9th August 2022 > > Hodlnaut.

tl;dr

Hodlnaut, a centralised crypto lending platform is the latest to collapse.

Market Snap

Market Wrap

On the 16th July 2022 the CCC made the observation that The Merge was a classic sell the rumour buy the fact scenario.

Futures and options prices show that ETH is predicted to rally into The Merge to as high as $5k and sell off afterwards, a situation known as backwardation in the futures market, and with vol costing far more in October than in September in the options market.

It appears that the current expected ramp-up is being driven by institutional demand, with seven consecutive weeks of positive inflows to ETH based funds. According to CoinShares Head of Research James Butterfill:

“We believe this turn-around in investor sentiment is due to greater clarity on the timing of The Merge where Ethereum shifts from proof-of-work to proof-of-stake.”

Curious Cryptos’ Commentary – And another one goes

Crypto lending platform Hodlnaut has suspended withdrawals, deposits, and transactions.

Based in Singapore, the firm has of course blamed market conditions and lack of liquidity. It is odd how no-one ever takes responsibility for their own actions.

Following the Terra fiasco, and the collapse of 3 Arrows Capital (3AC), Celsius Network – another centralised crypto lending platform – filed for bankruptcy. Voyager Digital and Blockchain.com were other casualties.

I had been hopeful that with the risk of BTC dropping to the mid-teens now seemingly receding by the day (can I say that without tempting fate?) the knock-on effect of the Terra fiasco might be behind us. It appears not to be the case.

The press release is here:

https://www.hodlnaut.com/press/hodlnaut-message-to-our-users

In a further twist, founder Junter Zhu has claimed that the firm had no exposure to UST, the algorithmic stablecoin at the heart of the Luna ecosystem.

That appears to have been contradicted by on-chain data, a possibility that should have been considered by Zhu who is now possibly publicly outed as a liar. That does not engender great confidence in the winding up process. Anyone with funds held on this platform should steel themselves for a lengthy delay before they receive as little as cents on the dollar for their investment.

…

The CCC has long maintained that the risks of lending stablecoins or other cryptos to centralised platforms are not matched by the potential rewards. I know that rates such as 20% APR sound superficially appealing against bank deposits of less than 1%, but that does not mean it is good value.

Those sorts of rates are a very expensive marketing tool. They cannot be maintained in the long-term, and the crypto holders who go chasing those rates have zero loyalty to any one platform.

I continue to hold in excess of 90% of my crypto portfolio in cold storage using Ledger Nano X.

I urge you to do the same. The CCC team is ready and willing to help you if you have any questions or queries.