Everyone is well aware of how high cryptocurrency prices have risen, but what’s even more impressive is the massive growth in the volume of DeFi transactions since last year.
Latest Numbers Show Unprecedented Surge in Crypto Market Volume
Chainalysis is a prominent analytics firm that provides essential data and insight into global cryptocurrency trends. They’ve just released their report on the Geography of Cryptocurrency for 2021, the latest version of an annual publication that profiles industry trends.
Among the most significant of their findings is that monthly crypto transactions are up over 1,000% compared to last year by volume. While there was a slight dip in transactions during June 2021, the numbers still far outpaced the previous year’s.
At the very height of the reported period was May 2021, following Bitcoin’s all-time high price of $64,863 in April. In May alone, there were $164 billion in North American crypto transactions, compared to less than $10 billion the preceding May.
DeFi Leads the Way for Crypto Market Growth
While there has been marked growth across all areas of cryptocurrencies, the report showed that the most significant growth has been in decentralized finance (DeFi) applications. Over the course of July 2020 to June 2021, North American residents sent over $276 billion in Bitcoin and other cryptocurrencies to DeFi platforms and services, making up over a third of all transfers.
One significant way that the North American crypto market has differentiated itself is the prevalence of retail investors. Most of these DeFi transactions are being carried out by regular people, with the bulk of transactions carrying values of less than $10,000.
This is a stark contrast to the European market, which is now the world’s largest after new regulations shut down all crypto activity in China. There, the majority of market volume is dominated by whales, institutional investors for whom individual transactions are valued in millions, not thousands. These massive investors are also moving more of their money towards DeFi platforms.
The market, in general, is still reeling from the impact of recent developments in China, with many firms still in the process of re-establishing themselves abroad. We’re also just now seeing Bitcoin climb back towards its previous all-time high after a significant drop in value in May 2021.
Many new blockchain firms and developers are working towards introducing new products and solutions today, spurred on by the rapid growth of the market. With an increase in innovative new DeFi platforms and applications, one can only expect this kind of growth to continue.
Both Established and New DeFi Applications Growing at a Rapid Pace
Among North American investors, Uniswap has become the dominant DeFi platform. The extensive decentralized ecosystem allows for the free exchange of cryptocurrencies and tokens. Not only is it believed to be the largest decentralized exchange in the world, but it’s also the fourth-largest exchange of any kind by daily trading volume.
North Americans transferred over $100 billion in assets to the Uniswap platform between July 2020 and June 2021. However, Uniswap is for from the only DeFi platform seeing wide use by North American investors. Options like Chainlink, DAI, 0x, and Maker are all thriving as well and making up a sizeable portion of DeFi growth.
Chainlink, in particular, has shown marked growth, with its innovative technology allowing for layered smart contract interactions between blockchains. As one of the earliest DeFi platforms, its been steadily advancing for years. The price of their token (LINK) has also shown a massive rise in value over the course of 2020-2021. It should be noted that DeFi platforms are unrelated in any way to fraudulent cryptcurrency trading systems like the Bitcoin Prime software.
While the bulk of DeFi activity has been in exchanges, that’s far from the only application of the technology. The most notable new development has been the rise of non-fungible tokens (NFTs). These unique digital collectibles are implementing DeFi tokens to validate ownership of digital artwork. While this use still pales in comparison to DeFi exchanges, the sudden appearance and explosion of NFTs show just how quickly trends can shift.
The Continued Growth of DeFi
When it comes to the use of cryptocurrencies, many people still rely on some link to centralized finance systems. As DeFi exchanges and other applications continue to grow, they’re establishing a foundation for a fully decentralized marketplace. With both governments and institutions around the world rushing to implement their own DeFi products, it’s clear that this new way of handling finance is here to stay.
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