Decentralized finance encourages the personal ownership of assets by default. As a result, users of crypto and those that fully own their assets through decentralized wallets or private keys have much more responsibility to manage those digital assets. More responsibility is a built in characteristic unless we allow custodial services to manage them for us. The problem this faces for many is the fact that — if we’re honest with ourselves — we’re not that great and managing money at all times. There is a lucrative area of education that’s focused on personal finance like Dave Ramsey and Robert Kiyosaki (Rich Dad, Poor Dad). In addition, not many people are good traders. Statistics have shown that the average person is just better off holding long term on an asset instead of capitalizing on any short term moves. Only a small percentage of people are good at trading. Market trading is a result of money transferring from bad trades to those that make good trades. So if you are not the best trader, this presents some complications.
This is one of the main features behind social trading and one that DeXe helps solve directly. They allow any user to create social trades based directly off of wallet activity. This is very beneficial if you know a good trader and make trades based off of their work. DeXe social trading can also eliminate the most questionable part of trading – the fact that most people are not that great at it. For someone that can admit their limitations and copy trade from wallet activity, this is a huge advantage.
Presenting the Evidence of Social Trading
The niche of social trading is active and has been growing for around a year now. Some of the most popular crypto projects that offer social trading are community based trading on the blockchain like Token Sets. Other copy trading projects like Melon Protocol are very similar to hedge funds without the fluff and headache of dealing with money managers and high fees due to infrastructure. Currently there is $22 million USD active on both of these platforms that are taking advantage of algorithmic copy trading or strategies derived from someone else or a consensus of people. This may not seem a huge number compared to the massive amounts of ETH donated for the purpose of an upcoming ETH 2.0 launch, but it is the beginning of a movement. After all, social media started out very small and now is a collective group that carries most of the top activity in the world. So much so that Twitter, Facebook, and Google were subpoenaed last month about concerns of overstepping the freedom of the press. The ability of social based activity should never be underestimated and cryptocurrency is no different.
Comparing DeXe With Others
Would it be fair to say that DeXe has a place among the social trading niche in DeFi? There is a solid case to be made, yes. For starters, it is a growing space but still has plenty of room to grow. Secondly, DeXe has a very innovative yet spectacularly simple feature of copying wallet addresses directly. This removes the ability of a trader to just “say” they have a good strategy. This levels the trading field by forcing “good” traders to place their money literally where their mouth is while directly allowing other traders to benefit.
How does something like this compare to Token Sets who currently sits at the top of the social trading pyramid? Token Sets have a few differences. Their social trading feature which they call a Social Trading Set isn’t a direct copy of their trades per se. Traders sign up, pick the assets they wish to trade, and determine the fees to charge people that wish to copy these trades. This method is also subject to rebalancing so it’s always changing indirectly. Token Sets also have more indirect social trading by using someone’s strategy they’ve placed on the platform, but it doesnt show their direct trades. As a result, someone could easily create a strategy and not execute it in real life. DeXe works a little differently by allowing the one copying the trade to be in control instead of the one doing the trading.
So what about Melon Protocol? Although Melon Protocol does allow users to copy trades, they are not particularly a “social trading” platform as such. Melon qualifies much more as a type of decentralized hedge fund and as such suffers from a couple problems that allow them to compete with DeXe. First, the process to use Melon Protocol is one of the most weight in the DeFi space, having to answer and agree to a large handful of contract conditions (nine in total). These contract agreements are due to the nature of hedge funds and money managing platforms in legacy systems – an antidote to keep regulations at bay. This could open up the idea that Melon Protocol could be heavily regulated in the future. Secondly, there is a clear hierarchy where there are “managers” of your digital assets instead of peer to peer activity. Although Melon allows you to maintain your own assets and keys, there is a set environment where the “managers” know what’s best for your money and you do not. With DeXe, you are still in control of your crypto and you get to decide how much copy trading can be done – you are still in control and there is no hierarchy of management.
DeXe Trading Raises the Bar of Crypto Trading
What can be seen in DeXe is a true transformation of social trading. Users of the platform can come together as they are, as either a trader or someone that wants to copy trades, and do as they please with their assets. DeFi is fundamentally ran on the premise that you are in control of your money and everyone in the DeXe Network is able to achieve that. Direct wallet activity is also at the heart of DeFi by focusing on the blockchain instead of what someone tells you to trade.
At the heart of it, DeXe Network is poised to be the most accurate definition of social trading. They present the most natural method to trade together as a community.
The Daily Chain
*Disclaimer – DeXe is our Media Partner, and this content is made possible with their support. The above article does not represent financial, investment, or trading advice, and we do not recommend the purchase of any cryptocurrency or product without consulting a financial aid. The Daily Chain strongly encourages you to do your own research before making any investment decisions