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.



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