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DeFi Pushes North America to Become World’s Second-Biggest Crypto Market

DeFi Pushes North America to Become World’s Second-Biggest Crypto Market


Growth in decentralized finance (DeFi) has driven North America to become the world’s second-biggest largest crypto market, new research by crypto intelligence firm Chainalysis said.

  • North American addresses received $750 billion in crypto between July 2020 and June 2021, or 18.4% of global transactions. Central, Northern and Western Europe received $1 trillion during that time period, accounting for 25% of global volume, Chainalysis’ “2021 Geography of Cryptocurrency Report” found.
  • Monthly transaction volume in North America grew by over 1,000% between July 2020 and this past May, from $14.4 billion to $164 billion.
  • Chainalysis attributed the growth to DeFi, which represented 37% of total transactions in North America between July 2020 and this past June. The region’s top exchange during that time period was decentralized trading platform Uniswap, followed by centralized exchange Coinbase and decentralized dYdX.
  • The U.S., the region’s largest market, topped Chainalysis’ DeFi Adoption Index, which measures “grassroots adoption” of DeFi.
  • Both North America and East Asia saw a slight dip in total transaction volume in May. The decline in activity in East Asia is likely explained by Beijing’s crackdown on crypto, which started with a State Council proclamation in May. China has historically been the world’s biggest bitcoin mining country and a major hub for crypto trading.

East Asia has long lost its edge

East Asia’s share of global crypto transaction volume started dropping in April 2020, long before this year’s crackdown on the industry by Chinese authorities, research by Chainalysis shows.

  • Starting April 2019, East Asia accounted for the lion’s share of crypto transactions globally, until June 2020, when it was overtaken by Central, Northern and Western Europe, as well as by North America, the report said.
  • China accounted for 47% of these transactions between July 2020 and June of this year, Chainalysis economist Ethan McMahon told CoinDesk in an email interview.
  • When asked about the drop in East Asia’s share of global crypto transactions in April 2020, McMahon said that “China has been moving towards an outright crypto ban in favor of its own solutions” for a while, adding that China started testing its own central bank digital currency that month.
  • From July 2020 to June 2021, East Asian countries also fell several places in the Chainalysis Global Crypto Adoption Index; China fell from fourth place to 13th, South Korea from 17th to 40th, Hong Kong from 23rd to 39th and Japan from 71st to 80th.
  • DeFi is also gaining ground in East Asia. Huobi is the region’s most popular exchange, according to the research, followed by decentralized exchanges dYdX and Uniswap.
  • Hong Kong is the region’s top DeFi adopter, where it accounts for 55% of transactions, followed by China at 49%, Japan at 32% and South Korea at 15%.

Mining

Since China’s State Council called for a crackdown on crypto mining in May, China’s miners have been moving their facilities overseas, primarily to North America, Central Asia and South America.

  • Between May and June, Binance saw the biggest decline in bitcoin received from mining pools, over $200 million, Chainalysis said. Huobi saw the second-biggest net decline, at just over $150 million, followed by FTX at around $100 million.
  • This lost liquidity might also account for the overall decline in activity in the region after May, said the intelligence firm.
  • North America’s share of the global mining hashrate more than doubled between the end of April and August, research from the Cambridge Center for Alternative Finance shows. By August, China’s hashrate had virtually dropped to zero, according to the center.
  • For mining pools not based in China, proceeds have more than doubled between January and July 2021, Chainalysis said. Those based in China saw their earnings decline by 50%, according to the report.



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