What is a degen?
Originating as a derogatory term (of sorts), a degen in crypto (derived from the word ‘degenerate’) is someone who is always after get-rich-quick-schemes. Now there is nothing inherently wrong with such schemes.
Given a chance, one must utilize such schemes as much as one can. Such strategies work best during a crypto bull market.
But what makes a degen different from the other class of crypto investors is that they make rash investment decisions, buy into Ponzi schemes, can be quite greedy at times, and are targetted by FOMO every now and then.
Example sentence: Being a degen is a risky way of life
In decentralized finance (DeFi), a degen does not have a practical end goal. They are mostly after more and more capital.
In order to quench their thirst for more, they end up making the riskiest of the deals, seeking out the highest yields, and even going on to the extent of using ‘pump-and-dump’ schemes.
This term gained popularity as the hype around crypto and NFTs went up. Increasingly, as the crypto industry expands, it attracts more people seeing crypto as a shortcut to getting rich overnight.
This guy, for example, was able to earn millions because of degens.
Ghozalo Ghozalu a 22-year student minted his selfies of four straight years as NFTs on Opensea. Since it was an unusual thing for NFT degens, they jumped and started investing, resulting in Ghozalu earning around 1.1 million dollars.
So, degens made him rich in just a matter of days.
Another degen example can be found in famous YouTuber Logan Paul who jumped on a trend without much knowledge and bought an NFT for $623k. That NFT is now worth only $10.
He later admitted his mistake.
A year ago, I spent $623,000 on an NFT. Today, it’s worth essentially nothing. I’ve immortalized this mistake in 99 Originals with an exact replica helmet & outfit.Logan Paul
Both examples are perfect representations of how degens work. They take a high-value risk that can go both ways. Either you can make a lot of money or lose a lot of money hence it is always better to DYOR before investing.
Origins of the term ‘degen’
But how did the term get stuck? Mostly used as an insult, the term was first coined as slang in the betting industry.
When gamblers who lack the expertise, experience, and knowledge end up risking all their chips and hard-earned money in betting and gambling, they are referred to as degens and are looked down upon by the industry bigwigs. They make irrational decisions to earn more returns but rarely succeed.
What is interesting about the use of the term in crypto is that investors wear it on their sleeves as a badge of honor and pride.
This is perhaps because when crypto came off as the big new thing in the market, people were a little apprehensive about it. But those who truly did believe in it, had the guts to try something new thus they invested big chunks of their money.
Today, there are crypto communities that have been shaped by the very term and they seem to be quite happy with it.
In simpler terms, a DeFi degen in crypto is someone who without properly doing your own research (DYOR) identifies a classy project such as the Bored Ape Yacht Club and invests in it.
Risk is a term unknown to them degen.
How do you identify a degen?
Degens in crypto are also referred to as believers who believe that their investment will yield hefty returns. They share some resemblance with a particular class of investors known as bulls who generally have a positive attitude toward the overall coin prices, and are full of self-confidence.
But, how do you recognize a degen? Some of the pointers have already been mentioned but don’t worry, we’ll reiterate them. Following are the characteristics of degen.
1. Rarely DYOR
Do your own research (DYOR) is a concept mostly alien to degens in crypto. A decentralized market happens to be more volatile than a centralized one and investing in projects without prior research and study is like digging your own grave.
Thus, by the behavior, the existing knowledge, and the way of making decisions, you can tell whether a person is a degen.
2. Dull portfolio
A portfolio is the most important and significant thing that an investor owns. There is little difference between investors in DeFi and centralized finance. A lot can be inferred about an investor just by looking at their portfolio.
However, if the portfolio is not diverse as if the investor has invested all the money in just a single currency, it may have an impact on the investor’s overall credibility and reputation. Thus, this is another way to recognize a crypto DeFi degen.
3. FOMO and overtrading
As mentioned, degens always have a fear of missing out. This leads to them making impulsive decisions and uncalculated judgments. Degens can also go on to the extent of taking out hefty amounts as loans and investing them in a cryptocurrency.
Moreover, they are very much into buying and selling cryptocurrencies within short spans of time primarily because of the thrill they get in doing so. If you notice such behavior and find it odd, don’t worry, it is just a degen.
Should you be a degen?
Hmm. Now that is an interesting question. While it totally depends on the taste, patience level, work ethic, and end goal of an investor, here are some quotes by some crypto founders that can help you decide whether you should be a degen.
“The best way to make money in crypto is to do the opposite of what degens do.”– Balaji Srinivasan, former CTO of Coinbase.
“In crypto, there are many ways to make money, but there are even more ways to lose it. Don’t be a degen.”– Changpeng Zhao, CEO of Binance.
So, degen or no degen? That’s up to you, fren.
DeFi (decentralized finance) degens are a specific kind of crypto investor who is quite a bit into risky projects. In difficult projects, they are specifically interested in investing in meme coins like $REKT and joke projects. They are also associated with pump and dump schemes.
A DeFi degen can be characterized as someone really into liquidity mining and yield farming on the decentralized exchange. They are always on the lookout for a get-rich-quick money-making scheme and can make impulsive and reckless decisions and investments. They are also risky enough to bet on unauthorized and unofficial projects.