Hodlnaut is a Singapore-based cryptocurrency interest account platform that offered compound interest of 10% for stablecoin assets and 6% for Bitcoin.
On August 8th, 2022, Hodlnaut suspended all withdrawals, token swaps, and deposits– making it third largest CeFi “crypto interest account” platform to prevent its users from withdrawing their assets (behind Celsius and Voyager.)
So, you may be wondering, is Hodlnaut legit?
The following Hodlnaut review examines its interest account product, security practices, usability, team community trust, and an exclusive interview with a representative from the Hodlnaut team.
Let’s dig in.
Hodlnaut Review: Quick Summary
Hodlnaut is a Singapore-based company founded in 2019. It is available worldwide, excluding locations prohibited by Hodlnaut Policy or Sanction Laws.
Holdnaut derives its name from the crypto slang HODL (Hold On for Dear Life), an enthusiastic expression that refers to keeping your digital assets rather than selling them, regardless of the market’s volatility. The latter part of the company name is in the motif of “astronaut.”
According to its site, the platform has accumulated about $250M in assets under its management from over 5,000 users.
Hodlnaut has raised about $100,000 in funding from one pre-seed funding round with Antler, a Singaporean startup accelerator and venture capitalist firm.
This is distinctly different from platforms like BlockFi, which has raised north of $500M. That being said, Hodlnaut seems to have narrowed down on a similar business model with drastically less funding necessary.
There was no minimum balance to qualify for crypto interest. Hodlnaut offers:
- 6.2% APY on BTC
- 6.7% APY on ETH
- 10.5% APY on stablecoins.
Hodlnaut’s Token Swap let users exchange tokens directly in the app, e.g, BTC to ETH
The Hodlnaut Team
Hodlnaut was founded by CEO Juntao Zhu and CTO Simon Lee. The duo previously founded Cypher Forge, a cryptocurrency trade execution platform.
Zhu spent over three years as an analyst and developer with the Swiss wealth management firm Credit Suisse.
Lee spent over three years in engineering management roles. The two founders have nine years of experience in software development, finance, and engineering.
Hodlnaut Review and Interest Rates: How Does Hodlnaut Compare?
Hodlnaut supports six cryptocurrencies: BTC, ETH, DAI, USDC, USDT, and WBTC, offering between 6.2% and 10.5% APY.
“We just added support for WBTC recently, where users can also wrap and unwrap their Bitcoin using our token swap feature,” says CEO Juntao Zhu. “We’ve played with the idea of adding BNB and also DOGE as well but nothing is planned yet as we’re focusing on other feature launches such as peer-to-peer fiat on-ramp, and getting our mobile apps out.”
So, it’s a newer platform, but it offers better rates than its more established competitors– with a smaller team and less funding. How does it pull this off?
How Does Hodlnaut Make Money?
Hodlnaut claimed to use deposits as collateral to offer loans to corporate creditors, earning off the difference between the interest it pays users and what it charges to offer loans to its institutional borrowers. The platform also makes money by earning interest from lending its assets to decentralized protocols.
“We have incredibly stringent capital requirements in place of our counterparties,” comments Zhu. “In any case, we’re very selective with whom we lend to. We only lend to corporate entities with good credit scores and we will verify this with them during the onboarding process, and the Loan-to-Value (LTV) Ratio of our loans is usually 70% or lower.”
Are Your Funds Safe With Hodlnaut?
No. On August 8th, 2022, Hodlnaut suspended all withdrawals, token swaps, and deposits– making it third largest CeFi “crypto interest account” platform to prevent its users from withdrawing their assets (behind Celsius and Voyager.)
No digital assets in any cryptocurrency interest account are FDIC insured, so one of the main protections for U.S. depositors is completely absent from this industry at large. Singapore also does not offer FDIC-equivalent federal protection for cryptocurrency accounts.
Hodlnaut Review: Security
The platform requires that you set up 2FA before making a withdrawal, which helps keep accounts secure and prevent unauthorized withdrawals. Hodlnaut uses industry-standard encryption and other safety regulations to protect the assets and information on its platform.
As of this writing, Hodlnaut has never been hacked.
Hodlnaut’s primary custodian is Fireblocks, a leading digital asset custody solution that employs various methods to ensure the safety of assets. Fireblocks holds assets in a mix of offline cold storage and insured hot wallets; all user deposits are never in the same place at once.
Hodlnaut allows you to purchase insurance on your crypto via a partnership with European company Nexus Mutual.
That’s big, especially in the crypto interest space where deployed, or loaned assets are often uninsured if they’re kept in hot wallets. Since these platforms are constantly lending and receiving deposits, the funds are in motion, which makes them very difficult to insure. The Hodlnaut insurance with Nexus currently stands at $22 million and is anticipated to grow as both companies gain traction.
Hodlnaut outlines its procedures in the case of a borrower default.
Hodlnaut is certified by the Singapore Fintech Association, which is recognized by the Monetary Authority of Singapore. However, at the time of this writing Hodlnaut is undergoing a license application, and aims to become the first regulated entity in Singapore’s crypto borrowing and lending space.
With over $250M in AUM, Hodlnaut will inevitably need to demonstrate explicit certification in its ability to be responsible with user funds. As the platform continues to grow, it’s likely we will see more developments in this area.
Hodlnaut Review: Ease of Use & Customer service
The platform is currently accessible only on web and intends to release an IOS application.
Reddit reviews of Hodlnaut tend to skew positive for customer support, citing the team’s promptness as a distinct advantage. Hodlnaut support can be reached via a support ticket or at [email protected]
Hodlnaut maintains an FAQ section on its website.
Hodlnaut Review Final Thoughts: Is Hodlnaut Legit?
On one hand, Hodlnaut is a fairly new company with a single bootstrapped fundraise based in Singapore. This is a drastically different proposition than U.S.-based companies like Celsius and BlockFi, which have established themselves as the blue-chip of CeFi. That said, Hodlnaut’s business model didn’t seem inherently riskier than any other crypto interest account provider– but based on its willingness and necessity to freeze all customer withdrawals, Hodlnaut is poorly equipped to handle any user funds.