Alright, let’s get the legals out of the way first. This blog is not investment advice! Information is intended for general and educational purposes only. It’s not to be relied upon as forecast/research/investment advice, and is not a recommendation to buy/sell any assets or adopt any investment strategy. Full disclaimers here. 

What this blog attempts to do is answer a question that we get regularly from new clients (and even friends and family, if we’re honest). How do I use Ledn? Specifically, how do I use your platform to build my wealth?

What follows is a summary of: 

1. the products available on the Ledn platform; 
2. a description of crypto bull and bear markets; 
3. a summary of how some of our most active and successful clients have used Ledn in the past to grow their assets during different market conditions.

We hope that you find this article interesting and useful. Ultimately, our goal is education and not financial advice. You must make the investing decisions that are most aligned with your risk profile and longer term goals. Of course, the Ledn platform and team are here to help you unlock the power of your digital assets.

Overview of Ledn Product Suite

At Ledn, our focus is on translating proven legacy financial products and services into digital wealth solutions. All of our products are available to international clients, while only our loan products are available to clients in select regions of the USA and Canada. A list of ineligible jurisdictions can be found here.

Standard Dollar Loans

What are they and why do people use them?

Ledn's cornerstone product is our Standard Dollar Loan. You can get the funds you need while keeping the digital assets you love. Our loan application process is instant, with our BTC/ETH-backed loans typically being funded within 24 hours of approval. You can pay off your loans at any time without penalties, and no monthly payments are required.

How do I take out a Standard Dollar Loan?

Once you’ve signed up for a Ledn account and complete your KYC, select the Dollar Loans tab. You can use our calculator to input the loan amount and determine how much collateral (in BTC or ETH) you need to secure your loan. From there, provide the bank details where you want the loan amount to be sent to. Dollar Loans can also be funded in your local fiat currency or USDC. Then, you can review and submit your loan application and wait for your loan approval. Our full how-to video is here.

Our internal data indicates that 40% of clients use their loans to pay for day-to-day expenses, while the rest use them to either pay down other debt or purchase new digital assets (see more on our B2X product below).  

What are the risks?

If the value of the collateral decreases, you may be required to deposit additional collateral for the loan. Ledn may also liquidate the collateral if an event of default occurs on your loan by selling such collateral, in whole or in part, to repay your outstanding loan amount in accordance with your loan agreement.

With our Standard Dollar Loans, Ledn has the right to lend collateral to earn interest. This helps keep our Standard Loan rates as low as possible. Information about the use of collateral is always available in our monthly Open Book Report. Additionally, features like Auto Top-Up and Loan Rebalancing make managing Ledn Standard Loans easier.

Learn more about our Standard Dollar Loans by visiting ledn.io/borrowing. 

Custodied Dollar Loans

What are they and why do people use them?

This product is a Dollar loan with enhanced safeguards over your loan collateral. It is for clients who prioritize security of their digital asset holdings. Ledn clients can choose between our Standard Loans, which permits Ledn to rehypothecate loan collateral in order to lower interest rates for clients, and our Custodied loans. When a customer chooses our Custodied Loan offering, they can rest easy knowing that the loan collateral is only being posted to an institutional USD funding partner, typically a bank or credit fund, and cannot be further rehypothecated to generate interest. Custodied Loans are ring-fenced from the credit risks associated with rehypothecation activities related to our Standard Loans and Growth Accounts.

To learn more about Custodied Loans, see our blog and FAQs. To understand more about rehypothecation, you can read our dedicated guide. 

How do I take out a Custodied Dollar Loan?

Applying for a Custodied Dollar Loan is as easy as our Standard Dollar Loans. Simply begin the loan application process and select “Custodied” when choosing the type of loan/use of collateral.

What are the risks?

Like all loans backed by digital assets, Custodied Dollar loans are subject to the same risks of collateral depreciation and liquidation.

