You've heard of DeFi but never tried it? CoinGecko analysis: Lack of incentives is the biggest issue

According to market research conducted by CoinGecko, a cryptocurrency market data platform, the majority of cryptocurrency investors have heard of DeFi and prominent projects in the field. However, the conversion rate between brand awareness and actual usage is not ideal, indicating that the sector is still in its early stages with much hype but limited adoption.

Decentralized Finance Well Known to All

The development of the Decentralized Finance (DeFi) sector has been growing steadily in recent years, with the total value of smart contracts reaching the $1 billion mark as of March 2020. To gain a clearer understanding of the user composition, structure, and current trends in the DeFi ecosystem, the cryptocurrency market data platform CoinGecko conducted a survey of 694 respondents. The survey results indicate that the majority of cryptocurrency investors have heard of DeFi and well-known projects in the field, with only 11% of respondents stating that they have never heard of DeFi.

High Brand Awareness in Decentralized Exchange Category

Furthermore, CoinGecko further examined the awareness of various DeFi projects among the 694 respondents.

Among these, cryptocurrency wallets are also classified as one of the categories in the DeFi sector, so it is not surprising that the cryptocurrency wallet Metamask received the most votes. Following closely are decentralized exchange projects such as Kyber, Uniswap, and Bancor. Among them, Kyber has the highest user awareness, accounting for 57% of all respondents. Uniswap and Bancor follow closely at 44% and 43% respectively. Given that the actual usage of Uniswap is not inferior to Kyber, the difference in awareness may come from the investment potential difference where Kyber has a token while Uniswap does not.

Additionally, according to data provided by CoinGecko, while nearly half of the people have some level of awareness of projects in the decentralized exchange category, the conversion of brand awareness into actual usage is not prominent. Even Kyber, ranked first in this category, has a usage rate of only 24%.

Poor Performance of Lending Platforms

The usage of decentralized lending platforms is the lowest among all categories. Although Maker's popularity is second only to Kyber, the actual usage rate is only 12%. For other category projects, besides low general awareness, the actual usage rate is also very low.

Insufficient User Incentives Is the Main Reason

CoinGecko points out that one possible reason for the high brand awareness but low usage rate is that the protocols do not provide strong incentives for users to use them.

In the past, one of the reasons why DeFi was able to grow rapidly in the market was that high lending rates provided sufficient incentive for users. However, this year, the DeFi sector has experienced many unexpected events. Including issues with Maker's stablecoin Dai after the market crash on March 12, the overall lending rates in the DeFi market have not been as high as before. Coupled with hacking incidents such as bZx and Lendf.Me, where returns do not correspond to the risks, most users have lost interest in DeFi.