Hodlnaut Review: A Guide, Review & Comparison for 2021

Hodlnaut Review Key Takeaways

Variable interest rates – Interest rates remain based on market demand and Hodlnaut earnings for the previous month. Whilst their team aim to keep these rates stable, they remain variable and subject to change. Stablecoin APR/APY currently ~4% lower than some leading competitors. Interest is accrued every day, compounding weekly and paid in-kind into your account every Monday, 5PM UTC (GMT +8). APR/APY ranges from: BTC 6.0/6.2%, USDT 8.0/8.3%, USDC 8.0/8.3%, ETH 6.5/6.7%, DAI 8.0/8.3%.

Limited asset options – Currently, users can only deposit and earn interest on DAI, USDC, USDT, BTC or ETH. There is no exchange for buying or selling assets. However, their “token swap” allows users to exchange any of the 5 supported assets. Their team state no plans to offer more currencies in the future. Alongside this, there is also no Fiat onboarding or support, instead only accepting the aforementioned asset options. Hodlnaut have decided not to offer Fiat deposits due to “uncertainty in regulatory requirements”.

Emphasis on security – All funds are kept safe and secure in cold wallets, with a percentage of profits redirected to their insurance fund each month. Their team state that they have no assets stored in hot wallets & use only cold wallets instead. In the event of any default, Hodlnaut state that they will take on the loss and pay users from equity funds. Further covered by BitGo custodians for up to $100M. Hodlnaut further offer insurance of up to $6.7 million for individual user funds.

Corporate loans only – This platform only lends to corporate entities with good credit scores. All loans are over-collateralized by at least “130%”, greatly reducing the risk of default but requiring a bigger initial deposit from the borrower. These loans are highly flexible and bespoke, best suiting the requirements of each business entity. Minimum loan amount of $50,000, with ETH/BTC or USDT/USDC as collateral options.

Accessibility – Although currently only available via website, an iOS mobile app is in development. This platform operates worldwide, only excluding operation in sanctioned countries (Iran, North Korea, Turkey, Syria, Cuba, Venezuela). Subject to Singaporean time zone, which can result in response times of up to 1 day, depending on your location and what time you contact support. KYC checks required to access any features; including deposits/withdrawals (took approx. 10 minutes with all documents ready).

What is Hodlnaut? An Overview

Founded out of Singapore in March 2019, Hodlnaut provides financial services for both corporate and retail investors. A combination of both “HODL” and “astronaut”, this platform was formed between two entrepreneurs/BTC enthusiasts. Although only operating for 2 years, this platform has fast become a great option for crypto-only savings; even qualifying for BitGo custodianship, who offer one of the most comprehensive insurance schemes for cryptocurrency.

At the time of writing, users can only deposit, earn interest on & withdraw 5 cryptocurrency/stablecoin assets: BTC, ETH, DAI, USDC, USDT, with currently no Fiat options. Given a few more years of operation, we will hopefully see this figure grow, alongside the addition of Fiat currency support.

Offering corporate loans & savings services

These services are limited to cryptocurrency savings accounts & loans; the latter of which only apply to corporate entities with good credit scores. Retail investors looking for a loan will benefit from reading our crypto loan reviews here.  This platform affords interest payments through lending out any assets received from individual investors to trusted financial institutions, who then pay interest rates.

These rates range from ~8% for stablecoins to 6.0-6.7% for BTC/ETH. Whilst their stablecoin APY isn’t very impressive, the BTC/ETH interest rates are competitive when compared to industry standards. Their team aim to keep these rates stable, however remain subject to change, relying on market demand and earnings for the previous month.

Hodlnaut is currently only accessible via website, with their iOS mobile app in development. They operate worldwide, only excluding operation in sanctioned countries (Iran, North Korea, Turkey, Syria, Cuba, Venezuela, etc).

Throughout our in-depth 2021 Hodlnaut review, we aim to cover both their loan and savings services; including security, loyalty levels, withdrawal/deposit process, KYC checks and any additional aspects of using this platform. So, lets begin the bulk of our review, starting with token and staking options.

Do Hodlnaut have a token?

Hodlnaut have not developed their own native token and currently have no future plans to. Instead, they offer a more unique staking alternative relating to their insurance coverage. Users can stake NXM on their Custody Cover contract and in turn claim weekly rewards. NXM is a continuous token model from Nexus Mutual, with the price depending on how the mutual is performing financially. This custody cover contract is explained in greater detail under “security and insurance“.

Verification, deposit and withdrawals

Verification and KYC

On sign up, users are first required to verify their email, after which 2FA must be enabled (via mobile). Users must verify their account in order to withdraw/deposit and earn interest on their holdings. This form includes information on gender, date of birth, occupation, industry, employer, annual income, address, etc. The third and final stage requires users to upload of government issued documents with proof of address (license, utility bill, bank statement, etc).

