Early in March, AMZN announced a 20-for-1 stock split. Though it will ultimately take place on 3 June 2022, it has already sent the stock on a rally not seen in recent months. In theory this should not happen, because a split doesn’t affect a company’s business fundamentals. Yet such splits often cause day traders to pile in, fueling rallies like these.
However, there is no change in the fundamentals that would justify such an increase, rather, the only thing that will happen is that each shareholder of AMZN in the traditional stock market will receive 20 shares for every 1 share of AMZN they currently own.
The distribution from the stock split will take place at the close of business on Friday, 3 June 2022, and trading will begin on the split-adjusted basis on Monday, 6 June 2022, at 9.30 am ET (1.30 pm UTC).
How does this affect dAMZN on DeFiChain?
Since the minting of dAMZN is dependent on the price oracles of AMZN, a split without an adjustment on DeFiChain’s side would cause severe issues causing dAMZN tokens that were previously minted at a different price to be evaluated at a new price as a result of the updated oracles. As such, it would be sensible to also have dAMZN split in accordance with AMZN.
These are the key changes DeFiChain users will observe as a result of the stock split:
- dAMZN token owners will have 20 tokens for every 1 token they own before the split
- Updated price from oracles
- Updated dAMZN Token ID: A new token ID will be assigned to the post-split dAMZN token. (If you are not familiar with this attribute, it likely will not affect you)
These changes are primarily implemented on the consensus layer, and little needs to be done by users of DeFiChain.
How will the stock split be executed on DeFiChain?
In order to implement this adjustment as smoothly as possible, DeFiChain will take the following steps: DEX, vaults and systems interacting with dAMZN will undergo a process called the lock, which is a mechanism meant to serve as protection from any unstable prices from the oracles during the transition period. The lock will last 3 hours before the split and 3 hours after the split. After the lock is lifted, vaults will be halted for 1 hour before they become operational again. This halt is in accordance with our protocol and serves as a safety mechanism for DeFiChain users.
As this is the first stock split event encountered on DeFiChain, the 6-hour lock period serves as a conservative buffer. Once the community gains a better understanding of how oracles would behave in such events, the lock period can be shortened in the future.
To understand the technical design behind the stock split, you may also watch the May 2022 Tech Talk episode:
Due to the upcoming AMZN stock split, DeFiChain’s dAMZN token has to be adjusted and such as split as well. As a result, DEX users will experience a 6-hour lock, 3 hours before and after the stock split. During this time, it will not be possible to interact with dAMZN at all.
Please be also aware of the fact that dAMZN vault owners will experience an additional 1-hour halt on top of the 6 hour lock period.
However, there are no actions required on the users’ part, except to take note of the 3-hour lock window before and after the stock split (6 hours in total, and an additional hour for dAMZN vault owners).