18.10.2021

Europe has become a leader in investment in the field of decentralized finance

Investors from the regions of Central, Northern and Eastern Europe have shown very noticeable activity in the cryptosphere over the past year, thanks to the growing popularity and volume of decentralized finance.

Experts from the analytical platform Chainalysis recently conducted a study of trends in financial flows of European market players, categorizing them under the CNWE acronym according to their region. As a result, they shared their conclusions on the situation. Let’s talk about them in more detail.

Recall that the decentralized finance industry is a variety of blockchain-based smart contracts. In fact, they are financial platforms that allow you to receive loans, lend money or earn on an analogue of deposits in the form of cryptocurrencies.

The key difference between such sites is the absence of intermediaries, whose role in the modern world is played by banks and payment systems. Accordingly, anyone can take advantage of this system. And this person will definitely not be faced with unequal treatment or anything like that.

What are the professionals investing in?

According to Decrypt, CNWE transaction volumes have reached a trillion dollars in the last 12 months, which is equal to a quarter of all cryptocurrency transfers in the world over the same period. Here is a comment from Chainalysis representatives on this matter.

Last year, CNWE ranked second in terms of transaction volume, but since July 2020, the activity of local investors has begun to grow rapidly amid a decrease in the number of crypto transactions in East Asia.

That is, in essence, the analysts made it clear that European investors had, as it were, intercepted the initiative in terms of the intensity of investment. Moreover, the money in this case was directed precisely to the promising industry of decentralized finance.

Recall that a noticeable increase in hype around the sphere of decentralized finance was observed in the summer of 2020 and in the last quarter of this year. Moreover, after a couple of months, the prices of many DeFi protocol tokens reached their all-time highs with significant profitability for investors. Here is a comment by analysts on this matter.

The volume of transactions in CNWE has grown significantly for almost all cryptocurrencies and cryptocurrency services, but especially for DeFi protocols. The influx of institutional investment, as evidenced by large deals, stimulated the growth of the sector, while activity among individual investors also did not slow down.

The aggregate value of large “institutional-grade” transactions – that is, transfers of $ 10 million or more – rose from $ 1.4 billion in July 2020 to $ 46.3 billion in June 2021, accounting for more than 50 percent of all activity from the aforementioned European regions.

Ranking of countries by volume of crypto transactions

Note that the presence of large players is also noticeable in the Bitcoin network. As the analysts of Glassnode found out the day before, the size of the average transfer to BTC exceeded a million dollars. At the same time, in the summer – during the market correction – this indicator was approximately four times lower.

Average transaction size in the Bitcoin network

The experts continue.

For most of the term, DeFi sites occupied 3-4 places in the ranking of the most popular platforms. Here we are talking about services such as Uniswap, Instadapp and dYdX. That being said, Binance and Coinbase remain the most popular centralized exchanges. In the European region, the UK leads in the volume of crypto transactions at $ 170 billion, with 49 percent of this figure going to the DeFi protocols.

Another notable crypto investment event recently took place in Switzerland. Swiss financial regulator FINMA has approved the official launch of a cryptocurrency index fund by Crypto Finance. FINMA noted that the fund will only be available to qualified investors who invest mainly in cryptocurrencies or digital assets “based on blockchain technology.”

The Crypto Market Index Fund can only invest in leading cryptocurrencies with a “sufficiently large trading volume . ” According to Crypto Finance, the fund will track the performance of Crypto Market Index 10, a product administered by the local SIX Swiss Exchange.

We believe that the decentralized finance industry will continue to grow and attract new investors. Of course, while Bitcoin remains a key investment due to its authority and role as a pioneer, however, the functionality of the network of this cryptocurrency is seriously limited against the background of its modern counterparts. Therefore, in the future, the focus of capital owners will probably shift to Ethereum, Solana, Avalanche and other similar projects.

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