A report by on-chain analytics firm, Chainalysis, has revealed that big players or institutional whales were responsible for more transactions in DeFi between April and June. Chainlysis’ report pointed to a shift of focus from Bitcoin-related investments to decentralized finance products.
from late 2020 into the start of 2021, decentralized finance has been a major appeal to retail investors who engaged in numerous activities including staking, liquidity provision, yield farming. However, in recent times, institutional investors have been jostling for space as they aim to get in on the ensuing action. Chainalysis’ report for the second quarter of this year evidences the number of investments the big players made within that period. It answers why the Total Value Locked (TVL) in DeFi shot up to $80 billion as of May.
Big Players Account for 60% of DeFi Transactions Above $10 Million
Essentially, the influx of big-money players played a significant role in bringing the DeFi segment of the crypto ecosystem to its current levels. Chainalysis broke down the data in its report. Transactions above $10 million accounted for more than 60% of DeFi transactions in the second quarter above less than 50% of all crypto transactions.
The emerging market is now a major appeal for banks and financial institutions which have been making significant investments in the last few months. This just points to the rising interest in DeFi from mainstream investors.
Regulators Consider Policies for Decentralized Finance (DeFi)
However, regulators around the world, especially in the US are now beaming their searchlight on decentralized finance. According to the US SEC, decentralized finance needs to be regulated. A week ago, the US regulator launched an investigation into the activities of the largest decentralized exchange in DeFi and on Ethereum, Uniswap.
Stricter measures are being taken to regulate the largely unregulated space otherwise known as the Wild West. In one of his comments on regulations, US SEC head, Gary Gensler highlighted the need for a regulatory sandbox and noted that the DeFi sector is one of the seven focal points concerning regulations for the commission. Gensler has recently argued against the decentralized nature of the DeFi protocols, declaring that most protocols were highly centralized and would require licenses from relevant regulatory agencies.
More of the activities spearheading the growth of DeFi comes from the sale of non-fungible tokens, which have become investment opportunities for several crypto enthusiasts. NFTs have broken out of the Ethereum ecosystem to others like Solana, Ziliqa, Internet Computer Protocol (ICP), and soon enough Cardano with the launch of its Alonzo mainnet just a few days away. The native tokens of these blockchains, especially SOL have ridden on the momentum generated by the NFT hype to create new record highs.