Compare AAVE vs Hodlnaut

The AAVE platform is fully decentralised and all deposits and withdrawls are handled completely automatically. This means withdrawls are very fast, and simply depend on the speed of the Ethereum network or side chain. There are no records of AAVE withdrawls being halted or frozen.

ON 8 AUGUST 2022, HODLNAUT FROZE ALL DEPOSITS AND WITHDRAWALS. Hodlnaut should be avoid until this situation is resolved.

AAVE is itself a liquidity pool and some people consider this entire ecosystem to be higher risk. Having said this, AAVE's system has held up well to date, with no major hacks or security breaches.

AAVE is complex product and there remains a risk of a major bug or vulnerability in the code. To counteract this risk AAVE's protocol code is open source so it can be reviewed by anybody, plus it has been through multiple security audits. Finally, there is and active bug bounty campaign with rewards of up to $250,000 for the identification of a critical code issue.

The other key area of risk is in the loan liquidation process. In the event that a loan needs to be liquidated it may not be possible to generate sufficient funds through the sale of the collateral to cover the loan. For example there may be insufficient in the collateral token marketplace to realise the expected value of the collateral.

Hodlnaut make strong claims about sensible risk management policies they have adopted, including being very selective about who they lend to. They even state that should an unrecoverable loss occur, then investors will be reimbursed out of shareholder equity. They also engaged Crowe Singapore to audit and attest that Hodlnaut holds the tokens that it says it does, although the last audit that we could find was carried out in May 2021.

Unfortunately, it has since transpired that risk management was not as robust as they claimed it to be. In August 2022, liquidity issues forced the platform halt all withdrawals and deposits. We have to hope that the platform is able to successfully restructure.