5 reasons why “DeFi” is the next Gamestop
What happened with Gamestop
The plan: Hedge funds must cover their short positions and buy back stocks at way higher prices than expected.
The success: End of January the hedge funds have suffered a mark-to-market loss of $19.75 billion. For more info about short selling read here.
The ideology: Small, retail investors attacked big, commercial hedge funds and beat them in their own game. The anti-establishment sentiments crossed even US-party lines. Ted Cruz, an important republican leader, agreed on a Twitter post of AOC (Alexandria Ocasio-Cortez).
5 reasons why “DeFi” is the next Gamestop?
- Decentralized exchanges cannot restrict access to your funds.
You do not have your funds on the exchanges. Instead, everything is on the blockchain, which is decentralised. Decentralized exchanges cannot forbid transactions as Robinhood did. Nobody can restrict your access on the blockchain. - High-risk high reward.
GME investors invested in a company, even though it was expected to fail soon. The risk was astronomical. They still did it. The reward — defeating hedge funds — was for many worth the risk. And they got rewarded. The same can happen in DeFi. Investing in DeFi means being part of the future financial leaders. - Regulations are not here (yet).
The financial world is deeply regulated and often favours big players more than small ones. DeFi favours no one because financial regulations barely exist yet. Of course, this means a higher risk too. - Fewer or no fees.
Why? DeFi means decentralized finance — the goal is to build a new ecosystem of decentralized applications and technology. Decentralization means there is no need for middlemen or centralized parties anymore. - DeFi is a mix of libertarian and equalitarian principles.
As mentioned above, Ted Cruz and AOC agreed on a topic. Its shows the left and right have similar ideas about Wallstreet and big capitalists. DeFi is the space for both factions —creating a playground for a rebellion against banks.
Conclusion:
DeFi may be the next step for the rebellion against Wallstreet. No middlemen mean no fear of fund restrictions, fewer fees and more freedom. People can be part of the future banks.
To start with DeFi:
Checkout Uniswap or Sushiswap — both decentralized exchanges (no investment advice).