You’ll be paying a higher APR, because collateral is not lent out to generate interest. Your counterparty risk is limited to the unlikely failure of the trusted custodians or banks holding such collateral. Custodied Loans are ring-fenced from the credit risks associated with rehypothecation activities related to our Standard Loans and Growth Accounts as those products are provided by different Ledn entities.

B2X Loans (with Auto Top-Up enabled)

What are they and why do people use them?

B2X is a simple, seamless way to double your BTC holdings. This Ledn-exclusive product provides you with a loan which is automatically used to buy more BTC. When the loan is repaid, both the collateral and the newly purchased BTC are returned to you. We launched this product because we found that clients were using their Standard Loans to buy more BTC. By automating that process for them, we’ve made it easier for our clients to move quickly.

How do I take out a B2X loan?

First, you must have BTC in your Ledn Transaction Account to initiate a B2X. Simply navigate to the B2X tab on the Ledn Platform. Choose the amount of BTC you want to double and review the loan terms. Then review and accept the loan agreement. Just like that, with a couple of clicks, you’ve B2X’d. For the full How-to video click here.

What are the risks?

B2X loans carry the same risks of collateral depreciation and liquidation as any other loans backed by digital assets.

B2X increases your exposure to the price of bitcoin. While you can benefit from any upside, you are also exposed to greater downside if the price of bitcoin decreases.

B2X loans are only offered under a Standard Loan collateral management option. As such, B2X loans are also subject to the counterparty credit risks associated with Ledn’s collateral rehypothecation activities.  

Always enable auto top-up on your Ledn loans to protect yourself against liquidation. Auto Top-up is a simple and intuitive way to top-up your Ledn Loan collateral wallet address(es), removing the need to manually monitor and manage your open loans’ status during times of price volatility. To learn how to enable Auto Top-Up, see our FAQs here.

Growth & Transaction Accounts

What are they and why do people use them?

During bear markets and periods of limited price volatility, clients tend to focus on ways to earn passive income. At Ledn, we’ve rebuilt our savings experience to prioritize client control, safety, transparency, and access. With that, Ledn offers a dual account structure for its clients’ BTC, ETH, USDC, and USDT holdings. Clients use Ledn Growth Accounts to earn interest on their digital asset holdings. We currently pay up to 10% APY on digital assets held in a Growth Account, depending on the asset.

Learn more about Growth Accounts with this explainer video and about APY tiers here.

How do I use them?

You can think of your Transaction account(s) as the engine of your Ledn account. It’s how you can deposit and withdraw your assets to and from Ledn and decide how you want to use your assets, whether that’s earning interest in a Growth Account, taking and managing a loan, or opening a DCN. All activities in your Ledn account will flow through this Transaction Account.

Your Growth Account(s) has a single purpose, which is to earn interest with the new safeguards that have been introduced to protect your assets. You can add and remove digital assets to and from your Growth Account via your Transaction Account.

To learn more about Ledn’s savings experience, please visit https://ledn.io/savings

What are the risks?

Ledn's Growth Accounts are provided by different Ledn entities and are thus ring-fenced, meaning that for each Growth Account, you are only exposed to that particular Ledn entity’s counterparties that we lend your assets to in order to generate your yield. If there are losses associated with any other yield generation activity that Ledn engages in for our other products that are provided by other Ledn entities, assets held in Growth Accounts are not impacted.

Dual Cryptocurrency Notes (DCNs)

What are they and why do people use them?

A Dual Cryptocurrency Note (DCN) allows you to earn a high, fixed-term interest rate on your BTC or USD, with the potential to buy or sell BTC at a predetermined target price (the “Strike Price”), on a specific date in the future. During periods of high price volatility, DCN APYs increase significantly.

DCNs offer two main benefits that make them an attractive income stream:

1. Higher Returns: They offer returns that are higher than your Ledn BTC or USD stablecoin Growth Accounts – typically by 1.5 to 3 times!
2. More client control: With DCNs, you automate your view of the price of BTC, allowing you to sell high or buy low at prices you’re happy with. You pick the Strike Price and maturity date, which in turn generates the return for your DCN.

