NEW DELHI: DeFi or decentralised finance represents one of the fastest growing and most innovative sectors of the cryptocurrency economy, and India ranks sixth in terms of DeFi adoption, according to the 2021 Global DeFi Adoption Index by blockchain data platform Chainalysis.
US showed the highest DeFi adoption, followed by Vietnam, Thailand, China and the UK.
DeFi refers to a class of decentralised cryptocurrency platforms that can run autonomously without the support of a central company, group, or person.
DeFi platforms are built on top of smart contract-enriched blockchains– primarily the Ethereum network–and can fulfill specific financial functions determined by the smart contracts’ underlying code. Popular types of DeFi protocols include decentralized exchanges and lending platforms.
“India’s dominant position in Defi adoption indicates that crypto investments in India are widespread and deeply rooted in the country’s economy. I think it will be wise to say that in India, most businesses and the crypto community are driving the Defi adoption. There is an urgent need to take Defi to the masses to transform India’s financial system and make it future-ready. When India’s masses start adopting Defi adoption then we will see India at number one position in Defi adoption index,” said Shivam Thakral, CEO, BuyUcoin.
According to the Chainalysis data, 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.
The DeFi Adoption Index is made up of three component metrics: On-chain cryptocurrency value received by DeFi platforms weighted by PPP per capital; total retail value received by DeFi platforms; and individual deposits to DeFi platforms.
The data also showed that large transactions make up a much bigger share of DeFi activity, suggesting that DeFi is disproportionately popular for bigger investors compared to cryptocurrency as a whole. Large institutional transactions, those above $10 million, accounted for over 60% of DeFi transactions in Q2 2021 compared with under 50% for all cryptocurrency transactions, as per Chainalysis.
Earlier, another Chainalysis report had shown that India ranked second in terms of crypto adoption worldwide behind Vietnam, but ahead of countries such as the US, the UK, and China.
Moreover, the report suggested that worldwide adoption of crypto jumped over 880% with P2P platforms driving cryptocurrency usage in emerging markets.
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