Lock BTC, Get DAI: Lending Firm Bridges Bitcoin-DeFi Divide in Latin America

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Coindesk | Leigh Cuen | Oct 29, 2019

ledn making moves - Lock BTC, Get DAI: Lending Firm Bridges Bitcoin-DeFi Divide in Latin AmericaCanadian startup Ledn, which offers bitcoin-backed fiat loans, now also offers dollar-pegged DAI loans, connecting bitcoin users with ethereum’s decentralized finance (DeFi) ecosystem.

Ledn co-founder Mauricio Di Bartolomeo, a Venezuelan expat, told CoinDesk this new partnership with stablecoin promoter MakerDAO was driven by customer demand.

Out of “thousands” of users, more than half of Ledn’s users are in Latin America, Di Bartolomeo said, where ethereum-backed DAI is increasingly seen as an alternative to strictly regulated dollar transfers. In fact, this past weekend the central bank of Argentina restricted civilians to buying only $200 in USD per month, down from the previous $10,000.

“In Argentina, if you receive a bank transference in USD they convert it immediately to ARS (Argentinian Nuevo peso), and you lose money,” Nadia Alvarez, MakerDAO’s head of business development in Latin America, told CoinDesk. “We know BTC hodlers don’t want to sell their BTC, but they need liquidity, for their daily expenses. That is why we think this is relevant for Latin America.”

Ledn isn’t the first company to notice that bitcoiners are eager for access to the ethereum community’s experimental loan products. Silicon Valley startups in the Cross-Chain Working Group are also working on a different solution to allow wrapped bitcoin tokens directly on the ethereum blockchain.

Plus, later this month Maker token holders, who govern the stablecoin ecosystem, will vote on whether to include bitcoin among the upcoming multi-collateral version of DAI. (Currently, DAI tokens are only made by locking up ether tokens in smart contracts that monitor ether prices and automatically liquidate the ether collateral if the price plummets.)

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In the meantime, Ledn will buy ethereum-backed DAI from over-the-counter traders and manage bitcoin custody for loan clients. Di Bartolomeo said clients across Latin American have reported banking issues comparable to Argentina, although unique for each context, which is why they are turning to DAI. He added Colombians make up 16 percent of Ledn’s user base, the largest demographic in Latin America, followed by Venezuelans at 12 percent.

“Several users have expressed that they would like to use stablecoins like DAI to purchase additional digital assets and others to access more financial services,” he said.

DeFi boom

Ledn users will soon be able to lock up their bitcoin and spend DAI at 750 merchants across Colombia, Venezuela, Argentina and Brazil, according to MakerDAO’s Alvarez.

Separate from the loan startup, MakerDAO is partnering with product-provider Pundi X, and planning to install point-of-sale devices across Latin America so that DAI users can spend crypto directly on goods and services. In addition, brick-and-mortar locations will enable a user in Argentina to send fiat or DAI to Venezuela, for example, with Pundi X’s debit card–esque Xcard.

“The [Ledn] DAI loan gives bitcoiners the opportunity to enter into the DeFi world, and all the projects inside the ecosystem,” Alvarez said.

Di Bartolomeo told CoinDesk he’s excited to work with MakerDAO precisely because they have “boots on the ground” where his customer base lives. Dozens of people have attended DAI meetups in Mexico City, Bogota and Buenos Aires over the past year. Globally, MakerDAO records currently show more than 60,000 DAI wallet addresses in October 2019.

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NCFA Jan 2018 resize - Lock BTC, Get DAI: Lending Firm Bridges Bitcoin-DeFi Divide in Latin America The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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