance requirement for Ledn’s savings product, and you can withdraw your funds at any time. This product is available worldwide except for a few countries, including the US.
Compared to Ledn’s Bitcoin-specific offering, the Hodlnaut Interest Account allows its users to earn interest on five different cryptos viz Bitcoin (BTC), Ethereum (ETH), Wrapped Bitcoin (WBTC), USDT, USDC, and DAI. At the moment, Hodlnaut offers 5.3% APY on 0.5 Bitcoin, which comes down on higher-tier deposits.
There are no minimum deposits and lock-in periods with interest paid out weekly, specifically every Monday.Hodlnaut also offers the Fixed-Term Deposit where the minimum lock-in period is 30 days where the lowest you can earn is 3% on BTC and the highest 7.50% on USDT.
Ledn’s other product is Bitcoin-backed loans, where you can borrow fiat currencies like the USD against your BTC. Basically, you can use your BTC holdings as collateral to obtain loans from Ledn, which allows you to access capital without selling your cryptocurrency. The crypto lender has a 50% maximum loan-to-value (LTV) ratio, meaning you can only borrow up to half the value of your Bitcoin.
The minimum amount meanwhile on Ledn is $500 with a term limit of twelve months, which can be extended once the original loan term ends. Also, Ledn allows you to pay off your Bitcoin-backed loan in installments.
Ledn’s loan approval is pretty fast, and you can get your funds in fiat currencies or stablecoins as soon as within 24 hours of approval as well. To apply for a loan on Ledn, you have to first register an account, provide documents such as a driving license or passport, an image of you holding either of these documents, proof of address, and your bank details.
When it comes to Hodlnaut, loans on the platform start from $50,000 and have a flexible loan-to-value, in the range of 25%-100%, and the interest rates depend on the digital currency you collateralize on Hodlnaut to obtain a loan.
Hodlnaut only offers corporate loans where clients can obtain instant crypto credit lines using their crypto assets as collateral, meaning these crypto loans are not available for individual investors.
To get started, you have to sign up for an account and go through the mandatory KYC (Know-Your-Customer) verification process.
B2X is yet another product of Ledn, which is a way to double your bitcoin balance through a Bitcoin-backed loan and then purchase more BTC equivalent to the value of your total holdings. This option is, of course, beneficial for those who believe Bitcoin’s value will increase in the future. However, if the value of Bitcoin falls during the period, there is a risk of getting liquidated unless you either add more funds or pay off some of the principal of the loan. You must also note that Ledn also has the right to sell your Bitcoin holdings if you fail to take action.
Hodlnaut’s other product is token swaps, which allows you to exchange any of the supported assets seamlessly at zero fees. With its crypto portfolio management tools like this, you to manage your portfolio and rebalance asset holdings anytime. Additionally, you earn interest on your crypto assets on the same day that you execute your swap order.
Much like Hodlnaut, Ledn also offers instant trade between its supported assets BTC and USDC without any fees, and you can also start earning instantly on your asset, which essentially makes both Hodlnaut and Ledn a pretty solid Bitcoin trading platform. But when it comes to smooth trading experience, Ledn is class apart, which makes it an ultimate trading platform.
Both of them have mobile apps for their users, but Hodlnaut has more user ratings on both Google App Store and Apple App Store, which is a likely indicator of which of them is the best crypto trading app.
When it comes to fees, on Ledn, you have to pay a 35 USDC fee per withdrawal for a savings account, which is the miners' fee paid to process the transaction on the Ethereum Blockchain.
While there are no fees to use the Bitcoin Savings Account, for the withdrawal, fees paid are associated with the amount paid to the miners to process transactions.
Meanwhile, on Hodlnaut, there is no minimum amount to deposit or withdraw. But while depositing crypto on the platform won’t cost you any fees, on withdrawal, you have to pay a fee that is different for each asset, such as 0.0004 BTC, 0.0036 ETH, 10 DAI, 10 USDC, and 10 USDT.
To store its crypto, Ledn uses the qualified custodian BitGo, which was recently acquired by Mike Novogratz’s Galaxy Digital for $1.2 billion.
To ensure its users that their crypto assets are safe, Ledn started releasing its Proof-of-Reserves in 2021. This Proof-of-Reserves report is performed by an independent public accountant, Armanino LLP.
For security, Ledn has AES-256 encryption, while for user account safety, it uses two-factor authentication (2FA).
As for Hodlnaut, it has partnered with Fireblocks for its multi-layer security technology. Fireblocks is an enterprise-grade platform that provides a secure infrastructure for moving, storing, and issuing digital assets.
Last year, the company announced that it has committed about $1 billion of its equity to become a member of Nexus Mutual to make insurance affordable for its users. Hodlnaut users can purchase insurance on their funds on the platform at a premium of 2.6% p.a. The insurance funds, however, can only be claimed in two cases, first, when Hodlnaut gets hacked, where insuree loses more than 10% of their funds, and second when withdrawals from the platform are halted for more than 90 days.
The company also underwent a financial attestation performed by Crowe Singapore early last year.
Compare With Ledn and Hodlnaut Alternatives
Similar Savings Accounts
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Among them, Hodlnaut seems to be a safe crypto lending and borrowing platform that allows cryptocurrency investors to earn interest on their crypto holdings, where the interest rates you will earn depend on the cryptocurrency you deposit. This digital assets lender has no minimum deposit requirement, pays out weekly, and allows you to withdraw at any time to your external cryptocurrency exchange accounts or a crypto wallet.
However, there are only five crypto assets that are supported, and also the rates are subject to monthly fluctuation. The platform has limited features, and its crypto loans are exclusively offered to institutional investors.Ledn, on the other hand, is specialized in Bitcoin borrowing and lending and is further introducing the world's first Bitcoin Mortgage for users to use their BTC holdings to buy a brand new property or finance the home they already own.
It has a pretty simple model but only allows you to earn interest on Bitcoin and USDC, and the rates go down on large BTC deposits.
As we saw, no cryptocurrency investment platform is perfect, each has its features and limitations, but now that you have all the information you can make your best decision based on your specific needs.