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Holdlnaut is a centralized crypto-lending and borrowing platform that was born out of a need to see investors earn handsome returns on their assets without the heavy fees.
The platform may have a good origin story and also had a decent user experience if you gave it a chance like we did, but we advise that you exercise caution before trusting your money with this service.
Though the website looks clean and has some raving reviews online, it is a platform that has suffered more setbacks than it has accumulated wins. Stick around as we break down why we don’t recommend this service.
We instead advise our readers to check out Ledn for crypto lending and borrowing services.
Hodlnaut Overview
We will rate this exchange on a scale of 1-10 according to our view of its features having interacted with the platform and checked it out for weeks. Here’s how we rank its top features.
| Rating | |
| Security And Safety | 3 |
| Necessary Requirements | 6 |
| Pricing And Fees | 7 |
| Deposit and Withdrawal Methods | 7 |
| Customer Support | 7 |
Who Hodlnaut Is Best For?
At the moment, the platform is not good for anyone unless you haven’t heard about its tribulations. When you log in to the platform’s website, don’t miss the
“In liquidation” notice on the top right of the screen right next to the platform name and logo.
We are however going to break down who the platform was good for before its reported demise.
Crypto borrowers
Before the platform suffered the setback of going into liquidation, it was a great deal for borrowers. The platform offered borrowers a great hedge against the volatile Bitcoin prices and market making fees on platforms or exchanges.
Some of the platform’s largest borrowers also needed the platform to provide liquidity when they were encountering shortfalls during periods of high demand. The platform kept several institutions from folding during its prime in an industry that is still volatile and nascent.
Crypto lenders
Crypto lenders have also had it good with the platform. The platform enabled users to lend out cryptos and earn weekly interest rates on select cryptos such as Bitcoin, USDC, USDT, DAI and Ether.
The platform would then take these crypto holdings from users and lend them out to corporate entities and institutional margin traders to earn returns, which it would in turn share with its users.
Crypto savers
With users able to earn weekly interest rates as well as annual percentage yields (APY) of 4.08% in Bitcoin, 4.6% in ETH, 3.56% in Dai and 7.25% in USDC/USDT, the platform was a decent place for a saver to stash some of their disposable cash.
With bank savings being eroded by inflation, digital assets are a common sense bet with the value of a fair number of these assets projected to reach all time highs in the near future.
Yield farmers
Yield farming is a bit different from saving because this involves active staking or lending to earn a higher return than you would if you passively invested.
Yield farming on Holdlnaut availed farmers a chance to earn up to 12% APY on their stablecoins, 6.73% on their BTC and 5.65% on their ETH.
Yield farmers on the platform also enjoyed security thanks to its FireBlock’s infrastructure and an optional insurance coverage of up to $44 million thanks to Nexus Mutual.
Who Hodlnaut Is Not For
At the moment the platform is not good for anybody since it is going through liquidation. The collapse of Terra back in 2022 was a sign that this platform would go under since it had tucked away most of its customer’s funds into a Terra algorithmically tradeable stablecoin.
We will, however, go through who Hodlnaut was not good for before the collapse, to educate our readers on what to look out for when interacting with such platforms.
Variety seekers
The platform only offered users the chance to earn interest on their BTC, ETH, USDC, USDT and DAI. Meaning that users who wanted to invest in coins like Litecoin, Cardano (ADA) and other similar Altcoins, were locked out.
No-KYC clients
As with every centralized crypto trading or lending platform, users have to identify themselves before their accounts go live.
The platform’s KYC/AML process involved providing your government-issued identification, a valid email address and setting up a long safe password.
It also involved setting up two-factor authentication (2FA) to prevent malicious people from accessing your account.
This process usually irks users who want to interact with crypto incognito. Such users would have been better off signing up with no-KYC platforms like Changelly, Probit and KuCoin.
Institutional investors
Hodlnaut made money by using customer funds as collateral to offer loans to corporate creditors. This business model, though profitable, is not the best bet for large cap institutional investors in an industry that is still in its infancy.
The FTX collapse which led to liquidation of many other companies including Holdlnaut, supports this argument.
This is why the recently SEC-approved Spot Bitcoin ETFs are more popular with institutions. They are viewed as legit and less risky.
Hodlnaut Features Explained
Security and Safety
Hodlnaut had solid infrastructure in place for keeping user deposits safe. Its 2FA process during account setup and during the withdrawal process helped keep accounts safe from unauthorized withdrawal.
