DCN (Dual Cryptocurrency Note)

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.