The DeFi Market is Driven by Professional Users - Report 15

The DeFi Market is Driven by Professional Users – Report

Summary:

  • Retail users make up a vast majority of DeFi users but professionals move the market
  • Fund sent to DeFi platforms from retail users are usually below $10,000
  • Most of the value sent to DeFi platforms comes from transfers above $10k and from professional users
  • 47% of the total value sent to DeFi platforms comes from transfers above $100k
  • Total value locked in DeFi has droped slightly to $11.11 Billion

The growth of DeFi in the third quarter of 2020 kicked off retail and professional interest in Yield farming. According to a recent report by the team at Chainlysis, the majority of the value sent to Defi platforms came from professional users who sent digital assets worth $10,000 and above. On the other hand, retail users made up the vast majority of individuals who sent funds to these DeFi platforms worth below $10k.

The team at Chainalysis further concluded that 47% of the value sent to DeFi platforms was from transfers above $100k. The report from Chainalysis explained the findings as follows.

…data suggests that most individuals sending funds to DeFi platforms are retail users, as the vast majority of transfers are under $10,000 worth of cryptocurrency. However, professionals drive the market, with most of the value sent to DeFi platforms coming in transfers above $10,000, and 47% of the total coming from transfers above $100,000.

Total value locked in DeFi drops to $11.11 Billion

Earlier this week, the DeFi realm was hit by the Harvest Finance hack that resulted in the loss of $24 million in just seven minutes.

This event has been linked with the recent drop of the total value locked in DeFi from around $12.46 Billion to the current level of $11.11 Billion. Another factor affecting the value of funds locked in DeFi, is Ethereum’s declining value in the crypto markets as a result of Bitcoin stealing the show, and investor capital, as BTC attempts to capture $14k. Below is a screenshot from DeFiPulse.com demonstrating the drop in total value locked in DeFi.

The DeFi Market is Driven by Professional Users - Report 16
Source: DeFiPulse.com

Is the DeFi Season Over?

The drop in total value locked in DeFi, as well as Ethereum losing value in the crypto-markets, could lead many to believe that the DeFi season is now over. However, this drop does not seem like a major issue considering the fact that the same total value locked in DeFi, was approximately $1 Billion in early June. This means that the DeFi industry has grown in value by a factor of 11x in approximately five months.

Such growth in such a short time period is a clear indicator that DeFi is just getting started. What might drop, is the amount of returns from Yield Farming as DeFi investors start to pick platforms with properly audited code and a proven track record. DeFi users will begin avoiding riskier platforms as they become more aware of ‘rug pulls’ and the effects of flash loans on such platforms as witnessed with Harvest Finance.