Despite Crypto’s Popularity With The Poor, DeFi Is A Rich Person’s Game

Despite Crypto’s Popularity With The Poor, DeFi Is A Rich Person’s Game
Andrew Rummer

over 2 years ago1 min

While cryptocurrency adoption is strongly skewed towards the world’s poorest nations – with the least developed financial infrastructure – a report from data firm Chainalysis shows that the recent boom in decentralized finance (DeFi) is still focused on the rich. 

DeFi uses blockchain-based technology to create financial tools that can run without the need for a trusted central authority. These projects – which range from lending funds to facilitating trading on decentralized exchanges – have exploded in popularity over the past year, with the value of crypto tokens involved in DeFi projects jumping from about $20 billion to $95 billion. 

What stands out from this Chainalysis research, however, is how different the market for DeFi is from the rest of the crypto ecosystem. As we wrote yesterday, poorer nations like Vietnam and India dominate the rankings of everyday crypto adoption, which can replace basic finance functions like bank accounts and money transfers. DeFi, meanwhile, generally replaces more sophisticated tools like leveraged trading. 

Chainalysis looked at three criteria to compile their ranking: a nation’s total level of DeFi activity; DeFi activity by small retail investors; and deposits by individuals to DeFi platforms. All three metrics were weighted by a country’s overall wealth. Here’s how the top 10 looks:

Top 20 ranking of DeFi adoption

“The data suggests that while grassroots cryptocurrency adoption generally is highest in emerging markets, DeFi adoption is strongest in high-income countries that already had substantial cryptocurrency usage, especially amongst traders and institutional investors,” Chainalysis reckons.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG