This week, Reddit decided to show Wall Street who’s boss. Banded together, retail investors pushed stocks like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) to unbelievable heights, prompting Robinhood bans on high-flying equities. And as trading bans came flying down without much explanation, retail investors watched helplessly from the sidelines as institutional investors got to walk away from the wreckage, leaving regular investors holding the bag.
In the aftermath, celebrities, CEOs and retail investors are joining together to demand change. That’s creating interesting cases for five Decentralized Finance (DeFi) stocks – companies that operate outside the traditional financial sector.
Not familiar with the story? Yesterday, Robinhood placed bans on GME, AMC and a handful of equities. The decision angered everyone from Ja Rule to Dave Portnoy to Ted Cruz and the people of r/WallStreetBets.
Essentially, retail investors believe that Robinhood overstepped its boundaries and cost its customers earnings opportunities. In fact, one customer went so far as to file a class-action lawsuit.
Perhaps unsurprisingly then, this morning brought a major cryptocurrency rally. Dogecoin (CCC:DOGE) remains elevated, as does Bitcoin (CCC:BTC). Exchange Coinbase suffered outages as a result of high volatility and customer demand.
With all of this in mind, these four DeFi stocks should be on your radar.
DeFi Stocks No. 1: Square (SQ)
Square (NYSE:SQ) is by no means truly decentralized. Customers are still sourcing their money through a nearly $100 billion corporation. However, Square represents a major shift in finance and offers real opportunity in the wake of the Reddit stocks rally.
The company disrupted payments processing, starting first with the smallest of merchants and then expanding its reach. Now, the company is moving into uncharted waters, becoming a one-stop shop for all things finance. This offers customers greater convenience, and helps them avoid traditional institutions like the old-school banks. For instance, Square offers everything from those payment processing tools to peer-to-peer payments and even stock trading. Yesterday, as the Robinhood bans caused customers to leave the leading platform en masse, SQ stock saw some upside.
Lastly, Square also offers investors exposure to cryptocurrencies, and also stands to fuel the crypto rally. The fintech keeps Bitcoin on its balance sheet and allows customers to trade it via Cash App.
DeFi Stocks No. 2: PayPal (PYPL)
PayPal (NASDAQ:PYPL) is an interesting equity in the same vein as Square. Through its payments processing solutions and peer-to-peer app Venmo, it offers customers workarounds from traditional banking institutions. Also like Square, PayPal represents breakthroughs in the cryptocurrency realm.
Starting this year, customers will be able to purchase and hold cryptocurrency assets in their PayPal wallets. According to the company, these services will soon expand to Venmo, bringing access to Bitcoin, Ethereum (CCC:ETH), Litecoin (CCC:LTC) and Bitcoin Cash (CCC:BCH) to the masses. As Jack Sun wrote for DeFi Rate, this will make PayPal one of the most accessible companies touching cryptocurrencies. This is because it has more than 340 million active accounts around the world.
Is this really decentralized finance? No. Some crypto bulls are quick to comment that buying and holding assets in your PayPal wallet goes against key ledger innovations. However, some like Tyler Winklevoss see firms like PayPal bridging the gap and ultimately boosting adoption.
DeFi Stocks No. 3: Riot Blockchain (RIOT)
Want to buy Bitcoin but not able to shell out $30,000? Sure, there are fractional buying opportunities, but there are also high-flying blockchain stocks like RIOT.
That is exactly the chase InvestorPlace contributor Joel Baglole makes with Riot Blockchain (NASDAQ:RIOT). The company seems to move along with BTC, although it seriously outpaces the gains in the leading cryptocurrency. In fact, in just the last year alone, RIOT stock is up more than 1,600%.
In the wake of the Robinhood bans, those gains continued this morning, but shares ultimately have pulled back. It seems then that Riot Blockchain may be one of the most obvious, albeit speculative, ways to play on a DeFi future.
So what should you know about the company? As Baglole writes, Riot Blockchain is a digital currency company that buys up crypto and blockchain technology assets. It is also a popular mining company that has plans to expand and grow its mining business in 2021.
DeFi Stock No. 4: Marathon Patent (MARA)
The last DeFi stock to watch on this list is Marathon Patent Group (NASDAQ:MARA), another high-flying stock that represents hopes for a different financial future.
Marathon Patent Group touts itself as a digital asset technology company. Specifically, it mines cryptocurrencies, and says it is one of the first miners to trade on the Nasdaq Exchange. Also making it appealing to investors is its focus on the blockchain ecosystem. Basically, throw in a few DeFi buzzwords and you will be sure to have investor attention!
Granted, MARA stock is a divisive equity. Some like InvestorPlace contributor Josh Enomoto see it as a great way to benefit from the rally in Bitcoin and its crypto peers. Others think it is too speculative right now. While this is certainly a company you should do your own research on, know that Marathon Patent is hoping to rapidly scale up its mining fleet. At its current goal, the company will one day have 103,000 mining machines.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.