That means they primarily accept Ethereum, as well as ERC-20 tokens. Because of this, DeFi platforms can exist independently of a company or other governing body.Ĭrucially, nearly all DeFi platforms are built on the Ethereum blockchain. Once built, they can run autonomously, executing specific financial functions - trades, loans, or other transactions - automatically when specific conditions are met as defined by the underlying code. DeFi platforms are cryptocurrency services built on top of smart contract-enriched blockchains. Since January 2020, the majority of Ethereum transactions have involved at least one DeFi platform, with the majority of these occurring between two DeFi platforms. Note: This graph reflects only transactions involving services, and not transactions between self-hosted wallets The Ethereum Ecosystem: A currency of innovationĪs a reminder, despite its lower market capitalization and less frequent media coverage, Ethereum had more transaction volume than Bitcoin in Q1 2021. That’s why we see such a high percentage of Bitcoin being held for long periods of time compared to other cryptocurrencies, and so much held by investors whose large transaction sizes suggest they’re at the professional or institutional level. Taken together, the data largely fits the narrative we’ve heard over the last year: Investors, especially those from mainstream financial institutions, have embraced Bitcoin as a long-term investment, with many positioning the asset as a hedge against inflation and other worrisome economic trends. The data shows that institutional investors likely accounted for 69% of all Bitcoin transaction volume during the time period studied, based on the sizes of the individual transactions. We characterize institutional transfers as transfers above $1 million USD, professional transfers as transfers between $10,000 and $1 million, large retail transfers as transfers between $1,000 and $10,000, and small retail transfers as transfers below $1,000. Services, which are simply wallets hosted by services such as exchanges.Traders, which we define as self-hosted wallets that have held less than 75% of all cryptocurrency value ever received.Investors, which we define as self-hosted wallets that have held 75% or more of all cryptocurrency value they’ve ever received. ![]() We separate wallets into three categories: First, we look at the breakdown of the types of wallets holding Bitcoin compared to wallets holding other assets. The data suggests that Bitcoin is primarily held as a long-term investment. The Bitcoin Ecosystem: A long-term investment Below, we’ll analyze each category in greater detail to shed light on how and why people use them. Together, these four categories make up the majority of cryptocurrency transaction volume. ![]() Wrapped Ethereum (wETH): $635 billion (Note: wETH is an ERC-20 token of equivalent value to Ethereum commonly used on DeFi platforms.).Looking across all cryptocurrencies during Q1 2021, the following have the highest transaction volumes:
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