What if you could earn up to 12 per cent interest per year without needing to check on your account constantly and trade actively?
For busy working professionals, investing usually ranks among the top few tasks we must do to make our money count, but due to our busy schedules, we often resort to depositing our funds into fixed deposits or bonds instead as it requires less maintenance.
I know that because that’s what I do. Having tried crypto trading, I also know that the daily volatile ups and downs in prices do make my stomach turn too often. Even so, I also have a fear of missing out on something big in this crypto movement.
Enter Hodlnaut, which claims to offer crypto users like me an opportunity to cushion the market volatility by depositing into its high-yield interest account.
The idea of being able to earn passive income without investing too much of my time really convinced me to take a serious look at this product.
I checked out Hodlnaut’s website and upon looking up reviews, the words from one user stuck in my mind: “Hodlnaut gives me a way to generate yield on these assets that would otherwise be idle in my cold wallet,” commented Markus Bruderer, director at Antler.
More insight from another reviewer: Golden Gate Ventures head of growth Kenrick Drijkoningen said that Hodlnaut is a great example of what the future of banking could look like.
Curious, I decided to find out more about what this investment product does and whether these claims really justify the hype on this product.
First things first, what is Hodlnaut?
Simply put, Hodlnaut is a platform that allows cryptocurrency investors to earn interest on their crypto holdings by lending them to vetted institutions.
It’s an emerging and fast-growing Singapore-based cryptocurrency interest-earning platform offering one of the highest interest rates in the crypto lending space (up to 12 per cent annually) to help users do more with their crypto assets.
Hodlnaut currently accepts deposits in the cryptocurrencies BTC, DAI, ETH, USDC, USDT, and WBTC. According to the company, it has accumulated about US$500 million in assets under its management from over 5,000 users.
“Hodl” is a common slang in the cryptocurrency community, it means to “hold on to your dear life”, depicting an act of holding the cryptocurrencies rather than selling it. The “naut” is derived from the word astronaut, which symbolises how crypto investments aspire to reach the moon.
Hodlnaut uses your parked crypto assets as collateral to offer loans to corporate creditors. The company only lends to corporate entities with good credit scores and will conduct strict verification checks during the onboarding process.
The loan-to-value (LTV) ratio of its loans are usually 70 per cent or lower.
It is certified by the Singapore Fintech Association, which is recognised by the Monetary Authority of Singapore. The company is currently undergoing license application under the Payment Services Act and aims to become the first regulated entity in Singapore within the crypto lending and borrowing space.
Founded in 2019 by CEO Juntao Zhu and CTO Simon Lee, Hodlnaut served a gap in the market, as it immediately received funds from its first depositors within the same year. The duo previously founded Cypher Forge, a cryptocurrency trade execution platform.
The platform is available worldwide, excluding places prohibited by Hodlnaut’s policy or sanction laws, like North Korea and Syria.
To date, it has raised about US$100,000 in funding from one pre-seed funding round with Antler, a Singapore-based startup accelerator and venture capitalist firm.
Getting started on Hodlnaut
Signing up for a Hodlnaut account was a fairly straightforward process, with the typical know-your-customer (KYC) requirements.
It took one to two business days for the account to be approved, and I had to fill in details like my name, address, latest residential address, as well as upload images of my identity card.
I also had to set up my two-factor authentication (2FA) via Google Authenticator. This generates a six-digit code on my mobile app for me to key in as verification when logging into the account.
The platform requires that you set up 2FA before you can make a withdrawal, which helps keep accounts secure and prevent unauthorised withdrawals. Hodlnaut uses industry-standard encryption and other safety regulations to ensure that assets and information on its platform are protected.
Once my account was approved, I went on to transfer 1 ETH from my Coinhako crypto wallet to my Hodlnaut crypto address. The amount was deposited in less than 30 minutes.
Hodlnaut also offers the option of having insurance coverage on the assets held on the platform. The company partnered with European company Nexus Mutual to provide users up to US$17 million of smart contract insurance.
This gives Hodlnaut users an option to purchase insurance on the funds deposited and works as an additional safeguard. Moreover, with iTrust integration, users can buy the custody cover directly from the Hodlnaut platform for a fuss-free and seamless experience.
Parking your crypto in Hodlnaut
For someone who likes to monitor my money pot as it grows, it was comforting to see that there’s a live meter on the platform that shows my interest rolling in every single second.
After depositing 1 ETH in the account for a short two weeks, I made 0.00248 ETH. This calculated to 7.2 per cent annual interest, or 0.0746 ETH by the end of 12 months.
Hodlnaut has a tiered interest returns scale. For the first 20 ETH, interest generated will be at 7.2 per cent per annum, and for the next 80 ETH, the returns will be at four per cent. For subsequent deposits above 100 ETH, it will be at two per cent.
