So, dYdX bought Pocket Protector. Big deal, right? Another DeFi platform adding another feature. Is social trading really democratizing the markets? Or is it just setting the stage for a different type of rigged game?
Following Blindly Into the Abyss?
The idea sounds good on paper: newbies copy the pros, everyone wins. Financial inclusion! Democratization! Except, whose financials are we including, and at what expense. Remember the Titanic? So many people of color had a stake in that journey.
As any FOMO’d investor can tell you, social trading, particularly in the lemming-leaping crypto realm, is pretty darn close to lemming economics. All it takes is one allegedly wise guy to take a leap off a cliff (execute a trade), and the rest of the pack is immediately following suit. The blockchain can deliver transparency but it cannot deliver wisdom. You might be able to tell what somebody did, but you can’t tell why they did it. And in crypto, "why" is everything.
Think about it. You’re trusting your hard-earned money to someone you likely know nothing about, based on a few numbers on a screen. Sure, their track record may be provable on-chain, but past performance is no guarantee of future results. Particularly in a market fueled by speculation, FOMO, memes, and good ole Elon Musk tweeting.
What occurs when the “pro” blows the call? Do they take responsibility? Doubtful. You're left holding the bag, wondering why you didn't just stick to buying actual bags – maybe a nice Hermès. At least those hold their value better.
The Elite's Echo Chamber of Wealth
Social trading platforms, as such, and by design, concentrate power. Of the few who are successful, most traders turn into “influencers,” luring swathes of followers in their wake. Their every move is widely reported, which gives them the power to create synthetic pumps and dumps. It’s not financial inclusion, it’s wealth consolidation, period. The result is that the rich get richer, and the newbies… well, they’re the ones bringing liquidity.
This isn’t some abstract theory. Consider the recent 50,600 ETH transfer that went from HTX to Binance. That kind of movement influences trading strategies. Now picture a social trading “guru” being aware of that transfer in advance. The potential for manipulation is immense. Equally important are the regulations adequate to address this? Decentralized regulations? Please.
And of course, there’s the feds’ ballooning crypto stash. Now Trump is the de facto owner of crypto, and the US government has started piling up Bitcoin. That’s what’s really going to move the market, not some dude on a social trading site. Government influence trumps (pun intended) all.
Crypto Payroll Fueling the Fire?
The notion that social trading might apply to crypto payroll and business banking? That's terrifying. Now picture these businesses shooting in the dark by following the “smart investment strategies” of any crypto wizard on TikTok payroll with their payroll dollars! The potential for catastrophic losses is staggering. We’re about to witness someone’s hard-earned retirement go down the drain.
This means we have to tread lightly as we introduce social trading to the larger crypto ecosystem. Before we start handing over our financial futures to strangers on the internet, we need to ask ourselves: Are we creating a truly inclusive system, or just a new playground for whales to manipulate the market at the expense of the vulnerable?
Perhaps this “social trading” is merely a hip advertising gimmick. Perhaps it’s a sincere effort to democratize finance. I suspect it's something else entirely: a Trojan Horse, promising financial inclusion while secretly delivering a new era of financial exploitation. Don't be fooled by the shiny exterior. Look inside. You might not like what you find.
