Market Analysis

Institutional investors dominated the DeFi scene in Q2: Chainalysis report

Big-money players accounted for the majority of transactions in the decentralized finance crypto market in Q2 2021.

The decentralized finance (DeFi) market appears to no longer be the domain of retail actors alone as the institutional investment footprint in the crypto market segment continues to attain more significant levels.

According to blockchain intelligence firm Chainalysis, institutional investors played a major role in De adoption in Q2 2021.

In its soon-to-be-released “Global DeFi Adoption Index” report, Chainalysis stated:

“Large institutional transactions, meaning those above $10 million in USD, accounted for over 60% of DeFi transactions in Q2 2021, compared to under 50% for all cryptocurrency transactions.”

Indeed, DeFi has become a major draw for big-money players in recent times, with banks and financial institutions beginning to commit funds to the crypto market segment.

The trend likely signifies a diversification of interest from offering Bitcoin-related investment products with large-cap investors looking to tap into the expanding DeFi scene.

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The preview report by Chainalysis also showed a widening dichotomy in the adoption metrics for DeFi and the broader crypto market. While emerging markets continue to show greater adoption of legacy crypto assets like Bitcoin (BTC), DeFi activity is reportedly being driven by institutional players in major economies.

Related: DeFi literacy: Universities embrace decentralized finance education

Meanwhile, regulators are increasingly focusing on the DeFi market, with the United States Securities and Exchange Commission recently launching an investigation into Uniswap — the largest decentralized exchange in the ecosystem.

Stricter monitoring protocols targeted at the DeFi market have been a major talking point for regulators in major economies. Back in August, SEC Chairman Gary Gensler identified DeFi as being among seven crypto-related policy issues for the commission.

Gensler has also previously argued against the decentralized nature of DeFi protocols, stating that many platforms are “highly centralized” and will require licensing from the authorities.

The DeFi market’s surge since July has been somewhat punctuated by the recent price declines, with the market’s nominal total value locked slipping below the $100-billion mark.

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