At the start of 2023, we wrote to you to address some of the market events that had happened in the months prior (Three Arrows, FTX, Alameda, etc). In that letter, we shared our intention to double down on our commitment to making financial services transparent, fair and accessible to everyone. Throughout the year, we’ve been contributing to the rebuilding of the digital asset lending industry, both technologically and reputationally. As we close out 2023, the shift in sentiment that comes with every new market cycle will test whether the lessons from 2022 have been learned by the industry, and by consumers.
We are extremely proud of our achievements to date, such as receiving regulatory approval as a Virtual Asset Service Provider (VASP) from the Cayman Islands Monetary Authority (CIMA), doubling the size of our retail loan book since the beginning of 2023, to launching ring-fenced Growth accounts, Custodied Loans, and reaching milestones like successfully facilitating $635M in retail loans and over $4B in institutional loans since 2018.
Not only did we survive the collapses of 2022, but our team’s continued focus on risk management, transparency, and user control places us in prime position moving into 2024. We’re confident that we’re developing the best digital asset lending platform in the world, and one that will withstand the test of time. Remember, when our competitors were halting withdrawals during the chaos of the crash, we were processing them in record time, putting our clients' needs first.
We’ve passed our stress tests, now others must pass theirs. New competitors, especially reboots of now-defunct lending platforms, must prove that they’re not simply new branding of old failed companies and concepts with “fresh cash”. Client trust is earned, not given.
The time has also come for clients to prove that they've learned their lessons from 2022, that blindly pursuing the highest yields or lowest borrowing rates will lead to disaster. Clients need to continue to ask the right questions and do due diligence on their lending platforms. Here are all of the questions you need to consider before you hand over any assets to a lending platform:
- Did the lending firm survive the FTX disaster?
- Did they launch before or after?
- If they launched before, what is their track record and how did they perform during the lending crisis?
- If they launched after, do they have any experience in extreme crypto market conditions? What tech or legal infrastructure do they have in place to withstand similar events?
- Where do their yields come from?
- Are they being transparent with their yield generation?
- Is the yield explanation based on fact or vague descriptions?
- How is your collateral being used?
- Is your collateral being re-lent or invested? If yes, to what end? Are you receiving a lower interest rate to reflect this, or are they merely driving profit?
- Where is your collateral being held?
- What assets can be used as collateral for loans or are they paying yield for?
- What’s the market capitalization of these assets?
- Are these assets highly liquid?
- Has the firm itself issued a token?
- Does that token price influence your interest rate or returns?
- Is the token inflationary or deflationary?
- Are you incentivized to hold onto their token?
- Are rewards paid in the deposited asset or the native token?
It has only been 15 years since Bitcoin’s invention and the digital asset industry is still new. Digital asset lending is still in its infancy. Getting good at digital asset lending takes time and experience. Here at Ledn, we’ve put in the time, weathered the storms, built robust systems and processes, pursued transparency and open dialogues, and ensured that we don’t lose sight of our principles. As a result, we see strong client loyalty with borrowers taking 4+ loans on average, and loving their experience - giving us a 4.7/5 TrustPilot rating. Our assets on platform have grown 108% since FTX collapsed, and our risk management program has been battle tested and further enhanced for future market cycles. In Bitcoin terms, we’ve got the Proof of Work.
Our commitment to making financial services fair and accessible to everyone is unshakeable. In 2024, we expect even stronger growth for Ledn and our clients, on the back of imminent spot Bitcoin ETF approvals and the halving. Our dedicated team is focused and ready to ensure we’ll be able to help our clients capitalise on these tailwinds to grow their digital wealth. We’ll be focusing on making our loan platform more accessible, more transparent, and even easier to use than ever before. Clients can expect to see new loan features as well as strategic partnerships that allow us to offer our lending services to new clients. Come the end of the year, we are confident that Ledn will be known as the most comprehensive digital asset lending platform in the world.
To our clients, Ledn would be nothing without you. We appreciate the opportunity to build the future of this industry with your support and we’ll continue to put you at the centre of everything we do.
As always, thank you for your continued trust in Ledn.
Adam Reeds & Mauricio Di Bartolomeo
Co-founders, Ledn
