Crypto lending platform Ledn is expanding its Growth Account offering, allowing users to earn up to 2% APY on ether deposits from October 12, in addition to its bitcoin, USDC and USDT savings products.
Unlike the complex process of manual ether staking, Ledn claims it offers a more user-friendly experience by simply transferring ether to its growth accounts to immediately start earning interest, according to a statement.
Manual solo ether staking offers the highest rewards but involves running an Ethereum node and depositing 32 ETH to activate a validator that participates directly in the network consensus. However, liquid staking options are also available on platforms like Lido Finance, Coinbase, and Rocket Pool, allowing users to earn ether staking rewards while unlocking the utility of various DeFi applications in the form of a liquid staking derivative token. While such platforms typically charge a fee for wagering rewards, Coinbase takes a 25% cut.
Ledn’s yield is lower for ether than its liquid staking counterparts, with Lido Finance, Coinbase and Rocket Pool currently offering a theoretical APR of up to 3.87%. However, Ledn said its users will not experience any delays in staking and withdrawing their ETH, so there are trade-offs in both cases.
Earlier this month, the Cayman Islands-based cryptocurrency lender also told The Block that it offered a “savings experience beyond exposing customers to the risks associated with decentralized financial protocols, which continue to be scarred by a consistent stream of hacks and exploits .”
“Users have continually asked us to add ether, so in line with our mission to offer only the best and most profitable yield options, we are excited to now introduce support for ETH on Ledn’s Growth Accounts,” co-founder and CSO of Ledn. Mauricio Di Bartolomeo said in the statement. “This yield option is significantly easier to set up than native ETH staking. Looking ahead, we are working to roll out ETH support across the entire Ledn product range in the coming months.”
Ether staking will lead to 50% of supply next year
According to Staking Rewards, the current stake rate is approximately 20% of all ether in circulation. According to The Block’s data dashboard, more than $20 billion in value is tied up in liquid staking alone.
On September 7, Ethereum developers said that staked tokens are likely to reach more than 50% of the entire ether supply by May 2024 – hurting liquidity. They proposed a plan to “mitigate the negative externalities of a very high level of total ETH supply,” which would slow the growth of ether stakes.
Shielded growth accounts
Ledn’s Growth Accounts are partly a response to the collapse of several centralized lending platforms in 2022 – including the bankruptcy of companies such as Celsius, BlockFi and Voyager Digital – which is having a serious impact on confidence in the sector.
These savings accounts are legally shielded. This means that users are only exposed to the counterparties that generate their returns, are protected if Ledn ever goes bankrupt and are not exposed to the risks of any type of account. For example, Bitcoin Growth Accounts are not exposed to the risks of Ether Growth Accounts and vice versa.
Ledn also confirmed that its USDT Growth Accounts, announced earlier this month, will go live alongside the new ETH Growth Accounts on October 12 and offer up to 8.5% APY on customers’ USDT stablecoins. However, Ledn’s ETH and USDT Growth Accounts will not be available in Canada or the US at launch, the company said.
Ledn’s previous USDC and Bitcoin savings accounts were split into a non-interest-bearing transaction account and an interest-bearing growth account, starting with the Bitcoin growth accounts on August 3 with an APY up to 1%. The transition to USDC Growth Accounts went live on September 12 at an APY of 8.5%. Ledn allows users to switch freely between the Transaction and Growth accounts to ensure control over their assets.
Ledn said it offers savings accounts and loans to customers in more than 130 countries, and partners with qualified institutions to provide greater transparency about how it generates returns.