As for the first 2 BTC, interest returns will be at 7.2 per cent, followed by four per cent, two per cent, and one per cent for deposits of 8 BTC, 90 BTC, and more than 100 BTC, respectively.
There are no fees for depositing and no minimum amount required to deposit the crypto.
It was also great to monitor the weekly payouts to the wallet as I could see the money generating more value the longer it is stored in the account.
A plus point to note is that users can deposit and withdraw their crypto anytime, and there’s also no lock-in periods or minimum deposits.
This contrasts with other financial investment products like fixed deposits at banks where I can only withdraw the amount after a period of time, with a much lower interest yield of less than two per cent.
This flexibility in managing my investments without a lock-in period and earning more interest by not doing much was a refreshing experience, having been investing for over 10 years and trying many different financial products.
There’s also an interest calculator on the Hodlnaut site to check how much returns one can get.
For example, if I were to place 1 ETH (worth S$4,127.33 at the time of writing) with Hodlnaut for six months, the returns I will generate would be 0.0366 ETH.
This would translate to earnings of S$151.20, at the back of an interest rate of 7.2 per cent, which is definitely better than putting your crypto in cold wallets and letting them go idle.
Although the returns look like a small sum in such a short period, we have to bear in mind that the cumulative interest within a year is higher than most investment products out in the market. This platform is more of a medium-to-longer-term investment game, as the longer you park the funds in the account, the higher the returns would be.
Hodlnaut has a token swap service that allows users to exchange tokens directly on the app. This is suitable for users who want to test out altcoins like Tether for example, which offers 12 per cent interest per annum for the first 25,000 USDT.
However, there are withdrawal fees and a daily withdrawal limit of 100 BTC. Withdrawal fees are adjusted regularly according to blockchain conditions. Currently, the transaction fee for ETH is 0.0036 ETH and 0.0004 BTC for BTC.
So how does Hodlnaut earn money?
Hodlnaut takes a small portion of the interest earned from lending and passes the rest to its users. It also lends out the assets to decentralised protocols and earn interest from there.
When we deposit our cryptocurrency into Hodlnaut, it loans out the coins to corporations that might not otherwise be able to get a crypto loan.
For this privilege, it charges the companies and other loan recipients an interest rate, just like any bank would for a loan. Hodlnaut then passes some of that interest to us as payment for allowing it to loan out our position.
“We lend out the assets we receive to established and vetted financial institutions that pay an interest rate,” said Hodlnaut.
“As for the attractive interest rates, we analyse supply and demand on our available crypto assets to set a fluctuating interest rate that adjusts as market conditions change. Also, we take earnings from our previous months into consideration.”
According to Hodlnaut, the partners who borrow from Hodlnaut use the funds depending on their business functions. Most of them use the crypto as a hedge against the Bitcoin prices or for market-making on their platform/exchange, while some approach Hodlnaut for liquidity.
You can now trade on the go with Hodlnaut’s new app
Hodlnaut recently launched its iOS mobile app earlier this month in line with its commitment to provide a fuss-free user experience.
For existing users like myself, it was as easy as downloading the app on the Apple App Store and logging into my Hodlnaut account.
Having the app allows me to check my returns on the go as well as transfer any excess crypto I have in other wallets to generate interest there.
It’s a feature I highly welcome, as the convenience of having an app on my phone allows me to better track my returns wherever I am, be it at the gym, or buying groceries.
The interest is calculated in real-time on the app as well. The first tab on the left shows information like total account value, total interest received, and the next payout date.
If you wish to withdraw your crypto assets via the app, you can do so by clicking on the crypto asset on the wallet page.
As for depositing crypto assets, users can either copy and paste the address code to another exchange or wallet, or scan the QR code that contains the link address from the exchange or wallet to initiate the transfer.
The iOS app also features Hodlnaut’s affiliate program, with which users can earn 10 per cent commission on their friend’s interest for every successful referral.
It is available for download on the Apple App Store and enables seamless cryptocurrency transactions. The application shows the interest calculated in real-time and is integrated with sharing applications like WhatsApp and Telegram for easy export of transactions.
An Android version of the app will be launched in the last quarter of 2021.
The company also has plans to launch a portfolio management system, auto swaps, and scheduled swaps soon.
Hodlnaut’s high-yield interest account is easy to use. For investors who want higher returns but may be too busy to manage daily trades, the platform is a great way to make your crypto work for you without you working much.
It also allows you to hedge against the volatile crypto market with its guaranteed interest returns.
The crypto market is only just warming up and has the potential to transform more industries, making the use case for cryptocurrencies even stronger down the road, and more crypto firms will look for lenders like Hodlnaut for loans, benefiting us users through the loan interest payments.
This article was written in collaboration with Hodlnaut.
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Featured Image Credit: Hodlnaut