Loan Management

Ledn offers flexible repayment options for clients to manage their loans:

1. BTC or ETH Collateral:
   • Repay your loan directly using BTC or ETH through the platform, ensuring real-time settlement.

Note: For US residents, the Repay with collateral option is currently in the following States: Alabama, Arizona, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Massachusetts, Minnesota, Missouri, Michigan, Montana, Nevada, Pennsylvania, South Carolina, Texas, Utah, Wisconsin, and Wyoming.

This list may change from time to time, and Ledn cannot guarantee your jurisdiction will be or remain available for any period of time.

2. Wire Transfer:
   • Make payments in USD by choosing the wire payment option. Processing may take up to 5 business days.
3. USDC Payment:
   • Use your USDC balance in your Transaction Account for quick and seamless repayment. 

Early repayments are penalty-free, giving you control over how and when you settle your loan.

The Loan-To-Value (LTV) ratio represents the relationship between the loan amount and the value of the collateral used to secure the loan. At Ledn, loans are issued in either US Dollars (USD) or USD Coin (USDC) and are generally set at an initial LTV of 50%.

This means that the funds you borrow are equivalent to 50% of the value of your digital asset collateral. For example, if your collateral is valued at $10,000, you can borrow $5,000.

The LTV is an important factor in managing your loan, as it determines the health of your collateral in relation to market fluctuations.

What Happens if the LTV Increases?

If your LTV increases, it means that the value of your collateral has decreased in relation to the outstanding loan outstanding balance. In such cases, you will be required to take action to avoid potential liquidation.

To prevent liquidation, you can:

1. Add more collateral to your loan.
2. Make a partial repayment to lower the loan outstanding balance.

If your loan reaches specific LTV thresholds, you will receive email notifications prompting you to take action:

• At 70% LTV, you will receive an initial alert to add collateral.
• At 75% LTV, a follow-up reminder will be sent.
• At 80% LTV, an automatic liquidation of your collateral will occur to repay the loan outstanding balance.

For more details on how to manage an increasing LTV, please refer to our Help Center article:
What Happens If the BTC or ETH Value Significantly Decreases?

What Happens if the LTV Decreases?

If your LTV decreases, it means that the value of your collateral has increased in relation to your loan outstanding balance. In this case, you may be eligible to redeem a portion of your collateral, provided that certain conditions are met.

Collateral can be redeemed as long as your loan maintains an LTV that meets Ledn's requirements for a healthy loan status. This process ensures that you can access your assets while keeping your loan secure.

For more information on how to redeem excess collateral, please visit our Help Center article:
How to Redeem Excess Collateral

Stay Informed and Manage Your Loan Effectively

To ensure your loan remains in good standing, we recommend regularly monitoring your LTV in your Ledn account. If you have any questions or need assistance, our support team is always available to help.

A loan top-up allows you to add more collateral, lowering your Loan-to-Value (LTV) and minimizing the risk of liquidation:

How to Top-Up:

1. Select “Top-Up” on Your Loan Dashboard: Log into your account and choose your loan.
2. Choose a Source: You can top up using funds from your Transaction Account or an external source.
3. Confirm: Upon confirmation, your LTV will be adjusted.

This feature ensures your loan remains secure during market fluctuations.

Ledn offers flexible options for renewing or refinancing your existing loans:

Loan Renewals:

• Automatic Renewal: If your loan’s LTV is at or below 60% at maturity, it may be automatically renewed under a new loan agreement which may include a new administration fee and the new interest rate will be the one in force at the moment of renewal. The basis for calculation will be the Outstanding Balance at the moment of renewal. 
• Canadian Clients: Clients in Quebec, New Brunswick, Nova Scotia, and Saskatchewan are not eligible for automatic renewals.

Refinancing:

• Loans can be refinanced after being open for 30 days. Refinancing can help adjust terms, switch loan types, or secure better rates. A refinance will also be subject to the terms of a new loan agreement which may include a new 2% admin fee.  The basis for calculation will be the Outstanding Balance at the moment of the refinance. 

Please note that the refinancing/renewal of a Loan does not release additional fiat or collateral. 

