It is no secret that the DeFi space is growing — fast and massively. In May 2020, the total value locked (TVL) in leading DeFi protocols such as AAVE, COMP, Maker, and Uniswap was barely $1B. In just a year, it’s been pushing $90B.
The DeFi space seems to have just had a healthy correction. Is it about to resume its historical climb? And how far?
To find something comparable, one can look at the meteoric rise of popular stock trading platforms, with the top ones having one thing in common: Social trading. They were able to attract traders who previously didn’t even consider investing and engage them in trading in a way unimaginable by old-school online brokers. They made trading fun, interesting, and seemingly even more lucrative than ever before. People would fo
llow in droves after a post on Reddit (usually, r/WSB) or one made by a Twitter influencer. Even TikTok became a source of information for social trading.
Of course, following random strangers who are following other random strangers into buying options of a company on the verge of bankruptcy can only work so many times before it doesn’t. The social trading movement is young and exciting. But this amateur approach is certain to leave a lot of people with their life savings lost in a split second on investments they don’t really understand.
This “flash mob” social trading will get replaced by its more mature and professional version. As with every financial market, amateurs can get lucky a few times but only a few true professionals can deliver the results consistently and without causing the investors to lose everything on one crazy bet. Professional social trading is transparent, accountable, and competitive.
It’s transparent in that everyone should see — in an instantly verifiable way — a trader’s trading record in as close to real-time as possible. No “trust me” or “trust my totally not corrupt and always accurate certifying agency. No. DeFi is about transparency that doesn’t rely on a questionable centralized source — DeFi is a system in itself where every trade can be traced and visualized.
It’s accountable because no sane and mature investor burned by trusting the mob a few too many times will give serious money to a trader who can lose those funds with nothing more than “oh well, sorry” and go on to lose someone else’s funds. An accountable social trading system makes sure that the trader has own funds at stake, ideally proportionally to the amount of investor funds the trader is allowed to take on (this is the system we will use in Dexe Investment, along with other incentives for trader accountability such as letting traders issue their own token that rises and falls with the trader’s success record).
It’s competitive because monopolies are rarely (if ever) a good thing for the consumer. Let traders compete for investor funds with their track record, trading strategy, etc. Let them present a wide selection of offerings to the investor and let the investor be able to easily compare various traders side-by-side.
Online brokers gave access to stock investing to millions who previously did not have access to brokers. Social/gamified trading apps got millions from the younger generations interested in investing. Crypto brought investing to people around the world with as little as a $1 to invest.
DeFi is taking everything that was done in finance earlier and is breaking down all walls, letting anybody participate and benefit from trading complex financial instruments. But that’s the problem: 99% of people don’t understand how all of these instruments work in enough detail to trade them professionally. And even if they do, who can keep track of every single market and asset class (let alone each promising asset)?
Social trading simplifies this process by letting investors find the best traders in a transparent, accountable, and competitive way. And social trading in DeFi is letting everyone into this game — so anybody can earn the right to manage funds and everybody can invest (no matter where they live, their age, or their income level). And that is nothing short of revolutionary.
Imagine how much DeFi social trading will grow once there is a capable platform for doing it, once Dexe Investment is released…
Dexe.Network is a decentralized social trading ecosystem that operates via autonomous smart contracts and includes tools for virtual currency allocation and automatic rebalancing. It eliminates the risks of transferring digital wallet details such as private keys and API or any virtual currency data to a third party. Most importantly, the DeXe Network connects successful traders and followers in a transparent, verifiable way for the benefit of both groups.
Official telegram channel: https://t.me/Dexe_network
Official telegram EN chat: https://t.me/dexe_network_official_chat