For this stage, Hodlnaut utilise “Jumio” third-party verification software, which requires a picture of your passport/drivers license and biometric face verification. These KYC checks took only 10 minutes with all documents already prepared, however still compromise user anonymity. Simply put, the platform is unusable without completing KYC checks; as the website prompts users to complete the checks whilst stopping them from navigating or setting up savings. It’s worth noting that this practice is common for CeFi platforms. Verified accounts have a 100 BTC daily withdrawal limit.

Deposit process

After verification, depositing cryptocurrency is straightforward and completely free of any fees, including network fees. To deposit, simply sign in and click the “Deposit/Withdrawals” button from the menu. Next, copy your Hodlnaut wallet address (verify both address & wallet type) and send over any amount of your choosing. Once any of the 5 asset options are sent to your Hodlanut wallet, interest starts accruing instantly; with no need to send over assets to an additional savings wallet, like some platforms.

Withdrawal Process

Withdrawals act differently to deposits, instead imposing a 24h withdrawal limit of up to 100 BTC. Alongside this, all withdrawals undergo processing at 9pm UTC (5pm SGT). Users must wait until this time before their withdrawal is authorised, which is stressful when savings are involved. Although unconfirmed, this is likely due to storing the majority of holdings in cold storage.

However, this does also ensure a greater level of security, as suspicious withdrawals will be raised to the client. Users should expect somewhat competitive withdrawal fees; ranging respectively from 3.0 for stablecoins (DAI, USDT, USDC) to 0.0005 for BTC/0.005 for ETH. Other than this, users will receive no hidden fees or other charges.

Security and Insurance

Since conception, Hodlnaut has never suffered from any security breaches or hacking. All funds are kept safe and secure in cold wallets, with a percentage of profits redirected to their insurance fund each month. Their team state that they have no assets stored in hot wallets and use only cold wallets instead. Cold wallets are the most secure way to store assets, incredibly difficult to digitally compromise, as it’s not connected to the internet.

Two Factor Authentication (2FA) is also a requirement, with users activating this upon signup. Users must also confirm both their email and SMS throughout KYC checks, further aiding against identity theft and other security threats. In the event of any default, Hodlnaut state that they will take on the loss and pay users from equity funds.

Utilises both BitGo insurance & cold storage wallets

This platform is also covered by industry leading crypto-custodians, BitGo; who in turn offer insurance coverage for up to $100M. This insurance covers loss of funds due to third-party hacks, copying/theft of private keys and even “dishonest acts by BitGo employees”.

Hodlnaut further offer insurance of up to $6.7 million for individual user funds; all though their Nexus Mutual’s Hodlnaut Custody Cover, a smart contract at a 2.6% premium with staking options (mentioned above). Comparatively speaking, this platform offers a better insurance initiative than most; with competitors usually simply settling for just BitGo coverage, or personally pooling.

Account security

Although currently only available via website, this platform runs on secure cloud infrastructure (AWS), with all traffic encrypted with SSL encryption. This greatly protects against data breaches and leaks, alongside other potential threats. Their team state that they encrypt and anonymise as much data as possible on their servers; utilising industry-standard algorithms for password hashing.

As previously mentioned, 2FA and SMS/email verification is required by default, with users unable to access the platform without enabling these. These verification methods have fast become the standard of account security, requiring multiple barriers to entry for hackers. The Hodlnaut mobile app is currently in development for iOS, so we hope to see some biometric scanning features (fingerprints, face recognition. etc).

Loans

How do Hodlnaut loans work?

Currently, Hodlnaut only offer corporate loans to companies with good credit scores. Their team state that as these are structured in complex ways dependant on the lender, terms and conditions for these loans vary. They encourage those seeking corporate crypto-backed loans to contact them with a brief company description and a required loan amount. Their support team are quoted as saying:

“The loan terms can be as short as 1 month, and up to 6 months. Hodlnaut’s unique selling point is that each loan we provide to our corporate clients is customised. Loan extensions are definitely available, and can be negotiated towards the maturity of the loan. We do have margin calls and liquidation levels. However, we have not had to liquidate any of our borrowers so far.”

All loans are over-collateralized by at least “130%”, greatly reducing the risk of default but requiring a bigger initial deposit from the borrower. Individuals seeking smaller crypto-backed loans should discover our cryptocurrency loan reviews. As every corporate loan is custom, Hodlnaut offer flexible LTV rates ranging between 25% to 100%, depending on requirement.

Hodlnaut margin calls: What happens if the value of your assets decreases?

