Gas fees, a hindrance to decentralized finance adoption

Proponents have been expecting that cryptocurrency and decentralized finance would allow people around the globe to find a way around the hurdles caused by economic underdevelopment. However, research shows that users from the largest economies around the world lead the decentralized finance rankings by online traffic.

Based on analysis from “The Defiant”, the US traffic leads eight of the ten largest decentralized applications by TVL and also falls behind only China for traffic visiting curve. The country also sits in the fourth position on balancer with China, Russia and Ukraine ahead. The UK also happens to be the second-largest source of traffic for 5 decentralized apps.

Read also: The Decentralized Internet (Web 3.0) and Blockchain Technology

Despite the world bank stating that there are about 1.7 Billion people that don’t have a bank account, and the SME finance forum stating a $5 trillion financing gap for SMEs, in developing markets, the statistics indicates that people are not adopting defi as a solution to these issues.

The major reason for the obvious difference between the adoption of Defi in new markets and already established markets could come down to the increased fees of the ethereum mainnet. With the gas fees of the common Defi decentralized applications exceeding $500 and complex protocols requiring over $1K as gas fees, it is most likely the using of over a whole day pay on only the associated fees with trying a defi protocol becomes a key hindrance to a lot of people from exploring the emerging markets.

Although the adoption of Defi seems to be slow in developing markets, data indicates that aside from the USA, new and developing markets lead the P2P BTC trade volumes. This suggests that cryptocurrency is being utilized as a means of payment in countries with weak financial institutions.

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