DWF Ventures said in a research report on social trading that as trade execution and fees become increasingly commoditized, the competitive advantage of trading platforms is shifting away from low costs toward network effects, trader relationships and proprietary information layers. It argued that social trading lowers the barrier to participation through public trade calls, verifiable positions and one-click following, creating a reinforcing flywheel in which successful traders attract attention, followers enter their trades, and the traders’ reputations grow further. DWF Ventures also expects the social-trading experiences of crypto and mainstream equities to increasingly converge over time.

At the same time, DWF Ventures warned that the same flywheel is a double-edged sword. Followers piling into a public trade can push prices in the trader’s favor, making some calls partly “self-fulfilling,” while traders may also be able to use their followers as “exit liquidity.” Citing data from Fomo, the report said that only 6.16% of roughly 292,000 wallets analyzed over the past three months recorded realized profits, while just 25 wallets generated net profits of more than $10,000. DWF Ventures added that even verifiable positions do not fully eliminate information asymmetry, as traders may still front-run publicly visible positions through undisclosed wallets. In its view, the platforms most likely to build durable moats will be those that own the strongest discovery and distribution layers and can develop proprietary social networks around high-value information.