There are three key players in decentralized finance — creators, buyers, and promoters who are all looking to gain from the next big thing, according to Bloomberg.
- Creators are those who make their own coins, earning from the token supply or investing in their own tokens early on.
- Generating coins has been made easier by platforms such as UniSwap or PancakeSwap which link buyers and sellers without a centralized custodian.
- Buyers are often retail traders on the prowl for the next historic swell. A number of them have dove into so-called Shit Coins, looking to make hefty profits.
- Promoters are usually social media accounts with a big following, who are paid to promote content.
- Creators tap promoters to publicize their tokens, bringing more people to invest.
- With DeFi, risk remains of a rug pull — create a coin, pay promoters for publicity, and then get out as soon as investors jump in and prices climb.
- Investors should watch out for liquidity. When liquidity isn’t locked, it is much easier for creators to exit.