DeFi degens are people who base their trades on either silly or malicious reasons. These can range from pump-and-dump schemes to buying coins because they like the memes behind it.

Standing for degenerates, DeFi degens describes traders who engage in trading without looking at technical indicators or fundamental analysis first. Specifically, in the aftermath of summer 2020, degens were dubbed as yield-farming chasers across the first wave of DeFi protocols - lending and decentralized exchanges.

By being first to stake their tokens into liquidity pools - Uniswap, Compound, etc. - they drove the prices of their native tokens upward, only to leave with massive profit gains of up to 6-digit percentage yields. This would apply to every new DeFi project that popped up. Occasionally, they would create/copy-paste their own DeFi protocols, attracting other degens, and then cutting off with profits after they drove the token price upward.

Needless to say, degens are a predictable consequence when DeFi projects have small market caps, and people are not accustomed to doing their own research (DYOR) first. Many such platforms were unaudited, resulting in frequent hacking as well.

With that said, this period birthed decentralized finance (DeFi) as we know it, by separating the wheat from the chaff.

defi-degens.png Compound (COMP) price moves. Charts dominated by huge price spikes were common in the second half of 2020, thanks to DeFi degens.

One of the more notable crypto degens is DegenSpartan, having used Twitter to disseminate DeFi takes and discuss opportunities popping up within the rapidly evolving DeFi ecosystem. Those that are less scrupulous organize through secure Telegram or Discord channels in order to pump the price of small cap tokens through rumors.

For instance, if there is a rumor that a certain coin will be listed on a well-known crypto exchange, its price will experience a spike. Buying into the token, they themselves can jack the price up further, enticing other traders to join in. Then, when the price reaches a certain level, they sell the coin, collapsing the price along the way.

One of the most popular DeFi meme tokens that attracted degens was YAM from Yam Protocol running on the Ethereum blockchain. YAM was supposed to provide the role of a stablecoin, a crypto asset pegged to fiat currency in a 1:1 ratio. To maintain the peg, YAM's token supply underwent a process called rebasing - raising or lowering its supply in order to either drive the price down or up.

However, due to a rebase code bug, the project abruptly came to an end, losing about €639,000 worth of tokens. Flocking to such unaudited projects, as well as creating own DeFi bubbles, is the hallmark of DeFi degens. As the market matured and people tried to educate themselves more, degens' market footprint gradually shrank.