Earning with Ledn

What are Ledn Growth Accounts?

Ledn Growth Accounts allow you to earn interest on your digital assets (BTC, USDC, ETH, USDT) while maintaining flexibility to transfer assets in and out as needed. A Growth Account is ring-fenced to ensure you are only exposed to the credit risk of the counterparties that generate your interest, meaning it is isolated from the risks of other Ledn products and services, and it will not be affected in the unlikely event of a Ledn bankruptcy. 

How does Ledn generate the interest it pays for Growth Accounts?

Ledn generates interest for Growth accounts in two primary ways:

• BTC and ETH Growth Accounts:
  We work with institutional market makers who pay Ledn in return for borrowing BTC/ETH. These market makers use the borrowed BTC/ETH as collateral on exchanges where they provide market-making services or to settle trades in which BTC/ETH forms one leg of the transaction. Importantly, these institutions do not take a directional view of the market. All borrowers are rigorously vetted and continuously monitored by Ledn’s risk management team. We maintain a diversified list of these borrowers to mitigate the risk that any single borrower could negatively impact our operations.
  
  
• US Stablecoin Growth Accounts (USDC/USDT):
  Interest for US stablecoin Growth accounts is currently generated primarily by lending to Ledn's BTC/ETH-collateralized retail loan book, which has a proven track record with no history of loan losses. This ensures a secure and reliable way to earn interest on your assets.

We do not use Decentralized Finance Protocols (DeFi) to generate interest, ensuring that client assets are not exposed to additional risks associated with these platforms.

For more details about how Ledn generates interest, including specific breakdowns, visit our Open Book Report on The Ledn Blog.

How is interest paid each month for Growth Accounts?

Interest is accrued daily based on your Growth Account balance. Interest is paid out in kind monthly, typically on the first day of the following month, and you can see your earned interest directly in your Ledn dashboard.

Is there a minimum balance required?

No, there is no minimum balance required to start earning interest in your Ledn Growth Account.

Where are the Growth Account digital assets stored?

When not on-lent to borrowers, Growth Account digital assets are primarily held in custody at Ledn’s custodial partners and banking partners for operational purposes, including we can process your withdrawals smoothly.

For more details, check our monthly Open Book Report.

Am I Exposed to Risks from Coins I Don’t Hold?

Our Growth accounts are ring-fenced to ensure you are only exposed to the credit risk of the counterparties that generate your interest. There is no commingling of different Growth account asset categories. This means, for example, that a BTC Growth account holder is isolated from the risks of any other Ledn products or services, including our ETH or USDC/T Growth accounts. 

You are not exposed to the counterparty credit risk of USDC/T or ETH Growth Accounts unless you have assets in those accounts (i.e. you are a USDC/T or ETH Growth account holder). 

None of our Growth accounts are exposed to Ledn insolvency risk.  

Finally, you are in control and can easily opt in and out by transferring assets between our Growth and our non-interest earning Transaction accounts.

You can always find the current interest rates for Ledn Growth Accounts on our Rates and Withdrawal Terms page. The rates vary depending on the digital asset and balance in your account.

How does tiered interest impact rates?

For some assets, interest rates are tiered, meaning that larger balances may earn higher rates. For example, the first portion of your balance might earn at one rate, while additional amounts above a certain threshold earn a higher rate.

Example for USDC:

• Tier 1 (up to 100,000 USDC): 8.00% APY
• Tier 2 (100,000+ USDC): 10.00% APY

Transferring assets between your Growth and Transaction Accounts is quick and easy:

1. Log in to your Ledn account on the web platform.
2. Navigate to either your Growth or Transaction Account.
3. Select "Earn Interest" to move assets into your Growth Account and start earning interest.
4. Select "Withdraw" to move assets from your Growth Account back to your Transaction Account.
5. Transfers are processed within 48 hours, unless there is a non-performing loan, in which case your Growth Account may be temporarily locked for investigation.

