FIRST ON PRO: How Bitcoin lender Ledn survived 2022’s crypto credit crisis by Timccopeland
Many of the lenders were intertwined, and when cracks started appearing, they spread rapidly. In Ledn’s early days, in fact, Genesis was its sole partner and took out all of its loans. It begs the question of how on earth Ledn survived the year.
As a result, by the time that the crypto credit crisis occurred, Ledn had largely transitioned away from Genesis to its own order book. So when it heard about the brokerage’s potential liabilities, it sped up the transition and closed the relationship. The second way is that the company effectively lets its customers loan to one another. The company offers overcollateralized Bitcoin-backed loans at 12.9% APR, which is a few percent higher than the yield it offers on borrowing USDC. Ledn then takes a fee from this spread.
Since the company lends out its customer’s assets, it can’t show that it holds all of the assets in its own wallets. But Bartolomeo claimed that these attestations are important to show that the accounting is all being done properly — as opposed to companies like FTX, which didn’t seen to have a clue about its assets and liabilities.
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