The platform also used industry-standard regulation to protect user data and transactions.
An extra layer of security was having Fireblocks, a digital asset custody solution, as the primary custodian of user assets.
Users also had the option to procure insurance on their crypto thanks to a partnership with Nexus Crypto.
The platform had solid measures in places to protect user funds, but fell short when it came to proper risk management. Hodlnaut’s exposure to Terra, spelt doom for the platform when the third-largest crypto ecosystem after Ethereum and Binance collapsed back in Mid-2022.
The platform had a pretty solid rating on TrustPilot before it went into liquidation. It also had decent reviews and was verified on the platform.
Opening An Account With Hodlnaut
As with all centralized exchanges, users have to verify their identity before setting up their accounts.
Hodlnaut used Onfido as its KYC provider to facilitate a non-complex onboarding process that required users to upload their proof-of-address in the form of a utility bill along with a clear selfie.
When user credentials satisfy the platform’s security requirements, a confirmation email is sent to their inbox to confirm that their account is ready to earn interest.
The platform did not insist on a minimum deposit requirement or a minimum balance on accounts.
Pricing & Fees
Withdrawal fees varied depending on the supported asset users want to withdraw. The platform offered one free withdrawal per calendar month, after which normal charges would apply for successive transactions. Withdrawal fees would be adjusted depending on prevailing blockchain conditions.
| Currency | Minimum | Transaction Fee |
| BTC | >0.0004 | 0.0004 |
| DAI | >10 | 10 |
| ETH | >0.0036 | 0.0036 |
| USDC (ERC -20) | >10 | 10 |
| USDC (BEP -20) | >1 | 1 |
The minimum charges for transacting the most popular assets in BTC and ETH are 0.0004 BTC and 0.0036 ETH respectively. There were no fees charged for using Hodlnaut’s token swap feature or for depositing funds on the platform.
Deposit Methods
Hodlnaut allowed users to deposit and withdraw crypto round the clock from anywhere with eight cryptocurrencies supported. These were BTC, ETH, DAI, USDT, USDC, PAXG, and WBTC. Amounts deposited on the platform would start earning interest immediately.
Users could also elect to hold their assets in fixed term deposit accounts and specify their preferred lock in periods. Here’s a breakdown of the lock in periods and the interest rates they attracted.
Note that the higher the lock in period, the higher the interest rates applied.
Withdrawal Methods
Before the platform halted all withdrawals and token swaps, it had introduced one free withdrawal a month for its users and charged a minimum of 0.0004 BTC and 0.0036 ETH to withdraw. Being a centralized platform, it did not have any elaborate measures in place to help customers move their funds offline.
This is why customers had no recourse when the platform halted all withdrawals.
It was also a bit complicated to send cryptos from your Hodlnaut account to a non-custodial wallet because the platform adhered to Singapore’s stringent “Travel rule”.
The travel rule involved users having to provide supplementary information such as a user code, a recipient address and a VASP code.
Hodlnaut which is a VASP “Virtual asset service provider” was required to share all the details about their customers just like a bank would. The same was required of the other entity involved as cryptos were being sent to and from the platform.
This process, though well intended, required a lot of updates before users got the complete picture of how to be “Travel rule” compliant.
Switching Between Currencies and Blockchains
The travel rule may have complicated this process, but users finally had clarity on how to switch from their Hodlnaut wallets to non-custodial wallets like Metamask, Trezor or ledger. Switching between blockchains and currencies was a three step process.
Select destination
Users needed to get on the platform and select “private wallet” to send money to a non-custodial wallet.
Recipient details
Users would then need to add the credentials of the beneficiary such as their name and address.
Input wallet address
The final step is inputting the beneficiary’s correct wallet address. Making a mistake here would typically lead to a loss of funds.
Transferring from one blockchain to another on the platform was done through its token swap feature which helped users manage funds better and balance their asset portfolios. Swaps involved a simple three-step process.
Select token
Select the token you want to trade, I.e choose to trade your ETH to swap it with BTC.
Review quote
In this step, users got a chance to look at their quote and reassess the transaction before pulling the trigger.
Place order
Once satisfied with the swap ticket, execute the order to swap cryptos from one blockchain to another. You would then see one asset being debited as the other gets credited on your wallets.
