The adoption of Decentralized Finance (DeFi) is growing faster and faster around the world. A new report from Chainalysis has now shown in which regions DeFi is particularly popular.
Ethereum’s (ETH) EIP-1559 has now been online for 24 days and to date the upgrade has already burned through over 100,000 ETH (just under $320 million). The Non-fungible Token (NFT) space in particular, but also DeFi, have been major contributors. As a result, the growth of DeFi on Ethereum is causing the number of new Ether to drop on a daily basis.
Despite this fundamentally positive news for Ethereum, the DeFi sector suffered a slight setback this week. Total Value Locked (TVL) fell by several billion US dollars in the last few days. However, it is still currently near its all-time high of just under $88 billion.
In addition, Solana’s DeFi Space and Avalanche made headlines this week. Avalanche announced a $180 million liquditiy mining program and on Solana, the data oracle Pyth Network launched. In addition, Circle, the publisher of USDC, a stablecoin widely used in DeFi space, announced positive news.
USDC, the safest stablecoin in the world?
Effective immediately, the stablecoin USDC, which is widely used in Decentralized Finance, will only be backed by US dollars and US government bonds with short maturities. Previously, USDC was backed by a mix of government and corporate bonds.
Circle’s decision to back the world’s lowest-risk financial instruments in the financial world marks an abrupt change in direction. As recently as early May, the company had expanded its pool beyond U.S. dollars to include unsecured corporate bonds and commercial paper (bonds with very short maturities). According to a report released in July, these bonds were responsible for nearly 14 percent of its reserves.
<img src=”//www.w3.org/2000/svg’%20viewBox=’0%200%20541%20292’%3E%3C/svg%3E” alt=’Circle Debt’ height=”292″ width=”541″ data-src=”https://yellowrocketagency.com/wp-content/uploads/2021/08/Screen-Shot-2021-08-23-at-7.04.02-PM.png” />Source: Circle.com, Reserve Account Report May 2021 Still
, the change in direction comes as little surprise, as Circle
later this year. In addition, the company plans to become a national commercial bank. Both moves will therefore lead the FED and other regulators to scrutinize USDC far more closely in the near future.
DeFi Adoption Index
Chainalysis released a report this week on the global adoption of decentralized finance. In this report, Chainalysis ranks various countries specifically on DeFi adoption, focusing on grassroots adoption by individuals. In doing so, the analytics firm’s data showed that DeFi adoption is highest in high-income countries. Adoption is particularly high among institutional investors and professional traders.
Chainalysis’ chart shows that countries that have also seen increased trading volumes in the past lead the DeFi adoption index. In addition, the crypto analytics firm’s report shows that these countries also have significantly higher
monthly website views than other countries.
that this trend is due to the fact that DeFi is primarily run by experienced crypto investors and institutional investors looking for new return opportunities.