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DeFi Space Is Growing like Never before in 2021
Since the year 2020, there has been massive growth in the DeFi space. We are hearing about series of hacks in the Defi protocols for few weeks. Despite the increasing cybercrimes in the area, DeFi is continuing its growth in 2021.
Let’s discuss about the growth of DeFi in different countries
DeFi protocols are built on smart contract enriched blockchains and can fulfil a particular financial function. These DeFi projects can include lending platforms and decentralized exchanges. These protocols basically run without any central authority.
The total value locked in DeFi is skyrocketing since the previous year. The Q2 of 2021 witnessed 60% of DeFi transactions by the large institutions for all of their crypto transactions. In the prior year, around 50% of the total transactions in the crypto space were in the DeFi space.
Talking about the adoption of decentralized finance, it is higher in countries with a high income, which already had numerous crypto usage. According to the report by Chainalysis, the top 10 countries in the decreasing order of DeFi adoption are United States, Vietnam, Thailand, China, United Kingdom, India, Netherlands, Canada, Ukraine and Poland.
In the report regarding the global defi adoption index, 154 countries were analyzed by Chainalysis based on their on-chain crypto value received by DeFi platforms, individual deposits to the platforms and the on-chain retail value transferred by the platforms.
Why is DeFi space growing?
It is observed that experienced crypto traders are looking to diversify their portfolios, which in turn can be the reason for the increased growth of decentralized finance. The growth is specifically more in the countries with established crypto markets.
The significant growth in the sector is due to the crypto insiders who already tried their hands on trading and are currently looking for newer assets to invest in. the countries such as United States, Russia and China have the higher crypto adoption. So, thus they have the higher DeFi adoption because of the already developed crypto market.
Investors are looking for innovations either to carry out remittances or to preserve their savings from the devaluation of the currency.
The rise of more innovative platforms in the DeFi space could be the possible reason for its wider adoption. Decentralized finance has actually reduced the friction in financial operations, making it the most viable option for individuals. DeFi platforms are eliminating the intermediates, which in turn reduce the cost and make the process more efficient.
Many investors even find it attractive compared to the traditional centralized systems of banking and financing.
DeFi space is growing, and significant growth is visible in countries with professional markets and the most prominent institutions. So far, the biggest adopters of DeFi are the large scale traders, and the adoption is kind of targeted towards the insiders. With the involvement of more innovations, we can expect the DeFi space to grow further in the coming years.