If you recall, during the first months of 2021, traders from the Reddit forum r/wallstreetbets set off a trend in which retail traders bought so-called “dead stocks” including AMC and GME. In a coordinated move, this grassroots movement of almost 11 million became a worldwide phenomenon by crippling hedge funds by shorting, in particular, GameStop
Since then, the hype surrounding the Wallstreetbets group may have seemingly faded. However, behind the scenes, the group has launched a new decentralized finance project named wsbdapp.com. What’s it all about? In short, the app allows traders to swap synthetic stocks backed by blockchain technology.
Wallstreetbets and Defi: ‘Synthetic Stocks’
Specifically, the defi platform, as well as the protocol and WSBDAPP.com, allow users to exchange tokens much like popular decentralized exchange (DEX) apps.
The tokens are digital tokens that are based on blockchain technology and represent stocks on the stock exchange. As an example, by the end of July, Uniswap had delisted over 100 tokens, many of them synthetics linked to stocks and commodities. In the crypto community, synthesized tokens were thought to be unregistered securities by U.S. regulators, so Uniswap delisted them.
When you land on the site, you’re greeted with neon text proclaiming, “Defi’ing Wall Street with blockchain tradeable assets.” It also states that it’s “always open” and supports “borderless trading, 24/7, 365 days a year.” The portal also adds that the app gives “the benefits of blockchain made real for traditional investors.”
Further, the WSB DApp has its own native token called WSB, which is capable of being leveraged for liquidity pools and staking, according to its website. At the time of this writing, WallStreetBet’s price is $0.01512375 with a 24-hour trading volume of $279,207. And, it has a $1 billion supply.
One Big Step Toward Blockchain-Based Finance
I think you have an idea why the group behind WallStreetBets would want to launch the WSB DApp. But, I wanted to go directly to the source and ask its founder Jaime Rogozinski why he wants to take on the established financial industry head-on.
“The stock market isn’t accessible to everyday people, and Wall Street makes sure to take a cut from even the smallest investors,” he said. “The WSBDApp is a correction to this broken financial system, where participating actually rewards you with eye-popping APY and maximum returns, instead of creating more value for predatory institutions.”
“That’s why we’ve launched The People’s Fund, a crypto hedge fund that gives regular investors access to the kinds of trading algorithms that are typically reserved for the wealthy,” adds Rogozinski. “While most hedge funds require tens or hundreds of thousands of dollars to participate, anyone in the world can join The People’s Fund for less than $1 and navigate the market with expert knowledge.”
In short, the app is the next step in the world of finance by using blockchain technology in conjunction with financial markets. And, not just for Wall Street, but for the average person. Eventually, this will make the world’s markets stronger and more democratic. And, above everything else, it will give power back to the individual.
The 4 Key Features of the WSBDApp
So, how exactly can the WSB DApp achieve the above? Well, it will be through the following four key features.
1. Makes investing less scary.
“The biggest reason Americans don’t like the stock market is because they are afraid they’ll lose their money in a market downturn or a crash,” writes James Ellis for MagnifyMoney. “Our survey found that almost 61% of Americans hesitate to invest in the stock market because of a potential crash.”
In spite of the fact that young millennials have more time to absorb losses and make up for them, 72% of millennials worry about a market crash, compared to 56% of Gen Xers and 55% of baby boomers, he adds.
How can the WSB DApp help you overcome this fear?
“ETP investment strategy deploys techniques designed to mitigate downside systemic risk by referencing a portfolio of assets based on the interpretation and prediction of large-scale events related to macro factors such as economic models, market conditions, historical trends, and international relations, such as geopolitical, regulatory and cross-border trade,” explains Rogozinski.
2. Addresses the rigged and expensive stock market.
According to a survey by Bankrate of 2,525 American adults about stock markets and investing habits, nearly half of respondents believe that the market is rigged against individuals. And, to be fair, they have every reason to be skeptical with the three types of market manipulation activities;
- Spreading rumors. Rumors circulated by fraudsters can inflate or lower stock prices depending on their interest in buying or selling. Misinformation is spread using social media, chat rooms, email campaigns, and phony newsletters. The most common example of this scheme is pump-and-dump.
- Fictitious trading. Fraudulent trades are sham transactions designed to create the appearance of activity or movement in the market. Traders are not exposed to any financial risk because ownership does not change. The practice of entering many buy or sell orders and then canceling them, also known as spoofing or layering, is one example of fictitious trading.
- Price manipulation. The manipulation of prices can be accomplished with high volumes of trading. Another example is when Inactive shell companies with registered shares are obtained by fraudsters. Through a series of phony transactions, they then increase the value of the shares.
Thankfully, the WSBDApp solves this problem by removing the fees and market manipulation that have solely benefited centralized financial institutions for the past hundred years.
3. Offers a community voting platform.
“$WSB governance token holders vote on regular rebalancing of ETPs,” he says. “Think that TSLA should be 90% instead of 10% of an ETP Portfolio? Vote on it.”
As opposed to these important decisions being made by some anonymous figures, “votes are weighted according to the size of an individual’s $WSB holdings before the timer runs out each rebalancing cycle.”
Voters’ opinions alone will be taken into account when allocating funds. Through the creation of a decentralized autonomous organization, or DAO, retail investors will be able to get exposure to ETPs.
Each DApp will be subject to WSB governance tokens. Tokens will be used for rebalancing and exposure, and users will be able to hold them. During predetermined voting cycles, votes are cast by signing a transaction with WSB tokens.
4. Helps fight back against hedge funds.
As you might have gathered from the GameStop short squeeze, WallStreetBets isn’t too enthusiastic about hedge funds. Why? Most hedge funds require hundreds of thousands, if millions of dollars to, join. As such, retail investors aren’t exactly thrilled with their success. But, that’s where the “The People’s Fund” comes into play.
The WSBDApp team launched the first-ever hedge fund for retail investors, the People’s Fund. The People’s Fund uses blockchain technology to provide open-access investing that anyone globally with a smartphone can join. Even better? It costs less than $1 per share.