How are Interest Rates Calculated at Hodlnaut

News
June 9, 2021

One of the most common questions our support team encounters is: “How are interest rates calculated at Hodlnaut?” To help users understand how the interest is calculated, we have put together this simple guide explaining its details. Hodlnaut Interest Account elementally enables customers to earn crypto interest on their assets. 

Here we address some of the frequently asked questions related to interest rates at Hodlnaut. Let us dive right into it! 

How Does Hodlnaut Make a Profit While Paying High Interest?

We lend out the assets received to established and vetted financial institutions that pay an interest rate. Hodlnaut is able to provide attractive interest rates after analyzing the supply and demand of our available crypto assets. The interest offered is subject to market conditions, and also takes into account the earning from our previous months. 

Hodlnaut essentially takes a small portion of the interest earned from lending and passes the rest to our users. Moreover, we lend out the assets to decentralized protocols and earn interest on it. Partners borrow funds from us to usually use it as a hedge against the Bitcoin prices or market-making on their respective platforms/exchange. They might also approach us for liquidity. 

Furthermore, our partners might have specific needs and reasons for borrowing from us; thus, we’re willing to customize the loans based on their business requirements. As for the supported assets, we are currently accepting deposits in BTC, ETH, DAI, USDC, and USDT.

To understand the interest calculations, it would be helpful to know about APY, APR, and the difference between the two terminologies. Let’s look into it. 

What is APR?

Annual Percentage Rate (APR) is the cost you pay each year to borrow money, and it is expressed in percentage. It includes the interest rate and the fees you will have to pay to get the loan. APR does not take into account the compounding of interest within a specific year. This is how APR is calculated: 

APR = Periodic Rate x Number of Periods in a Year.

Note: Hodlnaut offers an APR of 6% to its customers. 

What is APY? 

The Annual Percentage Yield (APY) is the real rate of interest earned on a savings deposit or investment, taking into account the effect of compounding interest. Unlike APR, APY considers the frequency with which the interest is applied. Although this may seem like a subtle difference, it brings about crucial implications for investors and borrowers. Here is how APY is calculated: 

APY = (1 + Periodic Rate)Number of periods – 1

Note: Hodlnaut offers an APY of 6.2% on BTC, 6.7% on ETH, and 10.5% on DAI, USDC, and USDT. 

How Does Hodlnaut Calculate the Interest?

Hodlnaut does not have a tier system. No matter the number of assets you deposit, you will continually earn the same fair rates we boast on our platform! 

Let us understand how we calculate the interest rates at Hodlnaut. 

Calculations based on 10 BTC deposit:

APR: 6%

APY: 6.2%

You will earn 10*6%/365 daily.

You will earn 10*6%/365*7 weekly, paid out on Monday at 5 PM. 

If you keep the funds in the account from 11 May 2021 (Tue) till 24 May 2021 (Mon), you will earn the following rates:

Interest earned from 11 May to 17 May: 10*6%/365*7 = 0.01150685 BTC

Total assets as of 17 May, 5PM = 10.01150685 BTC

Interest earned from 18 May to 24 May: 10.01150685*6%/365*7 = 0.01152009 BTC

Total assets as of 24 May, 5 PM = 10.02302689 BTC.


This is a weekly calculation that considers the compounding effect. You can also check out the Interest Calculator on our homepage to determine exactly how much interest you can earn on your deposits. 



How Does Hodlnaut Pay the Interest? 

The interest is earned and paid out in-kind, meaning that you will earn interest in the same cryptocurrency you have deposited in Hodlnaut. The interest is directly deposited into your Hodlnaut account and is accrued at the end of each day. It is credited to your account every Monday, 5 PM (GMT +8). You will start earning interest immediately after depositing crypto into your Hodlnaut Interest Account. Our interest rates are updated monthly and depend on the market conditions. 

P.S: You can find out about our current interest rates on our website, our web application, and our social media pages. 

Sign-up for Hodlnaut Interest Account 

Signing up for a Hodlnaut Interest Account is incredibly easy and takes just a couple of minutes. Visit https://app.hodlnaut.com/signup to get started. Once you key in your contact information, you will have to go through Hodlnaut’s KYC process. Once that is done, you will get an email confirmation about the activation of your Hodlnaut Interest Account. Now you can earn crypto interest on your deposited asset seamlessly. Moreover, if you would like to earn crypto interest in a specific token, you can do that as well with our Token Swap feature. 

If you have any questions about Hodlnaut Interest Account, please feel free to reach out to our team at support@hodlnaut.com. We would love to assist you! 









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