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North-America: DeFi Outpacing Centralized Exchanges

A new report indicates that Decentralized Finance (DeFi) is now outpacing Centralized Finance (CeFi) in the volume of transactions processed in the North-American region, a report has said.

A report released by Chainalysis stated that DeFi protocols now have a higher amount of daily trading volumes than centralized exchanges in North America. In order of decreasing volumes, Uniswap protocols came first, closely followed by Coinbase, a centralized exchange. This is the first time that DeFi is outperforming CeFi in the volume of transactions recorded within a given time.

The report states that top DeFi exchange, Uniswap, handled a little over $100 billion worth of transactions over the period that the report covers, while Coinbase handled far less than that amount. Other DeFi protocols operating on Binane and Kraken also recorded some significant increases in transaction volumes over that period.

Why is DeFi Transaction Volume Exploding?

The world has seen an increase in the adoption of cryptocurrencies in recent months. El Salvador became the first country to adopt Bitcoin as an official legal tender in August 2021. Although calls for close monitoring and regulation have increased in recent months, the adoption of cryptocurrencies is not slowing. More people are turning to DeFi protocols as a measure to guard against government ban. For example, crypto traders in China are turning towards DeFi and NFTs to explore blockchain following China’s total ban on cryptocurrencies and crypto-related financial activities.

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Chainalysis report indicates the same idea is playing out in North America, except that no government has banned cryptocurrencies there. The report suggests that traders are now ditching centralized exchanges to engage DeFi protocols, prompting an explosive growth of DeFi.

The report, which covers 12 months, goes as far back as July 2020 and describes the “Geography of Cryptocurrency”, states that crypto transactions increased by 1138% within 12 months; growing from $14.4 billion to $164 billion. DeFi, Chainalysis reports, accounted for more and more of the total transaction volume, dwarfing the volume of transactions carried out on centralized exchanges. The report went further to state that the volume of DeFi transactions in North America was second only to the volume in Europe.

The massive adoption of DeFi protocols can be linked to the safe choice of crypto transactions that DeFi offers, something that centralized exchange Coinbase has had issues in recent months. Recall that the SEC and Coinbase were engaged in a back-and-forth following Coinbase’s decision to launch its USDC lending program. The SEC kicked and Coinbase canceled the project.

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While the massive adoption of DeFi protocols in North America is a welcome development, there are concerns that regulations could stifle its growth. With calls for crypto regulation increasing by the day, the SEC chairperson, Gary Gensler, has informally invited DeFi project teams to “come to talk with the SEC”.

The adoption of DeFi in South America and Asia is also expected to increase soon as more traders turn to the increasing number of DeFi projects to earn some income.

Shelly Melancon (Switzerland)

Shelly is a cryptocurrency enthusiast from Switzerland, she bought her first crypto in 2015 when it was way less popular then it is today and since 2017 she has been writing about cryptocurrency for online news portals. Shelly is the newest addition to the Tokenhell team, she writes mostly news and reviews related articles , stay tuned to her posts to stay up to date with the crypto world.

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