Degen is an acronym for degenerate, which means “DeFi gambler, veteran”. It is often used to describe the concept of a novice who invests first without considering the security audit of the DeFi agreement, and then leaves the market before the bubble bursts and the heat goes down, extracting liquidity and selling the tokens to the next player.
First you need to understand what the term “pump-an-dump” means.
Pump and dump is a market manipulation technique that is often referred to in the cryptocurrency world as a financial scam on the stock market. Pump and dump is usually carried out by major players (like Defi Degens) in a given market. The ploy is to buy huge amounts of a cryptocurrency, in order to artificially inflate its price in the hope of creating a “Fomo” sentiment around this speculative bubble.
Fomo (for “fear of missing out”) is a psychological mechanism for an investor that boils down to the fear of missing out on an opportunity when the price of a security, or in this case, a cryptocurrency, starts to rise. When the objective is reached, i.e. when the operation succeeds in attracting enough new buyers to artificially raise the price, the actor who until now played the role of “pumper” suddenly becomes a “dumper” and sells his assets before the others in order to make a maximum profit.
What are DeFi Degens?
DeFi Degenerates, a subculture attached to a notorious decentralized finance nasty spot, best noted for their pump-and-dump approaches.
DeFi contains quite a few prominent startups and projects within the realm of financial services and is seen as perhaps the upcoming frontier of cryptocurrencies as well as finance altogether. However, there is a different angle associated with DeFi: namely those who cater towards non-regulated mainstream cryptocurrency projects that often combine between pranks and scams.
Through telegram and Discord private channels, participants exchange updates regarding new DeFi projects that they think may actually generate money for them… sometimes simply for entertainment purposes. In the eyes of several Degens, crowdfunding offers a chance for them to pursue new projects based around both monetary projects mixed with popular online multi-player video games. Such developments often adopt the shape of unpredictable and abstruse tokens, similar for example to the ill-fated Yam, which is now the totem of DeFi Degens.
These projects are mostly left unproven, not fully regulated as well as relying heavily upon encrypted codes that users only have the ability to read, understand, and interpret. For example, Yam involved fresh token dumps once every 12 hours, as users excitedly amassed the token value prior to collecting their earnings.
Those debaters with no understanding about how such DeFi projects function tend to easily get burned, although Degens often look at them purely and simply as a cost-effective and enjoyable pastime which also helps them testing the boundaries of crypto code along with the frontiers of acceptability among the crypto community.
Degens DeFi have become strongly linked to the so-called pump-and-dump movement, where crappy coins are trumpeted through online boards as well as via private networks, only to be discarded or otherwise driven to collapse – although not without the Degens getting their money’s worth out of the deal.
Compared to the competitive DeFi analysts, who need to be very cautious in researching before investing, Degen is like an amorous scumbag who seeks to maximize profits and is willing to take greater risks.