Ethereum Upgrade Brings Risks for Ailing Crypto Lender Hodlnaut

Hodlnaut, a struggling cryptocurrency lender, warned about potential risks to its assets if the impending Merge, an upgrade to the Ethereum blockchain, causes a spike in price volatility. The company warned that sudden changes in the value of tokens connected to the Ethereum network could prompt smart contracts to “liquidate the assets automatically.” Ethereum Upgrade Brings Risks Ethereum is the most popular network for smart contracts – programs that automatically run when specific circumstances are satisfied. Smart contracts are standard in blockchain-based decentralized finance (DeFi) applications. According to Hodlnaut, significant price swings following the Merge could cause liquidations since such rules, for example, in protocols managing collateral, are triggered. After stopping withdrawals, Hodlnaut is now under judicial administration in Singapore. The company, based in Hong Kong, is one of many that collapsed globally following the collapse of the cryptocurrency markets this year. The eagerly anticipated Merge will upgrade Ethereum to a more energy-efficient network, scheduled for about September 15. Investors are closely watching the challenging and long-awaited software upgrade since problems could impact the entire crypto ecosystem. “One way to mitigate risks is to unwind tokens deployed on decentralized finance platforms, which may result in material losses,” Hodlnaut said. The expected losses from unwinding and...