Indians are clinging to the cryptocurrency economy. The country with nearly 1.4 billion people doesn’t just have the second-highest level of cryptocurrency adoption globally, it is also among the top 10 countries with the highest adoption of decentralized finance (DeFi) system. According to the 2021 Global DeFi Adoption Index by blockchain data platform Chainalysis, India was ranked sixth in terms of DeFi adoption with the US, Vietnam, Thailand, China, and the UK in the top-five bracket. DeFi essentially involves a financial system, built primarily on top of the Ethereum network, wherein financial products are available on the decentralized blockchain network and open for use by anyone in a peer-to-peer manner instead of accessing the middlemen such as banks or a company to facilitate a transaction. Buying and selling digital assets are among the common DeFi uses cases.
“India’s dominant position in DeFi adoption indicates that crypto investments in India are widespread and deeply rooted in the country’s economy. I think it will be wise to say that mostly businesses and the crypto community are driving the DeFi adoption in India. There is an urgent need to take DeFi to the masses to transform India’s financial system and make it future-ready. When India’s masses start adopting DeFi, we will see India at the top in the DeFi adoption index,” Shivam Thakral, CEO, BuyUcoin told Financial Express Online.
The data suggested that while grassroots cryptocurrency adoption generally is highest in emerging markets, DeFi adoption is strongest in high-income countries that already had substantial cryptocurrency usage, especially amongst traders and institutional investors, the index noted.
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According to David Gogel, Growth Lead at decentralized exchange dydx, large-scale traders — individuals operating at a professional level to cryptocurrency hedge funds — have been the biggest adopters of DeFi so far. The index quoted him saying, “It’s people who have been in the industry for a while and have enough funds to experiment with new assets. In the long run as ETH gas prices fall, it’ll become accessible to more people.” Chainalysis had ranked India second after Vietnam in terms of crypto adoption in its 2021 Global Crypto Adoption Index published last week while the worldwide crypto adoption shot up by 880 percent between June 2020 and July 2021.
On Wednesday, former RBI governor Raghuram Rajan had told the Reuters Global Markets Forum that while cryptocurrencies have a “potential future,” particularly well-regulated stablecoins but fundamentals backing their valuations weren’t clear other than a “heady environment,” with easy monetary policy fuelling all asset prices. He noted that cryptos won’t be “your last resort” in a doomsday scenario, Reuters had reported.