Ethereum Merge Could Spell Trouble for Distressed Crypto Lender Hodlnaut

Ethereum’s pending transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) can trigger new risks for the troubled crypto lender – Hodlnaut.

The Singapore-based company was one of several firms in the crypto industry that succumbed to the pressures of the downturn after the collapse of Terra ecosystem tokens.

• According to a new report, Hodlnaut has warned of risks to its assets if the Merge fuels a “bout of volatility in virtual coins.”
• As such, sudden price movements in the price of the Ethereum-based tokens could prompt “smart contracts to automatically liquidate the assets,” said the distressed company in the blog post.
• One way to alleviate risks, according to Hodlnaut, is to unwind tokens deployed on decentralized finance (DeFi) platforms. However, this move could lead to material losses.
• Hodlnaut is currently put under judicial management to protect it from legal proceedings from third parties.
• The court-appointed judicial managers have inquired about the estimated losses from such an unwinding and any preventative steps that can be taken to preserve the value of assets.
• The anticipation surrounding the Ethereum Merge has reached new highs as it gained recognition from the world’s most popular website, which is counting down to the upgrade.
• Tech juggernaut Google has added a countdown leading up to the event, with two bears on either side that should merge into one if the upgrade occurs as planned this week.
• With just days away, several crypto firms are on the lookout for any possible hiccups as the newly upgraded Ethereum network comes to life and anticipates a period of trading frenzy.