Excess Collateral Redemption allows you to unlock collateral when your LTV drops below 30%:

Eligible Loans:

• Active for more than 60 days 
• LTV is  below 30%.
• No recent redemption history within the last 60 days.
• A minimum of $100 USD worth of excess collateral is required, with a maximum redemption of $100,000 USD every 60 days.

Process:

1. Check “Active Loans” Tab: Eligible loans will show a “Redeem Collateral” button.
2. Unlock Collateral: You'll have the ability to unlock the amount of collateral that will bring your loan's LTV back to the target LTV of 40% and send it back to the applicable Transaction account.

Use redeemed collateral for trading, earning interest, or new loans. This feature is available in all eligible regions.

Auto Top-up is a simpler and more intuitive way to Top-up your Ledn Loan collateral address(es), removing the need to manually monitor and manage your open loans’ status during times of price volatility.

Features:

• Automatic Adjustments: When your LTV hits 70%, funds from your Transaction Account are automatically added to your collateral wallet address to bring the LTV back to 50%.
• How to Enable: Toggle the Auto Top-Up feature in your loan settings.

In case you don't hold enough balance to bring back your loan's LTV to 50%, our system will still withdraw all available balance in your BTC or ETH Transaction account to top up your loan's collateral.

In the event that there's no remaining balance on your BTC or ETH Transaction account to top up your loan's collateral, you will receive a notification email informing you that, due to lack of available funds, we were unable to Auto Top-up your loan(s). In this case, you will need to continue with manual top up.

Yes, Ledn allows clients to refinance their Standard Loans to Custodied Loans:

Eligibility:

• Loans must be active for at least 30 days, and your LTV should be within the safe range.
• Switching may lead to a higher interest rate due to the security of Custodied Loans.

How to Switch:

• Contact Ledn Support to initiate the refinancee. The team will guide you through the process, which may involve a new agreement with higher interest rate and applicable fees.

Benefits: Enjoy enhanced security by switching to a Custodied Loan, knowing your collateral is securely held and not rehypothecated.

A partial loan repayment allows you to repay a portion of your outstanding loan without closing it. Here’s what you need to know:

How to Make a Partial Loan Repayment:

• USDC Payment: Directly repay from your USDC Transaction Account. Use the “Repay your loan” button on the loans page.
• Wire Transfer: Contact our support team for assistance.

Currencies Available:

• USDC: From your Transaction Account.
• Fiat: Via USD wire transfer to Ledn.

Minimum Repayment Amounts:

• USDC: Minimum of 100 USDC.
• Fiat: Minimum of $1,000 USD. We do not support repayments that would bring the outstanding balance below $500 USD.

Benefits of Partial Repayments:

• Lowers LTV: Reduces the risk of automatic liquidation.
• Reduces Interest Expenses: Partial repayments first settle accrued interest and administration fees, with the remaining amount reducing the principal balance. Lower principal means less interest charged daily.

Additional Information:

• No Fees: There are no charges for partial repayments.
• Quick Processing: USDC repayments are processed instantly, while wire transfers may take longer depending on banking procedures.
• No Restrictions on Frequency: Make partial repayments whenever needed, though scheduling in advance is not currently available.
• Irreversibility: Partial repayments cannot be reversed once processed. Confirm all details before completing the transaction.

If the value of your BTC or ETH collateral drops significantly, your loan’s LTV ratio increases, raising the risk of collateral liquidation:

Monitoring and Alerts:

• Notifications: Ledn sends an email when your LTV exceeds 70%, advising you to add more collateral or repay part of the outstanding balance.
• Additional Reminders: Further alerts follow if your LTV reaches 75%.

Action Required:

• Top-Up or Repay: Deposit additional collateral or repay the loan in full or partially.
• Automatic Liquidation: If the LTV exceeds 80%, Ledn will automatically sell part of your collateral to cover the outstanding loan. This process is irreversible, and any remaining collateral is sent to your Transaction Account.

Proactive Management: We strongly recommend that you regularly monitor your LTV and add more collateral even before reaching 70% LTV. Also consider enabling Auto Top-Up to remove the need to manually monitor and manage your open loans’ status during times of price volatility.