5 Questions to Ask Before Choosing a Crypto Lending Platform

Hey Lantern Community,

Welcome to the first edition of the Lantern Letter!

This will be a weekly newsletter that provides:

• A quick market update on our supported coins

• A short educational piece of content

Let’s get into it!

Here are 5 questions every borrower should ask before choosing a crypto lending platform:

1. Where is the company headquartered?

The platform's jurisdiction determines the regulatory framework that protects you. At Lantern, we're proud to be a US-based Delaware C corporation headquartered in Nevada, operating under robust US regulations that prioritize your protection.

2. How do I know my assets are safe?

Security should be your top priority. Look for platforms that use a qualified custodian for your assets. A qualified custodian is a regulated entity required to maintain 1:1 holdings of your assets at all times. They generally also come with insurance protection. In addition, lenders should share with you the blockchain wallet address where your collateral sits, so that you can see it at any time. Your assets' safety depends on these critical measures.

3. Does the platform rehypothecate user assets?

Find out if the platform lends out your deposited assets to generate additional returns and what safeguards are in place to protect your funds. Some platforms explicitly avoid rehypothecation for added security.

4. Is the platform registered and compliant with regulations?

Verify if the platform is registered with appropriate financial authorities and complies with Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements. Regulatory compliance indicates legitimacy and responsible business practices.

5. What is the platform's max loan-to-value (LTV) ratio?

The LTV ratio directly affects your liquidation risk. Higher LTV ratios (70-90%) provide more borrowing power but increase liquidation risk, while lower ratios (25-50%) offer more protection against market volatility. Lantern supports different levels of LTVs depending on an asset’s volatility to keep you protected.

Why This Matters for Lantern Users

At Lantern, we've built our platform with these crucial questions in mind.

When we founded Lantern, we committed to creating a platform where everyday crypto investors could do more with their digital assets without needing to be crypto natives.

This means providing clear, straightforward answers to all these questions and more.

In next week’s newsletter, we'll dive deeper into risk management and also touch on one infamous crypto lending disaster.

Until then, if you have any questions or feedback, please reply to this email.

We read every single reply.

Best,

The Lantern Team