An exchange that offers collateralized loans, high-interest rate savings, and more aggressive investment strategies sees crypto’s security problem as an opportunity.
A fintech platform is taking on the decentralized finance craze with a focus on security, stability and accountability that DeFi platforms, by their very nature, cannot match.
“Crypto has a reputation problem and we hope to fix that,” crypto exchange and lender YouHodler CEO Ilya Volkov said. “We want to be as safe and reputable as your local TradFi bank but with an innovative twist that lets users harness the power of blockchain-based financial services.”
Call it TradFi with a fintech twist, as YouHodler offers crypto-collateral loans on 30 cryptocurrencies, an exchange with a fiat off-ramp, high-interest savings, and a pair of higher-risk, higher-reward investment platforms. These are Multi HODL, which focuses on extracting profit from market volatility, and Turbocharge, a “cascade of loans” product.
Security is a major concern — and selling point — for YouHodler, which holds a $150 million pooled crime insurance policy from Ledger Vault. The company also works with Fireblocks, a major crypto custody service.
The buck stops where?
YouHodler’s biggest feature is its aggressively proactive approach to security — something it argues cannot be had from DeFi platforms without an individual who is responsible.
DeFi’s accountability — or lack thereof — was made crystal clear in September 2020, when a community vote reversed a previous vote to compensate MKR holders who were cleaned out when the Maker liquidation system failed during an ether “black swan event” selling off loan collateral for zero-dollar bids.
The vote, with 65% against compensation, was thought to be a revolt by Maker “whales” who control large swaths of tokens, and the voting power that comes with it.
“Our team is visible, contactable, and responsible for the platform, unlike DeFi platforms,” the company said. ”When something goes wrong, YouHodler is responsible. Because of that, we are very careful with our operations and pride ourselves on creating the safest, most stable platform possible.”
Locking the back door
This month marks two years since a vpnMentor report outlined a data breach from YouHodler. It had a huge influence on the company back then.
“Thanks to the error in the news about 86 million clients affected with the leak we’ve got thousands of new registrations on the platform in the next few weeks. Of course, we never had millions of clients, and the number in the news was referred to the lines in the log files which were found by the researchers,” CEO Ilya Volkov said. “We tried to post an official answer from our side but unfortunately, everybody is interested only in negative news. Moreover, none of our users weren’t affected and the funds were totally secured.”
He added: “The second positive lesson that we learned from 2019 is paranoid security. Since then, we have gone crazy with the protection of the funds of our users. We contracted with a number of cybersecurity firms to provide in-depth penetration tests every quarter, as well as regular web app security tests, and ongoing employee training and awareness evaluations for phishing and other social engineering hacks. The penetration testing involves a survey of the IT infrastructure, analyzing IP addresses and network topology, and scanning perimeter nodes. There is also a review of the applications and system software to identify potential vulnerabilities, followed by threat modeling. In simple words, you will never see the second vpnMentor report about us.”