Most people think about the U.S. as the hub for crypto activity. However, DeFi (aka Decentralized Finance) transaction volume is generally larger in Europe compared to North America. This area we are referring to includes Central, Northern & Western Europe. From a macro perspective, DeFi in Europe makes it the world’s largest crypto economy. Below are valuable trends to highlight and interesting metrics to explore from Chainalysis’s 2021 Geography of Cryptocurrency report.
Most of Europe comprises the world’s biggest crypto economy with over $1T in total payment volume over the past year. Compared to the rest of the counties and regions, this encompasses 25% of all crypto activity in the world. North America was a core receiver of cryptocurrency accounting for 34% of the volume sent from Europe. In terms of generating on-chain volume, this puts Europe over North America and China’s transaction percentage share. Although North America only accounted for 18.4% of global transactions, it was equivalent to $750B in volume placing it as the second largest major crypto market. Both Europe and North America followed a similar upward trajectory starting from the prominent activity spike in July 2020 and increasing as time progressed.
Large transactions are a strong indicator of growing a crypto economy. With most transactions being greater than $10M, Europe’s activity grew to over 3200% on DeFi platforms. Similarly, North America’s monthly transaction volume increases by over 1000% in the same time frame from $14.4B to $164B. In North America, 37% of total transactions were in DeFi between July 2020 to June 2021; most activities took place on decentralized trading platforms such as Uniwap/dYdX as well as centralized exchanges such as Coinbase/Binance. As DeFi summer captivated the majority of crypto, it was during the 4th quarter of 2020 that Europe’s crypto transfers passed other transaction forms. Towards the end of 2021, those $10M transactions made up for around 60% of global DeFi volume.
Europe’s high growth in Defi can be connected to the massive influx of institutional investors looking to gain exposure in the space. This is different from North America where around 20% of trading activity stayed mostly at the same level without much of an increase. As many DeFi protocols were emerging, investors were placing bets and deploying funding in various projects. Hot areas in Europe included the United Kingdom, France, and Germany where large institutional transactions were taking place. Through DeFi platforms, the most popular type of cryptocurrency traded was ETH and wETH which made up the bulk of the capital flow. Starting from July 2020, institutional transfers increased from $1.4B to $46.3B almost a year later. As more European investors participate in the DeFi Ecosystem, there has been a greater interest in North America.