The Crypto market can be so volatile, and even more volatile with real-world news. The stock market always has a say and somehow affect its way to the Crypto market, and DeFi tokens ain’t excluded, they also get affected by real-world news. This new development Amazon just made, has had a direct impact on DeFi tokens representing a portion of the AMZN shares in the crypto market.
Amazon’s Stock Split
Amazon’s 20 for 1 stock split took effect on June 6th, 2022, it split each and every existing share of AMZN into 20 units, each. Before the split, most small investors couldn’t have their piece of investment in the Amazon shares, but with the shares now trading at a price tag of $128, as at the time of writing, there should be a difference in the number of investors of the Amazon shares, which means, this 20 for 1 stock split would not affect the business fundamentals but will only open more avenues for newer investors looking to invest in the company.
Looking at it, this stock split seems like a bright idea to get new investors on board, but the effect it has on DeFi tokens representing it is kind of different than one would expect. That said, there are diverse projects that offer DeFi tokens representing real-world stocks, such as the DeFi chain which closely follows the Amazon stock in DeFi to give price exposure, not ownership though, and also allow users to mint and trade dAMZN. dAMZN just like other dTokens on the DeFi chain mimics the prices of real-world stock by tracking and reflecting several variable factors and using oracles to capture those feeds.
This works by allowing investors with a staked share of 50% DFI and 50% of any other assets combination to mint the appointed dToken. If investors choose not to want to provide a mix of DFI and other assets, they can still use DeFiChain’s decentralized stablecoin dUSD to mint a dToken. This dToken mimics the price action or movement of the actual asset, providing the investor with the opportunity to invest and withdraw whatever stock they want to withdraw without the stress of the regular traditional bank process.
The token will also then be broken up into 20 tokens, just as the genuine Amazon stock will be. The owners of the dAMZN DeFi coin will receive 20 tokens for every dAMZN token that they hold, but that doesn’t mean their investment will increase by 20 times. As DeFiChain updates the dAMZN price from the oracles, investors will hold the same amount of investment as they already had before the splitting happened.
Originally, the stock split itself was conducted in two stages, which are; following the cues of the stock market, DeFiChain locked all existing dAMZN tokens, and as the market reopened at the split-adjusted prices, DeFiChain began reflecting the price as well.
Why The Bullish?
dAMZN and other DeFiChain tokens are bullish as of now because DeFi tokens are much more efficient than TradeFi investments. For instance, the traditional investment process takes time, but DeFi tokens do not, because they require no lengthy process. Also, geographical restrictions and trading limits make it difficult for millions of investors to invest in their favorite US stocks. DeFiChain, with its dTokens, on the other hand, helps traders and investors gain price exposure to assets from any part of the world. Plus, one can also buy a fractional piece of a token.