Bitcoin ETF market makers are Ledn's biggest clients for crypto loans. Ledn credits Bitcoin and Ether ETF approvals for its performance. Big-money players say crypto loans offer tax advantages over selling tokens.
According to a report shared with News, centralized crypto lender Ledn said it processed $1.16 billion in crypto loans, mostly to bitcoin exchange-traded fund market makers.
Ledn's half-year figures mark a banner year for the company so far, with its quarterly loan volume growth reaching nearly 30%.
Still, the results pale in comparison $22 billion in crypto loans processed by the decentralized lending protocol Aave during the same period.
While Aave caters to retail and big-money investors, the bulk of Ledn's crypto lending business is on the institutional players side, as they accounted for 84% of the company's loan volume in the first half.
Ledn credits the upside of the retail side of its business and growing appetite from investors in the Global South.
Leadn co-founder and CEO Adam Reeds told News that bitcoin and ether-based loans are in high demand following their respective exchange-traded fund approvals by the US Securities and Exchange Commission.
According to Reeds, the firm has processed several hundred million dollars in institutional loans to ETF market makers.
Ledn's CEO also noted that investors are using crypto-backed loans to optimize their tax strategies.
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Ledn's CEO says investors see these loans as the best way to sell their crypto, as the former is typically a non-taxable event.
FTX survives
Ledn is one of the few centralized lenders to survive the collapse of the crypto lending market between 2022 and 2023.
During this period, a series of bankruptcies spread across the sector, with Celsius, Genesis and BlackFi going bankrupt.
Many of the affected firms have one thing in common – exposure to Sam Bankman-Fried's FTX exchange, which collapsed in November 2022.
Ledn was also in that category, but managed to avoid any negative impact.
Reeds told News that the company's risk management practices have helped it navigate turbulent market times.
“We've seen directional risk, where 'altcoins' that have no borrowing demand have been used as collateral to borrow stablecoins,” Reeds said.
The company only deals in liquid assets like Bitcoin and USDC, the CEO said.
“We recently added Ether and USDT, with no plans to add other assets,” Reeds said.
Osato Awan-Nomayo Our Nigeria based DeFi representative. He covers DeFi and technology. To share tips or information about articles, please contact him here [email protected].
Related TopicsCrypto LendingBitcoin ETF