DeFi and r/wallstreetbets

In the last post we focus on the scaling problem with blockchain.

In this post we will discuss about problems in traditional finance. Which is that a few people are able to make decision behalf of most people. Let’s discuss one of the stock that took over the attention of most trader the Gamestop stock. It has been an exciting turn of events in the stock market, where a video game retailer has become one of the hottest stock among traders.

What happened?

A short squeeze happened, it is when investors bet on the stock to plummet however the stock went up resulting in buying back the borrowed stock at the current high price driving the stock to go even higher.

Some saw the opportunity as the percentage of short is overwhelming since last spring. A trader posting the thought on Wallstreetbets brings more and more followers to join the trade and cause the chain of events. The chain of events resulted with Robinhood and a few other stock brokers making a controversial decision to disable selling GME and a few other stocks. Decision is very unbelievable for DeFi because the same situation would not happen on a decentralized exchange(“DEX”) like Uniswap. No one can decide to close the DEX or disable the trading pair of your favorite token.

It is a problem where DeFi or DEX would be solved and should be looked at more seriously by more people around the world.

Although there are more problems that still exist with DEX or DeFi such as KYC and AML to stop money from unknown sources and etc, there are also other work being done around the aspect. Some of the enforcement is with wallet providers or AI that identify and rate a blockchain wallet for the credit score.

We should like to see that DeFi becomes a crucial role in the financial system. With UI/UX easy for most people to use and easy steps for people to follow, but even before that happens DeFi is still going to be more efficient and open for people to audit.

Neukind HK is a private fund that seeks to innovate.