Analysis on Kevin O'Leary Backed DeFi Company WonderFi

Shark Tank's Kevin O'Leary announced he was an investor in a company called WonderFi, and he stated that the companies goal was to make decentralized finance available for everyone. He claimed that he realized this was a problem when he was doing decentralized finance and his daughter asked him if she could do the same, and he said no as he had multiple people working to allow him to do that and that she could not do that. This caused him to realize that there needed to be a way for anyone to start benefitting from decentralized finance. 

Now, the actual WonderFi app has not been launched yet. This makes analysis of WonderFi a little bit harder as one can only look at what they say the app will be able to do and not what it actually does. This is important to realize. It is not yet known when the app will actually be released as it is currently passed the initial release date, and it has not yet been launched. One can only imagine that it will be out soon. 

WonderFi claims that they will allow users to invest into stable coins that are tied to the US dollar. This means that one's coin will only move as the US dollar moves. They will then loan out one's money for them and collect interest on that, and they will be giving their users 4% interest on their money. This basically works as a bank account does. When one has a bank account, the bank holds their money and loans that money out like WonderFi will be doing. The difference is that WonderFi is giving their users 4% while most banks give around .05%. This is where the opportunity arises. 

WonderFi is currently trading on the Canadian stock exchange NEO with a market cap of around 167 million dollars. The stock is up almost 32% YTD. One can easily see why this is when one looks at the inflation worries that is currently happening. People do not want to hold money in a bank account right now if they think that heavy inflation is coming because their money will not keep up with inflation at a .05% interest rate which means they are going to lose value. Since WonderFi is putting one's money into a coin that is stable to the US dollar and offering a higher interest rate, people that don't want the risk of other assets can collect a 4% return and worry less about inflation.

Before one dumps all their cash into WonderFi, one should keep in mind that stable coins are not completely risk free either. Stable coins are relatively new, and it is not yet known what regulation will come out against them. This risk will have to be accepted by not just users of the app but shareholders themselves as regulation could hurt the business.

I won't tell anyone if they should or should not use WonderFi or buy the stock, but I hope this article can start one's due diligence on the company.

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