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

Canadian 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.)

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…

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