UN: Which country loves playing DeFi the most, is Taiwan on the list?

So far in 2020, the cryptocurrency investment market has been dominated by DeFi. We have experienced various trends in the past, including ICOs, STOs, IEOs, Dapps, and now the DeFi liquidity mining craze. The world of cryptocurrency investment is constantly evolving. While each model brings its own innovations, it is believed that most participants are primarily driven by speculative profits. However, the pursuit of high profits in the current landscape requires a higher level of knowledge.

To engage in DeFi, whether it is through lending (including liquidity mining), token trading, buying and selling derivatives, etc., one must be adept at using cryptocurrency wallets (such as MetaMask) and factor in the rising gas fees on the Ethereum network (fees required for transactions). Every action taken in DeFi requires careful consideration of costs. With various platforms offering complex interest rate mechanisms, users must do their homework beforehand as some mechanisms pose significant risks of losses. For the average investor, it is not easy to get started.

While there are fixed-rate products with simple operations, without a thorough understanding of the platform, it is challenging for general investors to trust and invest in such products. So, who exactly is playing in DeFi? Where are they playing? Some basic investigations have been conducted:

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Research Method

We used the popular data website DeFi Pulse as the basis for our analysis, focusing on the lending, decentralized exchanges (DEX), and derivatives categories listed on the site, with statistics covering the period from January to July 2020. Additionally, due to potential inaccuracies in traffic statistics from Chinese websites, this factor was not taken into account in this study.

(Note 1: Some platforms are relatively new, hence the adjustment in the statistical period)

(Note 2: DeFi Pulse ranks platforms based on the amount of collateral assets)

Lending Platforms: U.S. Leads, Taiwan Prefers Compound

We selected five platforms, and the website traffic ranking in order is Compound, Maker, Aave, dydx, and Instadapp.

Although Maker has the highest amount of collateral assets (digital assets deposited by users), reaching $1.2 billion by the end of July, Compound with $690 million in collateral assets had the highest website traffic over the 7-month period, notably surpassing Maker since May when the platform launched liquidity mining. Additionally, despite Instadapp having higher collateral assets than dydx ($260 million vs. $40 million), dydx had more visits.

The United States has the highest usage of lending platforms, with 23.62% of traffic coming from the U.S., followed by China and the UK. Starting from the fourth position are France, Germany, Canada, Argentina, Mauritius, Spain, and Denmark. Taiwan ranks fifteenth, one of the three Asian countries in the top fifteen (along with China and India), with Compound being the most used, accounting for 40% of all samples' traffic.

Interestingly, in the seventh position, Argentina shows a different pattern, with Maker accounting for 40% of usage. This may be due to the country's high inflation situation, leading to active engagement in stablecoins rather than speculative purposes.

DEX: Uniswap Dominates, Taiwan Favors...

In the decentralized exchange (DEX) category, we examined six platforms: Balancer, Curve Finance, Uniswap, Kyber, Bancor, and Loopring. Since Balancer and Curve Finance started providing data in March, statistics cover the period from March to July. (Note: According to Etherscan data, the top three exchanges in the last 30 days are IDEX, Uniswap, and Kyber).

Uniswap leads in website traffic, with 1.7 million visits over five months, followed by Kyber with 600,000, Curve with 411,000, Loopring with 384,000, Balancer with 382,000, and Bancor with 368,000.

In the DEX category, the U.S. and China rank first and second, but their traffic distribution is relatively even. The U.S. prefers Uniswap, while over half of China's users opt for the domestic company Loopring. Germany ranks third, followed by the UK, France, Poland, Canada, Italy, the Netherlands, and Thailand. Taiwan ranks sixteenth, with Curve being the most used, accounting for 42.3% of Taiwan's traffic, followed by Balancer at nearly 30%, and Uniswap surprisingly in third place despite not being the most frequently used.

InsuranceGains Attention,Derivatives: Taiwan Ranks Ninth

Derivatives platforms serve a more diverse purpose, with samples including Synthetix for synthetic asset trading, Nexus Mutual for community-shared insurance, MCDEX for perpetual contracts, Erasure for prediction markets, and Opyn for Ethereum put options. Synthetix stands out with significantly higher traffic overall, offering services including lending and options. Notably, Nexus Mutual saw a significant increase in traffic from June to July, indicating growing concern about DeFi risks.

Unsurprisingly, the U.S. and China lead, with Mexico showing considerable interest in Synthetix. Particularly, China has a higher proportion of traffic on the Ethereum put options platform Opyn, while Synthetix, Nexus Mutual, and MCDEX have similar levels. However, Nexus Mutual actually prohibits registration for Chinese users. Taiwan ranks ninth in traffic for derivatives, with 80% attributed to Synthetix, the highest ranking in any DeFi category for Taiwan.

DeFi Attention Rising, but Centralized Exchanges Still Dominate

Looking at the traffic across the three DeFi categories, there has been significant growth this year in various areas. Although Compound is primarily for lending, its traffic closely rivals that of Uniswap, a platform focused on trading. Overall, there remains a considerable gap compared to centralized exchanges.

In terms of user experience, centralized platforms are still more user-friendly for the majority. More centralized exchanges are rapidly adding DeFi tokens for trading. With the surge in Ethereum gas prices, currently, most DeFi platform users are whales, reducing the incentive for the general public to visit decentralized platforms.

Concerns have been raised about the regulatory aspects of DeFi, as the volume of transactions continues to grow and retains a high degree of anonymity. In the future, DeFi will inevitably face increased scrutiny in anti-money laundering regulations. Additionally, the high interest rates in the DeFi lending market rely heavily on bullish trading activities; if a bear market ensues, the attractive rates generated by DeFi may subside, affecting the overall activity in other applications.