Ledn Ditches Ethereum, Embraces Full Custody Bitcoin Lending
Ledn, a digital asset lender, is making significant changes to its business model by focusing exclusively on Bitcoin (BTC) and adopting a full custody approach. This shift involves discontinuing support for Ethereum (ETH) and ensuring that Bitcoin collateral is securely held, according to a recent announcement. This move aims to align more closely with the founding principles of Bitcoin and reduce risks for clients.
Focus on Bitcoin and Full Custody
Ledn’s transition to fully collateralized Bitcoin lending means they will no longer lend out client assets to generate interest. Instead, all Bitcoin collateral will be held in full custody by Ledn or its partners. This approach ensures that assets are not rehypothecated, reused, or loaned out, reducing the risk of loss for clients.
According to Ledn co-founder and CEO Adam Reeds, this move is a return to the company’s roots and aligns with Bitcoin’s original purpose. Bitcoin was created as a response to the risks associated with fractional reserve banking, a system that Ledn is now moving away from.
Traditional finance relies on constantly reusing client assets to create leverage and, ultimately, inflation. Bitcoiners instinctively reject that model. That’s why we’ve moved away from this approach entirely.
End of Ethereum Support
As part of this strategic shift, Ledn is also ending support for Ether (ETH). According to Reeds, Bitcoin represents over 99% of Ledn’s client activity, making it logical to focus solely on Bitcoin. By streamlining their platform, Ledn aims to better serve their clients’ needs and simplify their operations.
Founded in 2018, Ledn has grown into a significant player in the digital asset lending space. Their loan book value once reached $9.9 billion, according to Galaxy Research. Ledn allows Bitcoin holders to borrow against their assets, providing liquidity without needing to sell their holdings or incur taxable events.
Bitcoin’s Role in Disrupting Traditional Finance
Bitcoin’s emergence was a direct response to the 2008 financial crisis, offering an alternative to traditional fiat currency systems. Its role in finance has expanded, especially after the launch of spot Bitcoin ETFs in 2024.
While institutions are increasingly adopting Bitcoin, some banking sectors are reportedly worried about blockchain innovations, particularly yield-bearing stablecoins. These stablecoins can offer higher interest rates compared to traditional banks, potentially disrupting their business models. New York University professor Austin Campbell described banks as a “cartel” that relies on fractional reserves to maximize profits while offering minimal interest to depositors.
Summary
Ledn’s strategic decision to focus solely on Bitcoin and adopt a full custody model reflects a commitment to Bitcoin’s core principles and a desire to provide a safer, more streamlined service for its clients. As reported by Cointelegraph, this move comes amid growing interest in Bitcoin and increasing concerns about the risks associated with traditional financial practices.
Disclaimer
The information provided in this article is for informational purposes only and does not constitute financial advice. All news content is sourced from trusted platforms like Cointelegraph, Bitcoinist, and our own writers written with added value, editorial insights and reviews by our team. Always do your own research before making any investment decisions.
