TL;DR
- Ledn will stop offering ETH-backed loans and crypto yield accounts, shifting its entire operation to Bitcoin-backed loans starting in July.
- The company will eliminate any counterparty risk by directly holding all collateral and ending institutional asset lending.
- From July, Ledn will lower its annual rate to 12.9% and let users release part of their BTC when their loan is well collateralized.
Ledn announced it will discontinue Ethereum (ETH)-backed loans and crypto yield accounts. Starting July 1, the platform will focus its entire operation on loans secured exclusively with Bitcoin. This decision follows a strategic shift aimed at minimizing risks and simplifying its business model after the issues that hit centralized lending markets in 2022.
The company will also stop lending client assets to institutions to generate interest. From that date, all collateral will be held directly by Ledn or by verified partner entities, completely eliminating exposure to external counterparties. This adjustment will end its BTC and ETH savings products, which offered yields of up to 4% per year.
Goodbye to Ethereum
Even though Ledn added support for Ethereum in February 2024, most of its portfolio remained backed by Bitcoin. Today, over 95% of its loans use BTC as collateral. Dropping ETH is part of its strategy to focus on the asset it sees as the most secure and predictable for lending operations.
The Bitcoin-backed lending market has begun showing signs of recovery, driven by the cryptocurrency’s price surge and the growing need to access liquidity without selling off positions. In recent months, companies like Strike, Xapo Bank, and Coinbase have launched similar products, sparking fierce competition in this segment.
Key Changes at Ledn and User Benefits
Starting in July, Ledn will introduce two major upgrades to its service. Users will have greater control over their collateral and the option to unlock part of their BTC when the loan-to-value ratio is in a healthy range. Additionally, the annual rate for custodied loans will drop from 13.4% to 12.9%, while maintaining the flexibility of no monthly interest payments and no early repayment penalties.
The company describes this approach as the most transparent and secure way to operate Bitcoin-backed loans, distancing itself from the opaque models that led several firms to collapse three years ago. Since its founding, Ledn has originated over $9.5 billion in loans and currently manages a $550 million loan book backed by more than $1.35 billion in BTC.