Can I cancel a transfer?

Yes, transfers can be canceled at any time until they are fully processed.

For more details on transfer timelines and potential delays, visit our Open Book Report.

What is tiered interest?

Ledn Growth Accounts offer tiered interest, meaning larger balances earn higher interest rates.

How does tiered interest work?

Interest is calculated as a weighted average, with different tiers applying to different portions of your balance.

Blended Rates Example (for USDC):

• 100,000 USDC = 8.50% APY
• 250,000 USDC = 9.40% APY
• 500,000 USDC = 9.70% APY

If Ledn identifies a non-performing loan with any of the counterparties that borrow digital assets to generate interest for our Growth accounts, we take immediate steps to protect our clients' assets. Here’s what happens:

1. Access to Unimpaired Funds:
   Growth account clients will still be able to access unimpaired funds quickly, ensuring that assets aren’t tied up in lengthy and complex bankruptcy proceedings.
2. Temporary Account Lock for Investigation:
   To ensure the safety and integrity of your assets, your account may be temporarily locked for the duration of our investigation. During this period, you will continue to earn interest on your holdings.
3. Outcome of the Investigation:
   • Once the investigation concludes and we determine the extent of any loan impairment, all unimpaired assets will remain accessible to you and will continue to earn interest.
   • You will be able to view the status of the recovery efforts for the impaired loan.
   • As we recover assets from the defaulted loan, we will distribute any recovered amounts back to affected Growth account holders on a proportional basis.
4. Risk of Loan Losses:
   While Ledn employs rigorous measures to safeguard client assets, it is important to acknowledge that loan losses may occur. IN THE EVENT OF AN IMPAIRED INSTITUTIONAL LOAN, LEDN WILL DO EVERYTHING IN ITS POWER TO RECOVER AS MUCH ASSETS AS POSSIBLE FROM THAT INSTITUTIONAL BORROWER. Any losses that cannot be recovered will be proportionately shared among all Growth account holders exposed to that counterparty.

Important Note:
Your Growth account is not insured or guaranteed by any entity. Unlike traditional bank accounts or guaranteed investment certificates, Growth accounts are not covered by government deposit insurance or other investor protection schemes.

Transfers between Transaction and Growth Accounts generally take up to 48 hours. This period ensures that your assets are secured and protected. If there is a loan under investigation, transfers may be delayed for security reasons.

Transfers can be canceled at any time before they are processed.

A Dual Cryptocurrency Note (DCN) allows you to earn a high, fixed-term interest rate on your BTC or USD, with a potential sell of your BTC or purchase of BTC at a predetermined target price (the "Strike Price") on a specific date in the future.

What are the components of a DCN?

You can pick between BTC to USD and USD to BTC DCN pairs. There are two components to each DCN pair:

1. Term Return:
   This is the amount of BTC or USD interest you will receive at the maturity of your DCN. The Term Return amount doesn’t change based on the BTC price at maturity and is paid in the original digital asset of your DCN.
   
   
2. DCN Outcome:
   • BTC to USD DCN: You set a Strike Price where you’d be happy to sell your BTC for USD. There are two possible outcomes:
     • If the BTC price at maturity is at or below the Strike Price, you’ll receive your original BTC amount back.
     • If the BTC price at maturity is above the Strike Price, your BTC amount will be converted into USD at the Strike Price.
   • USD to BTC DCN: You set a Strike Price where you’d be happy to buy BTC using your USD. There are two possible outcomes:
     • If the BTC price at maturity is at or above the Strike Price, you’ll receive your original USD amount back.
     • If the BTC price at maturity is below the Strike Price, your USD amount will be converted into BTC at the Strike Price.

Note: USD funds will be funded and returned in USDC on a 1:1 basis through your Ledn USDC Transaction account. In certain circumstances, you may receive your funds back in USD. Please refer to the Dual Cryptocurrency Note Agreement for more details.