Whilst LTV and margin calls are variable depending on the client, Hodlnaut will liquidate assets to cover losses should this limit be reached. However, users are asked to deposit more collateral or pay off some of this principal before this stage, in order to avoid liquidation of assets.

So far, this platform claim to have never had to liquidate any client assets to cover their margin. Corporations looking for loans should specify these rates and limits with their support team first.

What happens if the value of your assets increases?

Users will keep any increase of value in their asset, simply only paying off the cost of their initial loan.

What assets are supported as collateral?

Clients can freely choose from USDT/USDC or ETH/BTC as both collateral or loan options.

Check out our loan comparison tool for more information >>

What is the minimum loan amount?

Corporate loans start from $50,000 (USD) and require at least 130% collateral upfront.

How long does the application process take?

The loan application process relies on support/client response time of emails, alongside business requirements. Depending on how much the business chooses to borrow, funds should reach their account typically within the day.

How much do Hodlnaut Loans cost?

As all corporate loans offered are bespoke and suited towards the business, fees and rates remain variable; dependant on amount borrowed, loan term, collateral used and more.

Whilst all rates are agreed upfront, their team also guarantee “no hidden fees” or other unagreed costs throughout the process. Whilst we would appreciate seeing some fixed rates, we understand that these tailored loans suit varying requirements.

How much can you borrow with Hodlnaut?

There is no maximum amount that corporations can loan from Hodlnaut. Instead, this figure relies on the amount of collateral they can offer. As this platform requires 130% collateral upfront, clients can effectively loan as much as they can cover with collateral. Please note that collateral required can change depending on the amount borrowed and the asset used.

Repaying Hodlnaut Loans

Flexibility is a clear positive when it comes to taking loans on this platform. Clients can choose from fixed terms or open terms, available for repayment at any time; however early repayment on fixed terms may incur a fee. Although these terms are agreed upon by both parties, clients can extend their loan period upon request.

Should customers choose not to pay, their assets are liquidated by Hodlnaut to cover costs or any loss. This is not advisable, as this platform requires overcollateralization of the loan upfront. However, this platform claim to have never needed to liquidate any client assets.

Hodlnaut Loan Summary / Verdict

It’s clear that Hodlnaut loans suit businesses and corporations only, as they will not loan to individuals or retail investors. Their 130% collateral requirement is very high, however this likely ensures that no clients default on their payments. It’s clear that they offer highly versatile arrangements, with LTV’s ranging from 25% to 100%.

Having the choice between fixed and open terms is always good; with their support team guiding clients to a bespoke loan with terms suitable for their requirements. We feel that more asset options would bring benefit to clients, as using ETH/BTC collateral is a little volatile for a stablecoin loan (USDT/USDC).

Personally, I found it hard to reach a true verdict as these loans and rates vary depending on requirement. Although it seems rarer to find loans offered to corporate clients only, I do wish there were loans for individual retail investors and holders.

The $50,000 minimum loan requirement is a little high, clearly suiting larger, established businesses. These large loan requirements can prove too exclusive for smaller businesses and individuals; instead appealing only to stable corporations much less likely to default on payment.

In comparison to other crypto-backed loan platforms, Hodlnaut don’t deliver. They require higher collateral than competitors, alongside less flexible early repayment options and asset choices. A number of competitors also offer loans to both individuals and corporations with a much smaller minimum loan amount. This platform needs to adapt quickly to match competitors in order to be considered a good choice.

Savings

How to use the Hodlnaut savings account

After completing all sign up stages and receiving KYC approval, users can deposit any amount into their savings account and start earning interest immediately. All balances qualify, with no limitations on interest earned or minimum/maximum deposits. There is also no lock-in period, so assets start earning interest straight away and are  available for withdrawal at any time (post verification).

Currently, this platform supports 2 cryptocurrencies and 3 stablecoin assets: BTC, ETH, DAI, USDC, USDT. The APY ranges from 6.2% for BTC/6.7% for ETH and 8.3% for DAI, USDT/USDC. Interest accrued daily, paid in-kind every Monday at 5pm (GMT +8) and compounding weekly.

Using the savings account is simple and straightforward. Just navigate to deposits/withdrawals, deposit your asset of choice to your relevant wallet & start earning interest instantly. Users can check their balances overview, pending pay-outs and APR/APY rates from the “my account” section.

Flexible savings account (no lockup term)

As mentioned, there is no lock-up period. Assets earn interest immediately and remain available for withdrawal at any time. However, please note that there is a very slight withdrawal fee of x3 DAI, USDC, USDT, 0.0005 BTC and 0.005 ETH.

Although the rate of interest remains fairly consistent, it’s remains based on market demand and Holdnaut earnings for the previous month. As such, these rates remain subject to change, however their team aim to keep these as stable as possible.