How do I use them?

First, you need to decide whether you want to Buy BTC (Call option) or Sell BTC (Put option) - this will determine which pair you choose.

Second, you’ll select a maturity date and a strike price (that you’re happy to buy or sell BTC at).

Finally, you review the terms of your DCN and execute it.

For more information, including a How-to video, please visit our DCN intro blog here.

To understand how some clients use DCNs to execute a longer term strategy, check out our thread here.

What are the risks?

As with all yield generating products, there are risks associated with DCNs: 

If the BTC price at maturity is higher than the strike price on your “Sell High” DCN, then you will miss out on the ability to sell at that higher price. Conversely, if the BTC price at maturity is lower than your strike price on a “Buy Low” DCN, then you are losing out on the ability to buy at that lower price. 

Additionally, your assets during the term of your DCN are locked and not available until your DCN matures.

Ledn Trade

Our Trade functionality allows clients to seamlessly trade between BTC and USDC with no hidden fees. The displayed price is the final cost, ensuring full transparency. Clients can adjust their holdings between digital assets to capitalize on market opportunities without concerns over withdrawal fees or processing times.  Learn more about Ledn Trade at ledn.io/trade 

Understanding Crypto Bull & Bear Markets

Bull and bear markets, terms originating from traditional finance, are also applicable to cryptocurrency markets. A bull market, characterized by rising digital asset prices and positive crypto holder sentiment, sees steady price increases, high market confidence, and growing interest. Conversely, a bear market is marked by declining asset prices and negative crypto holder sentiment, leading to price dips over a sustained period and reduced crypto holder confidence. Understanding these market cycles is crucial for crypto holders to make informed decisions about when to buy, sell, or hold their digital assets.

Clients can monitor asset prices via tools like CoinMarketCap. In traditional finance, bull and bear markets are defined by increases (bull) or decreases (bear) of price of 20% or more over at least a two-month period.  While a more volatile asset class, a similar rule of thumb could be used to gauge market conditions for digital assets.

Tools that clients can use to better understand crypto holder sentiment include the Crypto Fear & Greed Index and Bitcoin Fear & Greed Index.

What products are most popular in Bull markets?

Redeeming Excess Collateral

When BTC price rises, loan LTVs drop, and clients want to make use of their excess loan collateral. That’s why we introduced our excess collateral redemption feature for clients. Clients can redeem excess collateral (to rebalance their loans’ LTVs) from a loan when their loan LTV dips below 30%.

When a loan is eligible for excess collateral redemption, you'll see a "Redeem collateral" button in the LTV column of your "Active Loans" tab. You'll have the ability to unlock the amount of collateral that will bring your loan's LTV back to the target LTV of 40% and send it back to the applicable Transaction account. If the value of your excess collateral is worth more than $100,000 USD, you'll only be able to redeem a maximum of $100,000 USD worth of collateral. In these cases, the LTV will not reach 40% after redemption. To learn more about our excess collateral redemption feature, check out our FAQs here.

Typically, clients that redeem excess collateral during Bull markets take new loans (or shorter duration B2X loans - see below) with the excess collateral that’s been returned to them.

Shorter duration B2X Loans

In Bull markets, our clients achieve greater success with a shorter-term strategy by taking a B2X loan and then swiftly closing these loans, usually within an average of 30 days, as price increases and their LTVs drop, thereby effectively crystallizing their gains. During bull market phases, while the duration of each loan decreases, the frequency of product usage notably increases. This means that clients are leveraging the product more often, resulting in an increase in their Bitcoin holdings.

