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Are emerging markets missing out on DeFi due to gas fees?

  • Posted On - 2021-03-25 06:37:22

Developed economies are dominating the traffic rankings for the top DeFi by TVL, with the U.S. and U.K. topping the charts.

Despite the grand visions of enabling farmers in Vietnam access to the world of global finance via DeFi, emerging markets could indicate as only ten percent of visitors interacting with the top DeFi DApps.

Promoters have long hoped crypto and DeFi would allow users around the world a means to circumvent the barriers created by economic underdevelopment, however the data suggest users from the world’s biggest economies dominate the DeFi rankings by internet traffic.

A report from The Defiant shows the top five physical sources of traffic for the 10 largest DeFi platforms by Total Value Locked in February, with the data provided by web traffic aggregator SimilarWeb.

Report examines that U.S. traffic dominates 8 of the 10 biggest DApps by TVL, representing between approx. 10% and 27% of audience on MakerDAO, Compound, Aave, SushiSwap, Uniswap, Synthetic, Bancor, and BadgerDAO respectively.

The U.S is on second position after China for traffic visiting, and on fourth position Balancer after Russia, Ukraine, and China. The U.K. is the 2nd biggest source of traffic for these five DApps.

There are a total of 1.7 B  people without a bank account, World Bank estimates that and the SME Finance Forum noting a $5 trillion financing gap for small to medium-sized businesses in emerging economies, the data indicates that for currently, the public are not turning to DeFi to get these problems solved.

Skyrocketing gas fees associated with using the Ethereum mainnet since the Q3 2020 DeFi bubble. This may be One reason for this notable imbalance between developed markets and DeFi adoption in emerging markets .

As per to demographics website World Data, there are roughly 39 countries in which citizens earn more than $33.33 a day. With the gas fees associated with popular DeFi DApps regularly exceeding $50, and complex protocols recently reporting gas fees exceeding $1,000, it is likely the prospect of spending more than an whole day’s pay on just the fees associated with trying a DeFi protocol are a major deterrence to many people living in emerging markets from exploring the sector.

Emerging markets dominate traffic visiting Venus, the top DeFi protocol built on Binance Smart Chain — which offers significantly reduced fees when compared to Ethereum. Venus’ top source of traffic is Argentina with 9%, followed by China, Turkey, Thailand, and Peru.

While  in emerging markets DeFi adoption performs slow, data from UsefulTulips shows that aside from the U.S, emerging markets dominate peer-to-pee Bitcoin trade volumes — suggesting crypto is being adopted for payments in nations with weak financial institutions.