Ledn is a company that was created by Mauricio Di Bartolomeo, who was one of the first people to embrace Bitcoin in Canada. The company will offer credit to businesses and consumers in Canada. About 5% of people in Canada use Bitcoin. However, many of them struggle to access the services of the banking system. Bartolomeo saw an opportunity and decided to take advantage of it. He further noted that Canada was overachieving and much of it contributed to the crypto community, specifically to the Bitcoin.
What Other Experts Think
The CEO of Satoshi Portal, a company that is creating solutions for payments in Bitcoin agrees with this assessment. The company is behind Canada’s biggest processor for payments in Bitcoin, Bylls. He said the company tried to get loans to expand but nobody would give them money. Thus, Bylls has become the first customer for Ledn.
Bylls often receive Bitcoin from users and uses them to pay bills for the users. However, the company does not like holding onto the BTC due to the price volatility. It is the reason the company decided to take credit from Ledn. By using BTC to get fiat credit, this helps to ensure that they are more stable. The company said they would use the credit to fund its business and pay all Fiat-related costs of doing business. According to Ledn, Bylls is one of their customers. However, they would not reveal how many clients they have thus far.
How It Works
The platform has four steps for getting a loan. The customer will apply on Ledn and send their BTC to be used as collateral. The company will verify the application before sending the loan to customers in fiat.
The borrower will then make monthly payments of interest on the loan until they are through. After that, they can pay the principal and Ledn will give them back their BTC. Ledn is funding these loans based on money it got from several funding rounds. The plan is to raise $50 million according to the founder.
There are risks with this program. One is margin calls and custody. Since the borrower sends BTC, the carrier of BTC has custody risk to bear. If the sender is not careful, they could lose all BTC sent by customers. The company planned to use a third party custody service but there was none in Canada. Thus, they created a team to come with custody for the BTC. The BTC are in cold wallets, which makes it impossible for hackers to target them.
Margin calls is another risk for borrowers. With BTC being so volatile, the asset could lose or gain value in hours. The BTC collateral might fall below the value of the loan. In such a case, the lender would need more collateral or sell off some of the BTC to reduce their risk profile. For borrowers, the fact that they might lose BTC could keep them from taking the loan. Ledn tries to avoid the issues by monitoring BTC prices and talking to borrowers before any liquidation.