DeFi Adoption Index at a glance: The main growth market is Western Europe, which is more popular with large investors

Since the summer of 2020, the DeFi track has been an important growth point for the crypto market. It has led the crypto bull market to run wild for a year without signs of stopping. Although the growth rate of DeFi has achieved rapid development in the past year, the security and cooperation of DeFi Regulatory issues have been widely criticized, especially this summer, the US government departments also paid attention to the development of DeFi and plan to supervise it.

In order to be able to form a more systematic understanding of DeFi, Chainalysis has specially produced rankings based on the adoption of DeFi by countries around the world. Similar to the cryptocurrency adoption index, the DeFi adoption index aims to highlight the countries with the highest personal adoption rate, rather than those that provide funds. The most valuable country. The data shows that although the adoption rate of cryptocurrencies in emerging markets is generally the highest, the adoption rate of DeFi is stronger in high-income countries where cryptocurrencies are heavily used, especially among traders and institutional investors.

DeFi uses index ranking basis

The DeFi Adoption Index consists of three indicators, which will be explained in more detail below. Rank all 154 countries/regions based on these three indicators, take the geometric mean of each country/region’s ranking in these three indicators, and then normalize the final number to a range of 0 to 1, giving each country / Region is a score that determines the overall ranking. The closer the country’s final score is to 1, the higher the ranking.

1. The value of cryptocurrency on the chain received by the DeFi platform is weighted by per capita purchasing power parity

The goal of this indicator is to rank each country/region based on the total amount of DeFi activity, but the ranking should be weighted based on per capita wealth and the value of the country’s overall currency to favor countries/regions that are more important for that number. The indicator is calculated by estimating the total amount of cryptocurrency received by the DeFi protocol from users in a specific country/region, and the value on the chain is weighted based on per capita purchasing power parity (PPP), which is a measure of the country’s per capita wealth. The higher the ratio of the received on-chain value to the per capita PPP, the higher the ranking. This means that if two countries invest equal amounts in the DeFi agreement, the country with a lower per capita PPP will rank higher. 

2. Total retail value of DeFi platform revenue

The goal of this indicator is to measure the DeFi activities of non-professional individual cryptocurrency users, based on the ratio of the amount of cryptocurrency (that is, less than $10,000) invested in the DeFi protocol in retail-scale transactions to the per capita wealth. Then we rank each country based on this indicator, but prefer to weight countries with lower purchasing power parity per capita. 

3. Personal deposits to the DeFi platform

This indicator ranks countries based on which countries’ residents have the most DeFi transactions. This is measured by the ratio of DeFi transactions to the total number of Internet users in the country. The higher the ratio, the higher the ranking, which means that if two countries have the same amount of deposits, the country with fewer Internet users will rank higher. 

The personal deposit indicator was removed from the overall cryptocurrency adoption index this year because it artificially “prefers” DeFi transactions over transactions conducted on centralized exchanges. The non-custodial nature of the DeFi protocol means that all DeFi transactions are on the chain. Captured, while transactions on centralized exchanges are only recorded in the exchange’s order book. However, this is not a problem when we only measure DeFi transactions, which means that we can measure a single transaction to understand the number of users interacting with the DeFi protocol. 

Overview of Global DeFi Adoption Index in 2021

The highlight here is that, unlike the crypto adoption index, the countries/regions with the highest DeFi adoption rates are those countries that have had a large amount of original cryptocurrency value transfers currently and historically. These countries are often high-income countries or countries with developed cryptocurrency markets, especially strong professional and institutional markets . The prominent countries that embody these trends are the United States, China, Vietnam, the United Kingdom, and several other Western European countries that rank high on the DeFi adoption index.


The historical network traffic data of the DeFi protocol shows us how the adoption of DeFi has spread at the regional level over time.


From April 2019 to June 2020, the vast majority of network traffic used for the DeFi protocol came from North America. Starting around September 2019, Western Europe has also increased a considerable proportion, and it is still increasing. Around June 2020, as the total value flowing to the DeFi platform begins to explode, traffic from other regions is increasing, especially Central Asia and South Asia. Although China has become one of the countries with the largest volume of DeFi transactions, the share of DeFi protocol network traffic in East Asia is still very low compared with that of centralized encryption services.

Compared with all cryptocurrency activities, the DeFi protocol’s transaction volume share divided by transaction size strengthens our understanding of who is using DeFi.



Data shows that large-value transactions account for a much larger share of DeFi activities, which shows that DeFi is more popular with large investors than cryptocurrencies as a whole. Large-scale institutional transactions (that is, transactions exceeding $10 million) accounted for more than 60% of DeFi transactions in the second quarter of 2021, while all cryptocurrency transactions accounted for less than 50%. Compared with DeFi activities in the same period, professional, large-scale retail and small-scale retail transactions accounted for a larger proportion of all cryptocurrency activities. 

It can also be seen that the country with the largest institution and professional market in history is promoting the most DeFi activities. According to the scale of professional and institutional markets, the following chart divides all countries ranked in the index into five categories, and shows their cryptocurrency trading volume and specific DeFi trading volume.


Block 1 represents the country with the largest professional and institutional market since 2019, while Block 5 represents the smallest country.

dydx growth director David Gogel said in an interview with Chainalysis that so far, from professional personal operations to cryptocurrency hedge funds, large traders are the largest adopters of DeFi. Currently, DeFi is aimed at cryptocurrency insiders. These people have been in this industry for some time and have enough funds to experiment with new assets. In the long run, as the etheric Square gas costs decline, more people will use DeFi.

In addition, Gogel pointed out that the United States, China, Russia and some Western European countries with high cryptocurrency adoption rates are the main growth markets for DeFi.

The story of two ecosystems

The combination of Chainalysis’s adoption data and David Gogel’s description of the DeFi growth market clarifies the difference between the DeFi ecosystem and the larger cryptocurrency ecosystem.

At the grassroots level, emerging markets are promoting the adoption of cryptocurrencies. Users in these areas are turning to asset classes out of necessity, either to keep their savings when the currency depreciates, or to make remittances that they could not send. On the other hand, the adoption of DeFi is mainly supported by experienced cryptocurrency traders and investors who are looking for new sources of alpha in innovative platforms. At the geographic level, this is why we are seeing more adoption of cryptocurrencies in high-income countries with mature cryptocurrency user bases.

The question in the next few years is whether we will see DeFi follow the model of previous cryptocurrency services, and the wider population will adopt it for tangible benefits other than speculation and investment.


Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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