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In Q2 2021, big-money players accounted for the vast majority of transactions in the decentralised finance crypto market.
The decentralised finance (DeFi) market looks to no longer be only the domain of retail operators, as institutional investment in the crypto market segment continues to grow.
According to Chainalysis, a blockchain analytics organisation, institutional investors played a significant influence 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 recently been a major lure for big-money players, with banks and financial institutions committing capital to the crypto market segment.
The trend most likely represents a shift away from offering Bitcoin-related financial products and towards large-cap investors eager to participate in the booming DeFi ecosystem.
The Chainalysis preview analysis also indicated a widening discrepancy in DeFi and the broader crypto sector acceptance statistics. While emerging markets continue to show higher adoption of traditional crypto assets such as Bitcoin (BTC), institutional investors in developed economies appear to be driving DeFi activity.
Meanwhile, regulators are increasingly focused on the DeFi market, with the US Securities and Exchange Commission recently opening an investigation into Uniswap, the ecosystem’s largest decentralised exchange.
Stricter monitoring protocols aimed at the DeFi market have been a key source of discussion among regulators in major economies. SEC Chairman Gary Gensler named DeFi as one of seven crypto-related policy challenges for the agency back in August.
Gensler has already argued against the decentralised character of DeFi protocols, claiming that many platforms are “highly centralised” and will necessitate government authorisation.
The DeFi market’s ascent since July has been tempered by recent price reductions, with the market’s nominal total value locked falling below $100 billion.