Europe Becomes The World’s Biggest Crypto Economy, Thanks To DeFi

According to a recent Chainalysis report, Central, Northern, and Western Europe (CNWE) have become the biggest crypto economy in the world. Over the last year, the region has received over $1 trillion worth of cryptocurrency, and this amount represents 25% of all global activity. CNWE ranked second in last year’s survey. However, the tremendous growth that started in July 2020 pushed Europe to the top this year.

Although retail activity also increased, institutional investments drove most of the transactions, with 50% going to DeFi.

DeFi Drives Europe Crypto Growth

CNWE experienced major growth in transaction volume across all cryptocurrencies and service types, but especially on DeFi protocols. According to Chainalysis, the growth was majorly a result of an influx of institutional investment, signaled by large transactions. From July 2020, there was an increase in transfers above $10 million worth of crypto.

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The value of institutional crypto transactions grew from $1.4 billion in July 2020 to $46.3 billion in June 2021. Between this period, the United Kingdom had the largest crypto transactions value in Europe at $170 billion. Of this amount, DeFi protocols received 49%. Chainalysis senior content marketing manager Henry Updegrave commented on this growth. “The U.K.’s growth is driven mostly by growing institutional investment, based on the large-sized transfers driving most of its transaction volume,” he told Cointelegraph.

France, Germany, the Netherlands, and Switzerland are also among the top five countries.

Chainalysis’ data revealed that over the last 12 months, the bulk of large institutional-sized transfers went to DeFi platforms. Most of those large institutional transfers were made in Ethereum and wrapped Ethereum (wETH). wETH is an ERC-20 token of equivalent value to Ethereum commonly used in DeFi protocols.

“DeFi protocols represent three to four of the top five services in most months, with Uniswap, Instadapp, and dydx making frequent appearances. Binance and Coinbase, meanwhile, remain the most popular centralized exchanges.” the researchers explained

Decentralized Finance has grown into a multi-billion dollar industry. The popularity of the DeFi market is quite visible from the institutional trends in Europe, and a similar trend can be seen in the U.S. as well.

Currencies Traded In European Countries

Among the countries in Europe, the U.K. led by a wide margin, followed by France and Germany.

Combined, Ethereum and wETH are the most popular cryptocurrency in almost every country. Bitcoin makes up 27% of the U.K.’s transaction value while Ethereum and wETH make up 40%. In Germany, Bitcoin makes up 28% of transaction volume while Ethereum and wETH make up 36%. France, however, devotes just 20% of transaction volume to Bitcoin and 45% to Ethereum and wETH.

Total crypto market cap at $1.84 Trillion | Source: Crypto Total Market Cap from TradingView.com

Stablecoin usage is consistently between 25% and 30% of all transaction volume for most countries. However, for outliers like Monaco, stablecoins represent 39% of all crypto activity. Altcoin usage is also steady at 8% to 11% for most regions.

Featured image from PYMNTS.com, Chart from TradingView.com