Global DeFi Adoption Index

The growth of DeFi is one of the biggest stories in the cryptocurrency space over the past 18 months.DeFi stands for 'Decentralized Finance' and refers to a decentralized cryptocurrency platform that can operate on its own without the support of a central company, group, or individual.. How is it possible? The DeFi platform, also known as the Protocol, is based on a blockchain rich in smart contracts (usually the Ethereum network) and has access to certain financial functions determined by the base code of the smart contract. Popular DeFi protocols include exchanges and loans.

While concerns about DeFi's security and compliance remain, it represents one of the fastest growing and most innovative companies in the cryptocurrency industry. Chainalysis decided to develop a new geographic measurement system that measures the country as DeFi adopted. Similar to our cryptocurrency acceptance measure,The DeFi Adoption Index is aimed at countries with the highest adoption levels, not those with the best value for money.Data shows the cryptocurrency base is highest in emerging markets, but DeFi is highest in high-income countries (especially traders and businesses) where cryptocurrencies are already widely used. Below, we break down the DeFi benefits and exponential process.

The DeFi Adoption Index has three main components, which are described below. Rank 154 countries according to each of these three measures, take the geometric measure of each country level across the three measures, then do the final number from 0 to 1. Each country is scored to determine a ranking. The closer the national final score is to 1, the higher the ranking.

Component 1: chain cryptocurrency value received through the DeFi platform, a user to feed the parity weight

Although the purpose of this measure is to identify each country as the total value of DeFi activities, the ranking is weighted according to the wealth of the individual and the prices of national currencies, preferring higher income countries. This measure is calculated by estimating all the cryptocurrencies received by the DeFi protocol by users in a given country and weighing the value of the chain based on a purchasing power parity per capita, a measure of value. national of a person. Public.The higher the ratio between the value received from the chain and a customer's energy balance, the higher the ranking. In other words, if two countries send the same price to the DeFi deal, the country with the lower purchasing capacity of one person will be at a higher tier. Be the first.

Component 2: total sales revenue received through the DeFi platform

The purpose of this measure is to measure the cost of cryptocurrency references to DeFi protocol in the retail market, for example, DeFi functions of non-professional cryptocurrency users who have less than $ 10,000 of cryptocurrency. relative to the wealth of the average person. . . . . All countries are ranked according to this measure, but heavier for countries with less than one person will have equal power.

Component 3: Personal deposit on the DeFi platform

The purpose of this measure is to identify the country as the largest number of DeFi markets led by its people.Measured by the ratio of the DeFi market to all Internet users in the country.The higher the comparison, the higher the level, so if both countries have the same repository, the country with the fewest internet users will be at a higher level.

This year, we have removed the personal payments list from all cryptocurrency earning accounts because we have approved DeFi trading on the support of exchange exchanges.The lack of oversight of the DeFi protocol means that the entire DeFi industry is captured by the chains, the mid-sized exchange industry is simply captured by the exchange of books.. But that's not a problem, it just measures the DeFi industry.Personalization can be measured to include the number of users associated with the DeFi protocol.

Top 20 DeFi Global Adoption Index for 2021

The point here is that, unlike our Crypto Adoption Index, many of the countries with the highest basic DeFi adoption levels are those that currently and historically have multiple approaches to trading crypto value. original currency. These countries are usually high income countries or countries that have developed crypto industries, particularly strong and commercial. The main countries using this model are the United States, China, Vietnam, the United Kingdom, and many Western European countries that rank high in the DeFi Adoption Index.

The data history of network connections via the DeFi protocol shows how DeFi reception is gradually shifting to the local level.

From April 2019 to June 2020, most of the network connections for the DeFi protocol were from North America, and since September 2019, Western Europe continues to grow, its value increasing significantly. Around June 2020, we saw more and more traffic coming from other regions, especially Central and South Asia, as all shipping costs to DeFi platforms started to explode. Although China has emerged as one of the countries with the highest DeFi market volume by country, the share of DeFi protocol network traffic in East Asia is still relatively small compared to mid-market services. cryptocurrency.

Breaking the packaging industry's DeFi protocol of sharing by large corporations over any cryptocurrency transaction strengthens our understanding of who uses DeFi.

The data shows that the market is huge for a lot of DeFi business, indicating that DeFi is less attractive to large investors compared to cryptocurrencies as a whole. Large companies valued at up to $ 10 million or more accounted for over 60% of DeFi's market share in Q2 2021, while less than 50% of all cryptocurrency transactions were accounted for . Compared to DeFi games at the same time, expertise, large retailers and small retailers also include a large part of every cryptocurrency activity.

We also find that the countries with the largest economies and industries in history have conducted the most DeFi operations. Below, we present the cryptocurrency and DeFi market products for each country included in our index, divided into 5 categories based on their company size and industry.

Barrel 1 represents the country with the highest number of professionals and companies since 2019, while barrel 5 represents the smallest country.

As we have seen, the countries with the highest level of expertise and cryptocurrency companies in history have also supported most DeFi operations.

With those numbers in mind, to learn more about the development area of ​​the DeFi model, we interviewed David Gogel, director of development at dydx, the popular DeFi protocol focused on the benefits of cryptocurrency. he explained,From expert private equity to cryptocurrency hedge funds, large traders are far from the most common recipient of DeFi.“DeFi is currently targeting cryptocurrency insiders,” he said. "These are people who have been in this industry for a while and have enough money to try out new assets. In the long run, if ETH oil prices go down, more people will hang on to it," he said. Gogel.The United States, China, Russia, and many Western European countries with high cryptocurrency yields are some of the growing markets for DeFi.

The story of two ecosystems

Our adoption data, combined with David Gogel's account of the growing DeFi industry, highlights the differences between the DeFi ecosystem and the larger cryptocurrency ecosystem. At the local level, new markets have spurred the use of cryptocurrencies, and consumers in these areas are turning to these assets as needed to manage their savings or exchange money they cannot afford when the time comes. money goes down. . The adoption of DeFi, on the other hand, is largely driven by cryptocurrency industry experts and traders looking for new alpha venture capital in an innovative new process that our weight scale matches. the adoption criteria. On the ground, this is why we are seeing more and more cryptocurrency adoption in income-generating countries with cryptocurrency consumers.The question for the next few years is whether DeFi will follow the same pattern as previous crypto services and whether more people will embrace DeFi for better than expected results and investments.