What This Means for Users

Hodlnaut, a top crypto lending and borrowing platform in Singapore, has shut down, suspending all its services, including withdrawals, swaps, and deposits.

The company also withdrew its application for an operating license to provide digital token payment services filed with the Monetary Authority of Singapore (MAS) earlier in 2022.

Why Is Hodlnaut Shutting Down?

Hodlnaut’s team announced that the shutdown was necessary “due to recent market conditions.”

This is in reference to the ongoing “crypto winter,” in which the values of many cryptocurrencies have been wiped out. The so-called crypto winter has induced many reactions, including panic selling, especially by retail investors who may comprise a major part of Holdnaut’s users.

With other financial pressures worldwide, such as rising inflation and massive energy bill increase, it’s likely Hodlnaut faced a wave of withdrawals by those lending their assets on the platform, and the shutdown could be a way of preventing the company from going bankrupt.

It is also possible that Hodlnaut simply does not have sufficient assets for users to withdraw, potentially exacerbated by impermanent loss. This is a situation in which funds deposited to provide liquidity lose value due to a market crash. For an individual investor, it’s hard to take, but those losses are multiplied for an institution and investment platform.

What Happens to Hodlnaut Users’ Funds?

The first concern regarding the Hodlnaut shutdown is the fate of its users’ crypto holdings. Unfortunately, they are currently in the dark concerning this detail, but one of two things could happen.

The first is that the crypto market may crash further, leading to further loss due to impermanent loss, making a recovery even more difficult.

The second possibility is that the market bounces back and assets regain value, so users can access them again. The shutdown may be a way of buying time until the second possibility happens, after which Hodlnaut could reopen.

How Does This Affect Hodlnaut Users?

Hodlnaut users will have to wait for the situation to resolve itself. However, even if it does resolve itself, some users may never see crypto lending and investing in the same light again, especially for new investors.

In the end, it is also possible that some users may lose their funds permanently if Hodlnaut doesn’t recover and get back on track.

This is one of the risks inherent in crypto investing of any kind. It will be even more painful for those who have put all their savings or at least a large chunk of it in Hodlnaut.

What Can Hodlnaut Users Do?

As it stands, there isn’t much Hodlnaut users can do about the shutdown. They can only hope that the issue gets resolved, so they get their investments back, even if it’s without interest.

All investments carry risks, and the best Hodlnaut users can do is exercise caution in future investment decisions.

First, never invest more than you can afford to lose. This is the golden rule of crypto investing (or any investing, for that matter) since anything can happen which can lead to a complete loss of your funds.

The second is to diversify. If buying cryptocurrencies, buy a little of a number of different cryptos. This also extends to crypto lending and crypto staking platforms. Instead of dumping all of your cryptos onto a single platform for maximum returns, you should invest little in several platforms so that if anything goes wrong like the Hodlnaut shutdown, you can have other platforms to fall back on.

Will Hodlnaut Recover?

Since the shutdown was due to the crypto market crash and not a rug pull or any other type of crypto scam, there is a small chance that the company will bounce back and reopen when the market recovers. Unfortunately, many other crypto lending sites like Hodlnaut have also closed due to the pressures on the wider crypto market, so it’s extremely difficult to say whether or not Hodlnaut will recover.