“Buy BTC” Dual Cryptocurrency Notes (DCNs) 

High volatility in Bull markets can be attractive, as it causes DCN APYs to spike, potentially leading to substantial returns. Bull market data shows that clients shift their preference towards Buy BTC DCNs (e.g. USD to BTC pairs), targeting higher term returns, without the BTC conversion.  However, they’re pleasantly surprised if they’re exercised at prices lower than market.  Many will hedge by turning around and immediately putting their BTC proceeds towards a Sell BTC DCN (e.g. BTC to USD pair) to lock in profit and higher term returns.  

Larger Trades

During a Bull market, fewer clients engage in trading, which could suggest a 'hold' mentality in anticipation of further market appreciation. However, the average trade size is higher during Bull markets as clients are taking profit by trading digital assets for USD stablecoins as prices improve.

What products are most popular in Bear markets?

Enabling Auto Top-Up for all loans

We encourage you to always enable auto top-up on your Ledn loans to protect yourself against liquidation. During Bear markets, asset prices can drop which can cause a spike in a loan’s LTV.  Any loans with a LTV of 80% or higher will be liquidated.  

When activated, Auto Top-up will automatically transfer digital assets from your BTC or ETH Transaction account to your loan's collateral wallet address whenever the loan reaches 70% LTV to reduce the LTV.

During the top-up process, the amount to be withdrawn from your transactions account will be equal to that required to bring your loan's LTV back to 50%.

For more on how to properly manage your loans, watch this explainer video.

Longer duration loans (Standard, B2X)

The data shows that Standard Dollar loans and B2X loans are held for longer durations during Bear markets, possibly due to clients waiting for a market recovery. Patience tends to be rewarded as clients that can stay put during downturns may reap higher prices for their digital asset holdings as market conditions improve.

Custodied Loans

During bear markets, clients prioritize protecting their holdings. As such, we observe an increase in the percentage of our loan book that is made up of Custodied Dollar loans during these market conditions. 

“Sell BTC” DCNs

DCNs present crypto holders with a robust strategy to steer through both Bear and Bull markets. In Bear markets, the preference for Sell BTC DCNs (e.g. BTC to USD pairs) is driven by lower volatility, providing a hedge against USD conversion (e.g. selling) and delivering above market yields on BTC. During Bear markets, clients elect for shorter tenors, a tactical move to reduce exposure.  

Some clients do look to “Buy BTC” DCNs as an alternative to a Dollar Cost Averaging strategy as they can earn yield on USD stablecoins, while buying at prices they’re happy with.

Smaller, more frequent trades

In a Bear market, clients seem to trade more frequently, but with smaller amounts per trade to manage risk. 

Closing Thoughts

Bull and bear markets are inevitable and will affect your digital asset holdings. Understanding the current crypto market cycle before accessing digital asset products or services is a wise move.

Although bear markets can be intimidating, they are a regular occurrence in the digital assets space. They may offer opportunities for digital asset holders who can handle the risk and afford to wait for the possible next bull market. Ledn is not an exchange. Rather, our platform is designed to help clients build digital wealth over time. Our data indicates that clients who take longer term views see higher returns. That being said, more active digital asset holders use Ledn services to great success as well, particularly during bull markets.  

There are risks involved with buying, selling, or holding digital assets as explained in our Risk Disclosure Statement, which can be accessed here.

Hopefully, this guide has been helpful in improving your understanding of the products we offer and how to use them. Our team of dedicated client success specialists is available to answer any questions you may have. Until next time, happy hodl-ing and thanks for using Ledn!

About the Authors

This blog is a collaboration between our internal Product Marketing and Data team.

This article expresses the views of employees of 21 Technologies Inc. and/or its subsidiaries (“Ledn”) and is for general information, discussion, or educational purposes only and is not to be construed or relied upon as constituting legal, financial, investment, accounting, tax, estate-planning, or other professional advice or recommendation. Before taking any action based on this article you should consult a professional advisor. Past performance is not a guarantee of future results. Any numerical figures referenced in this article is for illustrative purposes only. The information contained in this article is subject to change without notice and Ledn is not responsible for updating such information. Please read Ledn’s full Risk Disclosure Statement and Disclaimers.