The crypto lending sector is experiencing a resurgence, buoyed by the introduction of spot bitcoin (BTC) exchange-traded funds (ETFs) and creditors recovering assets from bankrupt companies. Ledn, a prominent crypto lending firm, attributes its survival and success during the crypto winter to a “boring, slow, and safe” approach, according to co-founder Mauricio Di Bartolomeo.
“The market has come back roaring,” Di Bartolomeo shared at the Consensus 2024 conference in Austin, Texas. “The market never really left; it just got scared.”
Crypto lending operates similarly to traditional banking, allowing customers to deposit cryptocurrencies like bitcoin and earn interest or use their crypto as collateral for loans. The sector faced significant challenges in 2022 when firms such as Celsius, BlockFi, and Genesis filed for bankruptcy amid plummeting crypto prices.
Since then, the digital assets sector has rebounded. The CoinDesk 20 Index has surged over 200% since the end of 2022. This recovery was spurred by the approval of bitcoin ETFs by financial giants like BlackRock, which reignited interest and confidence in the market.
“Bitcoin’s rise from $20,000 to $70,000 and its prominence in the U.S. political landscape have fueled interest in bitcoin as both an asset and collateral for lending,” Di Bartolomeo noted.
Ledn processed over $690 million in loans in the first quarter of 2024, marking its most successful period since its inception in 2018. Institutional clients drove this demand, particularly following the approval of bitcoin ETFs in January. Ledn focuses exclusively on bitcoin, Ethereum’s ether (ETH), and two stablecoins: USDC and USDT.
The sector’s recovery is also linked to bankruptcy paybacks. Many users are receiving their assets back and returning to the lending market. Di Bartolomeo explained that these users, despite setbacks, remain committed to holding their bitcoin for the long term and leveraging it for borrowing and lending.
Ledn’s conservative strategy helped it weather the crypto winter. The firm only collaborates with qualified and vetted institutions, avoids asset and liability mismatches, and steers clear of DeFi yield farming. “People were calling us boring, and we said listen, this is our way: boring, slow, and safe,” Di Bartolomeo emphasized.
By maintaining liquidity and ensuring all lending and borrowing activities are term-matched, Ledn has solidified its position in the revitalized crypto lending market.