What is the BTC Reference Price, Strike Price, and BTC Price at Maturity?

• BTC Reference Price: This is the price of BTC, in USD, which is pulled from our third-party liquidity provider. It is a reference point to help you evaluate DCN options.
• Strike Price: This is the agreed-upon, pre-determined price of BTC, in USD, which will be compared against the BTC price on the maturity date to determine the outcome of your DCN. It is selected when you take your DCN.
• BTC Price at maturity: This is the price of BTC, in USD, at the time of maturity for your DCN. It is a reference price that when compared against the Strike Price determines the outcome of your DCN. This price is supplied by our third-party liquidity provider.

What is the difference between annualized yield, term yield (%) and term return?

• Annualized Yield: The annualized yield is the equivalent effective annual interest you would earn if the term of the DCN was 1 year. It is shown for reference only.
• Term Yield (%): Term yield (%) is the interest you will earn over the term of your DCN, expressed as a percentage.
• Term Return: Term return is the amount of BTC or USD interest you will receive upon the maturity of your DCN. You will earn this amount in the original DCN digital asset regardless of the outcome of your DCN.

Is there a minimum amount required to contract a DCN?

Yes. The current minimum per DCN is 0.10 BTC or its equivalent in USD. 

Can I cancel a DCN before it reaches maturity?
No, you cannot cancel a DCN once it has been placed.

When your DCN matures, three things happen:

1. The BTC Price at maturity is compared against the Strike Price. There are 2 possible outcomes for each DCN pair:

• For a BTC to USD pair:
  i. If the BTC Price at maturity is at or below the Strike Price, you’ll receive your original BTC amount back.
  ii. If the BTC Price at maturity is above the Strike Price, you’ll receive your BTC converted into USD at the Strike Price.
• For a USD to BTC pair:
  i. If the BTC Price at maturity is at or above the Strike Price, you’ll receive your original USD amount back.
  ii. If the BTC Price at maturity is below the Strike Price, you’ll receive your original USD amount converted into BTC at the Strike Price.

2. Once the outcome is calculated, we’ll deposit the funds into your BTC or USDC* Transaction account.

3. Regardless of the DCN outcome, we’ll deposit the Term return into your BTC or USDC* Transaction account. The Term return is paid in the original digital asset you took your DCN in.

* USD funds will be paid or returned in USDC on a 1:1 basis through your USDC Transaction account, subject to certain circumstances in which you may receive your funds back in USD. Find out more details in our Dual Cryptocurrency Note Agreement.

For more details, review the DCN Agreement.

The benefits of a DCN are the ability to earn a higher interest than is available in your Ledn BTC Growth or USDC Growth accounts and gain advantage from your market view on BTC. 

• By picking future BTC prices at which you’d be happy to buy or sell BTC, you’re able to automate your outlook and either sell at a higher price or buy at a lower price than the existing one when you took your DCN.
• Regardless of the outcome, you’ll earn an interest  that is higher than what’s available in the Ledn BTC Growth or USDC Growth accounts, helping you build passive income.

There are risks associated with selling, buying or holding digital assets or entering into a DCN transaction with Ledn. You should understand these risks involved before taking a DCN. Some of the risks associated with a DCN are:

• The amount of BTC or USD you used to take your DCN are locked for the duration of your DCN.
• For a BTC to USD DCN, if the BTC Price at maturity is above the Strike Price, you’ll sell your BTC at a price that’s lower than the BTC Price at maturity.
• For a USD to BTC DCN, if the BTC Price at maturity is below the Strike Price, you’ll purchase BTC at a price that’s higher than the BTC Price at maturity.
• If your DCN amount is converted upon maturity, you may be subject to a taxable event depending on the jurisdiction in which you reside. Please consult a tax professional in your local jurisdiction for advice on proper tax treatment. 

For more information, please carefully review the DCN Agreement and its Risk Disclosures.