The interim judicial managers of hodlnautdotcom are considering whether to unwind assets held on DeFi protocols to mitigate risk ahead of the Ethereum merge. Reporting by oknightcrypto
According to the statement, a particular risk of the Merge, which looks set to go ahead on Thursday, relates to so-called pricing oracles, which feed data to the smart contracts that govern DeFi protocols. The Merge may lead the oracles to"give out erroneous prices during the transition," leading smart contracts to automatically liquidate the company's assets.
Under the Merge, Ethereum will shift from a proof-of-work consensus algorithm to proof-of-stake one. If, as has been proposed, the blockchain splits, or forks, so that a proof-of-work version continues to operate, it's possible the oracles will source pricing data from the wrong system. "One of the ways of mitigating such risks in advance of the Merge would be for Hodlnaut HK to unwind the Tokens deployed on the DeFi platforms, which may result in material losses," Loh Cheng Lee said. Hodlnaut HK is one of the Singapore entity's operating companies., a form of creditor protection and debt restructuring, on Aug. 30, three weeks after it froze withdrawals citing"difficult market conditions.
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