Episode 100 of Season 4 of The Scoop was recorded remotely with The Block's Frank Chaparro and Ledn Co-Founder & CSO Mauricio Di Bartolomeo.
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After a tumultuous first half of the year, the crypto lending market is maturing, according to Ledn Co-Founder and CSO Mauricio Di Bartolomeo.
In this episode of The Scoop, Bartolomeo shares his insider perspective on the state of crypto lending, including what types of lending he reckons involves the least amount of risk.
The liquidity crisis following the collapse of Three Arrows Capital earlier this year has the surviving lenders thinking more seriously about risk management, according to Bartolomeo.
“Right now there is a huge focus on risk management — everybody is tightening up their covenants, everybody is trying to ensure that this doesn't happen again — and I think that has brought the space to a more balanced equilibrium,” he said.
Out of the various sources of demand for crypto loans, Bartolomeo stated that delta-neutral market makers provide some of the best opportunities, given such market making strategies do not rely on the market moving in a particular direction.
“The entities that performed the best typically were these high-quality market makers that take non-directional positions… that is the type of activity that we think is best suited to minimize risk,” Bartolomeo said.
One sign of increasing market maker activity, Bartolomeo explained, is the tightening of average spread on exchanges:
“Today, what you are seeing is that the average spread in most exchanges is getting tighter and tighter and tighter and tighter, and I think this is an expression of how many market makers are now coming in to narrow those gaps,” he added.
During this episode, Chaparro and Bartolomeo also discuss:
- Why Ledn never worked with 3AC
- How Bartolomeo got into crypto by mining BTC in Venezuela
- Borrowing against bitcoin versus real estate
This episode is brought to you by our sponsors Tron
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