History Of Downtime
The platform has been in a downtime state since it was ordered to wind down by the high court in Singapore late last year. The platform’s exposure to Terra saw it lose close to $190 million.
Officials from Singapore’s high court accused Hodlnaut’s directors of downplaying the issue instead of being upfront, which led to customers losing access to millions in crypto.
The platform’s directors have been under investigation since November 2022, with Singapore’s Commercial Affairs Bureau of the police force seeking to get to the bottom of the case.
Customer Support
Holdnaut customer support scored a seven with us because they did not have a live chat feature at the time of review.
They however had a dedicated email in [email protected] and a decent FAQ section that covered a wide-range of topics.
They also had an informative blog section that educated users on how interest rates were calculated, 2FA troubleshooting, a KYC verification guide among other educational material.
Alternatives
Before the platform went under, it had formidable competition with platforms like Nexo and Celsius competing favorably against Hodlnaut. Here is a breakdown of the rates offered by these competing platforms in comparison to Hodlnaut.
| Base Interest Rates-In Kind (APY) | BTC | ETH | USDT | USDC | DAI |
| Hodlnaut | 6.2% | 6.7% | 10.5% | 10.5% | 10.5% |
| Nexo | 4% | 4% | 8% | 8% | 8% |
| Celsius | 3.51% | 5.05% | 8.88% | 8.88% | 4.60% |
Conclusion
Hodlnaut was a competitive proposition for crypto users, borrowers and lenders when it was still afloat. The platform’s good run was cut short by an overexposure to Terra which had a devastating effect on many firms in the crypto industry in the 2022.
The platform’s super attractive returns compared to rivals such as Nexo and Celsius should have been a red flag, indicating that the firm was likely involved in risky investment activities to bring in much higher returns.
With investigations still ongoing, all eyes are on the Singapore authorities to see if users can get some respite.
The story of FTX and holdlnaut exposes the need for platforms to declare proof of reserves and practice utmost transparency especially in the crypto space.
This need is underscored by some former employees withdrawing about $1 million from the platform because they reportedly knew what was going on.
Utmost transparency protected users from needing to have some insider information before moving to save their assets.
Frequently Asked Questions
What Services Does Hodlnaut Offer for Crypto Users?
Before it was ordered to wind down, hodlnaut offered innovative financial services such as crypto custody, crypto interest and crypto yield farming. This enabled users to make the most out of their digital asset holdings.
Yield farmers on the platform had a chance to earn up to 12% APY on their stablecoins, 6.73% on their BTC and 5.65% on their ETH.
The platform also offered education on crypto farming and lending while also charging decent fees to execute transactions.
How Does Hodlnaut Protect Its Users and Their Assets?
Hodlnaut protected its users and their assets from the “sign up” stage, with all users required to complete a KYC/AML process. This was to ensure all accounts were valid and verified.
It also insisted on two-factor authentication (2FA) to ensure that only verified and authorized users could withdraw funds from the platform.
The platform also had a custody solution set up in conjunction with Fireblocks, a digital asset custody solution, that employed methods such as a mix cold storage and hot wallet solutions to preserve user funds.
Hot wallet custody was insured thanks to a partnership with Nexus Mutual. The partnership gave the platform’s users the option to procure insurance from Nexus Mutual to ensure their assets were protected.
After Hodlnaut went under, the platform only reportedly paid out about $1 million out of a $193 million shortfall. This represents 18 approved claims which were settled as 221 ETH and 764,008 DAI.
There were three denied claims which were disputed on the grounds of complications with claims sent in after the 90-day claims period and also the filing of claims with no supporting proof of loss.
What Are the Costs Associated with Using Hodlnaut?
Hodlnaut just like any other crypto platform did not charge users for depositing funds. It did however exact a charge when withdrawing funds. The charges differed depending on the asset users were trying to withdraw.
The Minimum for withdrawal charges or transaction charges for BTC was 0.0004, ETH was 0.0036, DAI was 10, USDC was 10, USDT was 10, WBTC was 0.0004, and PAX Gold was 0.01.
These were competitive rates considering the platform handed decent interest rates to crypto lenders on the platform. Users however paid the ultimate financial price when the platform went into liquidation.
This was precipitated by what has been described as irresponsible risk management in hindsight.
The unfortunate wind down has led to millions in customer funds being held up in bankruptcy court awaiting investigations and final determination.
