How Bitcoin ETFs boosted Ledn crypto lending to $1.2bn this year

Centralised crypto lender Ledn says it has processed $1.16 billion in crypto loans, mostly to Bitcoin exchange-traded fund market makers, according to report shared with DL News.

Ledn’s half-year figures represent a banner year for the company so far, with its quarterly lending volume growth almost reaching 30%.

Still, the results pale in comparison to the $22 billion in crypto loans processed by decentralised lending protocol Aave over the same period.

Also, while Aave caters to retail and big-money investors, the bulk of Ledn’s crypto lending business is towards institutional players as they amounted to about 84% of the company’s loan volume in the first half.

Ledn says the retail side of its business is on the upside and credits growing appetite from investors in the global south.

Adam Reeds, co-founder and CEO of Ledn, told DL News that Bitcoin and Ether-backed loans are in high demand following their respective exchange-traded fund approvals by the US Securities and Exchange Commission.

According to Reeds, the company has processed several hundred million dollars in institutional loans to ETF market makers.

The Ledn CEO also noted a growing trend of investors using crypto-backed loans to optimise their tax strategies.

The Ledn CEO said the investors view these loans as preferable to selling their crypto since the former is typically a non-taxable event.

Surviving FTX

Ledn is one of the few centralised lenders that survived the near collapse of the crypto lending market between 2022 and 2023.

During the period, a string of bankruptcies spread across the sector as Celsius, Genesis, and BlockFi went bankrupt.

Many affected firms had one thing in common ― exposure to Sam Bankman-Fried’s FTX exchange that collapsed in November 2022.

Ledn was also in that category, but managed to avoid any adverse effect.

Reeds told DL News that the company’s risk management practices helped in navigating the turbulent market period.

“We saw directional risk where ‘altcoins’ that did not have borrowing demand were used as collateral to borrow stablecoins that did,” Reeds said.

The CEO said the company only deals with liquid assets such as Bitcoin and USDC.

“We only recently added Ether and USDT, with no plans to add any other assets,” Reeds said.

Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.