A hedge-fund backed social network wants retail traders to prove they have 'diamond hands' by linking their brokerage account to verify trades

• Social media platform Commonstock allows retail investors to verify their trades.
• The app, backed by hedge funds, just announced a $25 million Series A funding round.
• The app "weeds out a lot of the grifters who might say they had a 1,000% return," the founder told CNBC.

A social media platform catering to retail traders and backed by hedge funds wants individual investors who have gathered on Twitter and Reddit to verify their trades and prove they've got skin in the game when making claims of big returns.

The app, called Commonstock, was launched last year and announced a $25 million Series A funding round on Tuesday, from hedge fund-backers including Bill Ackman, Dan Loeb, and Stanley Druckenmiller.

Commonstock founder David McDonough told CNBC that with the app, retail traders can see one another's performance in real-time.

On Reddit, where investing forums like Wall Street Bets have millions of members, posts are anonymous. But on Commonstock, users must link their brokerage accounts to the app to prove their investments.

"The ability for anybody to prove they own Tesla or Peloton by percentage, and show their skin in the game, weeds out a lot of the grifters who might say they had a 1,000% return," McDonough told CNBC in an interview.

The app's home page looks similar to trading app Public, which has a Twitter-like feed. User profiles are marked not by followers but instead by the total dollar amount invested of all the accounts following them, aka "follower assets." According to its website, the app "is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors."

McDonough left his product strategy role at Google to start Commonstock in 2017, according to his LinkedIn profile. The founder told CNBC he'll eventually consider monetizing the app using a subscription service, advanced features and aggregating and anonymizing data. He added that Commonstock would never sell that data to hedge funds or other third parties.

Retail investors gathering on sites like Reddit and Twitter have made their presence known in the stock market this year, starting with the epic runup in GameStop's stock price in January and spreading to other companies like AMC Theaters, among others. Now, markets are bracing for the new horde of investors to stay for the long haul.

"Over the last year, the world experienced a fundamental shift in the way markets operate. The information advantage is moving away from Wall Street and towards Main Street," a Commonstock spokesperson said in an email to Insider.

"The rise of retail investors will have a profound, positive long-term impact on society," McDonough wrote in a post on Commonstock's blog.