The crypto world promised democratization of finance. Instead, are we creating a new, deeper, and in some senses more dangerous version of financial class power? The new ability to track unique “smart money” wallets is truly a game changer. It gives the underdog an opportunity to succeed in ways that they’ve never been able to before. Before you all hop on that bandwagon, let’s look at the unintended consequences. What happens when all eyes are trained on the same “novel” smart wallets?

Are We Creating Market Echo Chambers?

Think about it. Whenever a small number of wallets are considered “smart,” every single action they take is magnified. And on top of that, a small purchase by one of these wallets can trigger an arbitrary cascade of copycat buys, artificially inflating prices. It's like a self-fulfilling prophecy. Then it relies on the cost of the insulted smart money wallet to effectuate a purchase, pushing the purchase price higher. Next, everyone else steps up, chasing perception’s coattails, resulting in returns that are often disconnected from the project’s actual worth.

Is this truly “smart” investing, or is it just using information asymmetry to game the market. And what’s the impact on the less informed average investor who comes in late when they see the initial success, lured by the hype? They’re the ones left holding the bag when the smart money wallets cash out their profits. I know, it seems a little Wild West out there right now right?

NFT Royalties: Are Creators Being Exploited?

Let's talk about NFTs and royalties. Here’s where the “social justice” angle really comes into play. Just as surely, smart money wallets are racing to track NFT projects. Or are they proactively gaming loopholes in royalty structures by finding these valuable projects early? Or are they using their knowledge of on-chain data to accumulate NFT assets through accumulation and/or distribution? In doing so, are they not just looking for ways to avoid paying creator royalties and outright stealing from the creators producing all the value.

Imagine an artist who justifies their creative work through continuing revenues. Now picture their income suddenly disappearing while savvy traders rake in profits through arcane machinations of the new system. This is more than an issue of dollars and cents, it’s about equity and treating artists and creators with respect. We hope you’ll join us to create more transparency within the NFT space! This will help make sure that creators are rewarded for their creative efforts.

Transparency: Leveling the Playing Field

The answer is not to outlaw smart money tracking entirely. That’s just unrealistic and, frankly, completely contrarian to the ethos of blockchain. The key is transparency. To protect investors, we need new tools and regulations that help smaller investors track the often hard-to-see manipulation caused by these massive wallets.

  • More Accessible Data: On-chain data should be more easily accessible and understandable for the average investor.
  • Educational Resources: More resources are needed to educate people about how to interpret on-chain data and identify potential market manipulation.
  • Community Initiatives: The crypto community should develop initiatives to promote fairness and prevent market manipulation.

Think of it like this: sunlight is the best disinfectant. This is key – the more transparent the market, the more open smart money wallets are to reducing their opportunity to exploit information asymmetry. This isn’t an argument to stifle innovation. It’s about establishing a level playing field, so all businesses, no matter who they are, have their fair shot at success. What we can do We need to increase financial literacy, especially among underserved populations. That will help free people to explore the crypto space more deeply and confidently.

At this point though, it feels like we’re building digital fortresses only for the wealthy. Everyone else is trapped outside the walls, peering in. It doesn't have to be this way. Together, we can ensure that blockchain unlocks the promise of a fairer and more inclusive financial system. We need to be aware and creative in addressing possible unintended consequences that new technologies, like smart money tracking, can introduce. The allure of the $PEPE extreme example could be strong, but the long-term health of the crypto ecosystem depends on fairness and transparency.

Personally, I’m very excited about helping to build the bridge between South Asian and global crypto communities. We can uplift these populations by investing in financial education. Through fostering equitable access to information, they can realize the promise of full participation in the emerging global economy and a richer future. Now smart money tracking tools are enabling us to see which projects are promising and to better support innovators. We need to make sure that these tools are used in a responsible and ethical way. Let’s make sure that the opportunity afforded by decentralized finance doesn’t become just another patchwork of entrenched privilege.