The COVID-19 pandemic and latest bitcoin bull run have provided a handful of stress tests for cryptocurrency lending firms.

During Wednesday’s market correction lenders were more prepared. 

The latest dip didn’t hurt as much as in March 2020, but it did clear out “excess leverage,” said Nexo co-founder and managing partner Antoni Trenchev. 

“It was so rapid. Because there was quite a lot of leverage, that’s why the crash was so deep,” Trenchev said. “Now that it’s cleaned up we don't have such excessive leverage in the system right now. That’s why we're seeing this recovery right now.”

Nexo lowered its loan-to-value (LTV) ratios a few weeks ago because of froth in the market, following the lead of Unchained Capital, which reduced its LTVs to 40% in February. 

“Everybody had more wealth in bitcoin and no one is in a position to complain about a move like that, and it made this period less stressful,” said Unchained CEO Joe Kelly. 

This time, the impact of margin calls on Unchained’s loan book was much less significant, Kelly said. 

In late April, crypto lender Celsius tried to help customers prepare for a market crash by warning them on Twitter they should add crypto to their accounts in case of margin calls.

Although Nexo and Genesis said they had made “hundreds of millions” of dollars worth in margin calls, the startups this time had more of a cushion from which to make margin calls and liquidations. 

An example of the difference: In March 2020, Nexo had $1 billion in assets under management compared to $15 billion now. 

Margin calls affected around 10% of BlockFi’s loan book yesterday while the March 2020 crash resulted in liquidations that affected 25% of the lender’s retail loan book, said CEO Zac Prince.

BlockFi’s “retail platform went down for a short period of time due to the scaling challenges associated with record volumes and activity,” but the “loan book is healthy,” Prince added.

After the crash, bitcoin supply was a bit thinner, but liquidity began to be less tight by the afternoon, said Matthew Ballensweig, lending director at Genesis, a crypto lender owned by CoinDesk parent company Digital Currency Group.