What is a 'Degen' in Web3?

The Web3 space has a rich and often bizarre vocabulary. One of the most common and culturally significant terms you will encounter, especially in the world of DeFi and NFT trading, is "degen."

What does it mean?

"Degen" is short for "degenerate." In the context of crypto, it refers to a person who engages in high-risk, complex, and often reckless trading or investment strategies. A degen is someone who is willing to "ape in" to a new, unaudited protocol in the hopes of achieving massive returns.

Is it an insult?

Surprisingly, no. Within the crypto community, "degen" is often used as a term of endearment and a badge of honor. It signals that you are a true power user, someone who is deeply enmeshed in the ecosystem, understands the risks, and is willing to live on the cutting edge.

Calling yourself a "degen" is a self-aware and ironic way of acknowledging the high-risk nature of your activities.

The Degen Mindset

The degen mindset is characterized by:

• High Risk Tolerance: Degens are comfortable with the possibility of losing their entire investment. For them, the potential for a 100x return outweighs the risk of going to zero.
• Deep Ecosystem Knowledge: To be a successful degen, you have to be extremely knowledgeable. You need to understand how complex DeFi protocols work, how to evaluate smart contract risk, and how to move quickly to capitalize on new opportunities like a yield farm.
• A Focus on the "Game": Degens often view DeFi as a complex, multiplayer game where the goal is to find and exploit inefficiencies in the system to generate "alpha" (returns above the market average).
• Living on the Frontier: Degens are the explorers and test pilots of Web3. They are the first to use new protocols, providing them with their initial liquidity and stress-testing their security.

While the "degen" approach is certainly not for everyone and is an extremely risky way to manage capital, the degens play a vital, if chaotic, role in the Web3 ecosystem. They are the engine of innovation, providing the initial liquidity and user base that allows new and experimental protocols to get off the ground. They embody the high-risk, high-reward spirit of the crypto frontier.