Ledn, a crypto lending platform, had its best quarter in Q1 2024, processing more than $690 million in loans, suggesting a renewed interest in centralized lending.

The sector suffered significant setbacks following a tumultuous year for centralized crypto lending services in 2022 — a period that saw the bankruptcy of firms like Celsius, BlockFi, Voyager Digital and Genesis.

Of the crypto loans the firm facilitated in Q1, Ledn processed $584 million in loans for institutions and over $100 million for retail. That represents a nearly fourfold increase in institutional loans compared to the $125.7 million Ledn issued in Q4 2023 and some sevenfold growth in loans issued to retail from $14.6 million in the prior quarter.

Demand related to Celsius refinancing deals and US spot bitcoin ETFs

Ledn’s growth in its loan book value was spurred on by demand from former Celsuis clients — with more than $40 million of the loans relating to refinancing deals from its collapse — as well as the U.S. spot bitcoin exchange-traded funds, the firm said in a statement shared with The Block.

Ledn launched ether-backed loans in February, having previously only offered bitcoin-backed loans. The move was partly designed to assist the victims of Celsius’ bankruptcy in July 2022 by allowing those who still had outstanding ether loans to refinance with Ledn, subsequently onboarding over 50% of the total amount refinanced, according to the firm.

Celsius emerged from Chapter 11 bankruptcy in January this year and has since distributed $3 billion worth of cryptocurrency and fiat to its creditors.

Regarding the spot bitcoin ETFs, Ledn said that their approval and launch in the U.S. in January, and the subsequent rise in bitcoin’s price, allowed the firm to process several hundred million dollars worth of institutional loans to ETF market makers.

"The first quarter of 2024 has set the tone for a promising year for Ledn, as we've not only doubled our loan book since November 2022 but have also solidified our leading position in the market by adapting to the increasing demand for digital asset financial products," Ledn CEO Adam Reeds said.

Signs of green shoots for the crypto lending sector

Following the crypto niche’s troubles in 2022, it remained unclear the extent to which users would trust such services going forward.

Ledn co-founder and CSO Mauricio Di Bartolomeo previously told The Block the company survived the period because of its “sound risk management program” and “prioritization of the safety and security” of its clients' assets.

However, Ledn’s loan book growth also follows an uptick in loans processed by one of the leading crypto exchanges, Coinbase, which reported lending $399 million to customers in Q4 2023 in its February shareholder letter — adding to signs of green shoots for the troubled industry.

Alongside its Q1 results, Ledn released its latest proof of reserves report as part of the company’s transparency efforts in a sector that has lost a lot of trust in recent years. However, many have criticized similar measures in the crypto industry, which fail to reveal audited fiat reserves, client and company liabilities and other information to assess a firm’s financial health.

In September 2023, Ledn also expanded its crypto savings product to include ether, adding to the crypto lender’s bitcoin, USDC and USDT savings products, with annualized yields of up to 4% APY as an alternative to staking solutions.