Savings loyalty levels

Whilst staking of NXM tokens is possible, Hodlnaut do not offer any favourable rates or treatment outside of weekly rewards.

Compounding weekly interest

With no minimum balance required, users will start earning weekly compounding interest as soon as they deposit. As it stands, the only staking options are for NXM token through their custody cover for weekly rewards. However, staking this token does not offer any preferential rates or changes in APY/APR.

The Hodlnaut Negatives:

Limited assets & no Fiat – Currently, users can only choose from 5 assets to earn interest on. Alongside this, their stablecoin interest rates are not very competitive; sitting at just 8.3% APY in comparison to 12% seen on some platforms, such as CoinLoan or Nexo. There are also no Fiat options for savings, loans or use as collateral, further limiting user freedom. We feel that adding more asset options and Fiat onboarding would benefit this platform and its users greatly.

Corporate loans only – The lack of loan options for individuals is obviously a negative for the average user. Whilst these corporate loans prove straightforward and flexible for big businesses, smaller companies and  retail investors have little chance. $50,000 minimum loan and 130% collateral requirement makes it difficult for newer or less established corporations. The addition of retail loans would benefit individuals, however would result in much more work for Hodlnaut.

Limited exchange – Not an overwhelming negative, although other competitors do allow users to buy, sell or exchange their holdings on their platform. However, Hodlnaut do feature a token swap, allowing users to trade/convert any supported assets. We feel that the ability to easily exchange assets via the platform directly is massively beneficial to users. Although with few asset options and no Fiat onboarding, this platform is still too small scale to warrant a complete exchange service.

Limited accessibility – Currently only accessible via website, iOS mobile app in development. Whilst the website is clean and concise, it lacks a little on features in comparison to other platforms. Their team also operate under a Singaporean time zone, which makes it hard to get hold of live support outside of certain hours. This leads to delays of up to a day before a response is received, however their staff stay friendly and helpful at all times.

Is Hodlnaut legit?

Yes, we firmly believe Hodlnaut offers a good service to both individuals and corporations alike. Although limited in operations, they remain clear from controversy and maintain an excellent public image. Their support, whilst restricted to Singaporean time, is helpful and responsive when online. This platform has never suffered any security breaches or hacking, with no users funds ever stolen.

User funds are safer than average on this platform, claiming one of the more comprehensive insurance policies in the industry; covered for up to $100M by crypto-custodian BitGo, whilst also pooling their own $6.7M insurance for individual user funds.

Users have the option to further insure and secure their holdings with Nexus Mutual’s “Hodlnaut Custody Cover” (at a 2.6% premium). Put simply, this platform is very secure, with user funds covered in case of loss. However, please note that loss of currency from user error is not covered; we recommend maintaining safe browsing practices.

Although straightforward, this platform lacks a number of features seen from competitors. It’s clear that this platform is still relatively small, with limited services and small support team. This platform definitely needs to offer better stablecoin rates, alongside more than 5 asset options to earn interest on and exchange to truly excel. Allowing smaller, individual loans for retail investors would help too.

Summary: is Hodlnaut a good company?

We appreciate the straightforward style of this platform, coupled with its competitive rates. Although fairly limited in what they support, Hodlnaut are great at the services they do offer. The deposit process is easy, with interest earning as soon as it enters your wallet. The 9am UTC withdrawal processing time is a little inconvenient, although also improves security due to the potential highlighting of any suspicious withdrawals.

Reasonable rates

Rates remain competitive, although the APY on stablecoins (DAT, USDT, USDC) is approx. 4% lower than leading competitors. As mentioned above, this platform offers brilliant insurance coverage over over $100M; including additional individual insurance for a 2.6% premium (Nexus Mutual).

Worth noting, cryptocurrencies deposited to Hodlnaut undergo lending to heavily vetted institutions; in turn paying for the interest on user deposits. This seems a fairly standard practice in this industry, with these institutions covering the cost should they lose any assets.

Limited in choice yet easy to use

Mandatory KYC checks prove a little annoying, as users cannot view the site without completing verification; not very good for those who want to look around before signing up. The delay in verification is especially long if you sign up after 7pm SGT (11am UTC), as users will have to wait until tomorrow for confirmation.

Focusing on corporate loans only is inconvenient for individuals, however feels like the right choice for this platform; essentially ensuring decent commission on large loans. Again, we feel that 5 asset options simply isn’t enough and feels restricting to users.

Despite these few shortcomings, we feel that Hodlnaut offer very secure and stress-free services; all with minimal fees and fair (although variable) APR/APY rates. This seems a good choice for those holding DAT, USDT, USDC, BTC or ETH hoping for a secure savings account with a decent return; although not the best for those looking to exchange/trade a number of cryptocurrencies or take out a loan.

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