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The crypto market has largely followed the global stock market whether it’s a move to the upside or downside. Interestingly, the recent Amazon stock split has had a direct impact on the DeFi tokens representing the AMZN shares in the crypto market, here’s how.
A Background on Amazon Stock Split
For the uninitiated, on June 6, the AMZN stock underwent a 20 for 1 stock split which essentially split each existing AMZN share into 20 individual units. The shares now trade at a price of $128. However, this stock split is barely going to have any impact on the business fundamentals and will instead encourage new investors to purchase AMZN stocks due to a relatively lower price.
Unsurprisingly, Amazon shares were far beyond the reach of most small investors prior to the 20 to 1 stock split.
We now know that a stock split is a decent method to onboard new investors. However, its effect on the DeFi tokens representing it is a little different than one would expect.
In the crypto industry, there is a swathe of projects that offer decentralized tokens or synthetic tokens representing real-world stocks.
For instance, DeFiChain allows users to mint and trade dAMZN, which is pegged to the Amazon stock price. The dAMZN token, like all dTokens on DeFiChain, mimics the prices of real-world stock by tracking and reflecting several variable factors and using oracles to capture those feeds.
Consider the scenario where anyone with a staked share of 50% DFI and 50% of any other assets’ combination can mint the assigned dToken. If investors don’t want to provide a mix of DFI and other assets, they can leverage DeFiChain’s decentralized stablecoin dUSD to mint a dToken.
The dTokens thus minted aim to mimic the price action of the actual assets. In a way, these tokens provide an individual with the opportunity to invest and withdraw their favorite stock without the hassles of a traditional bank process.
dAMZN to Also Undergo a Split
Following in the footsteps of the Amazon share, the dAMZN token will also be broken up into 20 tokens. The owners of the dAMZN DeFi coin will receive 20 tokens for each and every dAMZN token that they hold. However, it is important to note that this doesn’t mean their investment will shoot up by 20 times overnight.
As DeFiChain will update the dAMZN price from the oracles, investors will hold the same amount of investment as they had before the split took place.
Notably, the Amazon stock split itself was conducted in two stages. DeFiChain closely followed the stock market and locked all existing dAMZN tokens. As the market reopened at the split-adjusted prices, DeFiChain began reflecting the price as well.
A major reason why dAMZN and other DeFiChain tokens are witnessing a bullish force is that the process of traditional investment takes up too much of an individual’s time. Conversely, DeFi tokens require no such lengthy processing, making them much more efficient than TradFi investment.
In addition, geographical restrictions and trading limits have made it almost impossible for investors to invest in their favorite US stocks. DeFiChain, by leveraging its dTokens, is helping such traders and investors to gain exposure to these assets from anywhere in the world.
Moreover, one can also purchase a fractional piece of a token. For example, you could buy 1/10th of the dTSLA token. The same is almost impossible to find in the spot market.
DeFiChain adds further utility to these tokens by enabling the users to boost the yield with liquidity mining instead of only holding the stock to earn additional rewards.
To conclude, none of the dAMZN token holders have or will be affected drastically going forward since Amazon’s 20 for 1 split itself has been executed without any hindrance.