The US, Vietnam, China, India and the UK led the way in the first Global DeFi Adoption Index released by blockchain data platform Chainalysis.
Similar to its Crypto Adoption Index, Chainalysis' new index features rankings of countries based on their grassroots DeFi adoption and will include the top 20 nations that have embraced DeFi as well as key players and transactions pushing increased interest in DeFi.
DeFi, or "decentralized finance," has become a hot topic over the last few weeks due to a series of headline-grabbing cyberattacks that led to millions being stolen. But DeFi has gained prominence over the last year and a half as a "class of decentralized cryptocurrency platforms that can run autonomously without the support of a central company, group, or person."
"DeFi platforms, also known as protocols, are built on top of smart contract-enriched blockchains -- primarily the Ethereum network -- and can fulfill specific financial functions determined by the smart contracts' underlying code," Chainalysis said in a statement explaining the rankings.
"Popular types of DeFi protocols include decentralized exchanges and lending platforms. While concerns remain around DeFi's safety and compliance obligations, it represents one of the fastest-growing and most innovative sectors of the cryptocurrency economy. Similar to our Crypto Adoption Index, the DeFi Adoption Index is designed to highlight countries with the highest grassroots adoption by individuals, rather than those sending the largest raw values of funds."
CoinGecko found that the DeFi crypto market cap for Monday was more than $131 billion, with a total trading volume of about $11.3 billion in the last 24 hours.
The inaugural ranking, according to Chainalysis, shows that DeFi is popular in countries that already have high levels of cryptocurrency adoption and usage among traders and investors.
The ranking of 154 countries is based on three different metrics that seek to balance total DeFi activity against activity by wealthier individuals in richer countries.
"We calculate the metric by estimating total cryptocurrency received by DeFi protocols from users in a given country, and weighting the on-chain value based on PPP per capita, which is a measure of the country's wealth per resident," the blockchain company explained. "The higher the ratio of on-chain value received to PPP per capita, the higher the ranking, meaning that if two countries sent equal amounts to DeFi protocols, the country with the lower PPP per capita would rank ahead."
The countries topping the ranking typically have high raw volumes of cryptocurrency value moved like the US, China, Vietnam, the UK and a number of Western European countries. The data put together by Chainalysis shows that DeFi is far more popular among bigger investors due to the size of the transactions that make up a larger share of DeFi activity.
More than 60% of DeFi transactions in Q2 2021 were considered "large institutional transactions" of over $10 million.
"Professional, large retail, and small retail-sized transactions also accounted for a bigger percentage of all cryptocurrency activity compared to DeFi activity in that same time period. We can also see that countries with the historically largest institutional and professional markets are driving the most DeFi activity," Chainalysis found.
"The question for the coming years is whether we'll see DeFi follow the same pattern as the cryptocurrency services that came before it, with wider swaths of the population adopting it for tangible benefits beyond speculation and investment."