Are emerging markets missing out on DeFi due to gas fees

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    By Amee Mehta
    Apr 26th, 2021
    Despite grand dreams of Decentralized Finance allowing farmers in Vietnam access to global finance, emerging markets may only account for 10% of visitors to the top DeFi DApps. Proponents have long anticipated that crypto and DeFi will provide people all over the world with a way to overcome the obstacles posed by economic underdevelopment. Still, evidence suggests that consumers from the world's biggest economies control the DeFi rankings in terms of internet traffic. The Defiant has released a recent study that looks at the top five regional traffic sources for the ten main DeFi networks in terms of total value. With data from domain traffic aggregator SimilarWeb, it was locked in February. According to the report, US traffic controls eight of the ten largest DApps by TVL, accounting for between 10% and 27% of traffic on MakerDAO, Compound, Aave, SushiSwap, Uniswap, Synthetic, Bancor, and BadgerDAO, respectively. The United States also ranks second behind China in terms of traffic to Curve, and fourth in terms of traffic to Balancer, behind Russia, Ukraine, and China. For five DApps, the United Kingdom is the second-largest source of traffic. Despite the World Bank's estimate of 1.7 billion people without a bank account and the SME Finance Forum's estimate of a $5 trillion funding deficit for small to medium-sized firms in emerging economies, the data shows that people are not turning to DeFi to solve these problems for the time being. The skyrocketing fees associated with using the Ethereum main net after the Q3 2020 DeFi bubble may be one explanation for the apparent disparity between DeFi adoption in emerging and developed markets. Only 39 nations, according to the demographics website World Data, have people earning more than $33.33 a day. The possibility of spending more than an entire day's pay on only the fees associated with trying a DeFi protocol is likely a big obstacle to many people living in developing markets from pursuing the sector, with gas fees associated with common DeFi DApps routinely exceeding $50 and complicated protocols recently citing gas fees exceeding $1,000. Emerging markets account for most traffic to Venus, the top DeFi protocol based on Binance Smart Chain, which has considerably lower fees than Ethereum. Argentina is Venus' top traffic source, accounting for 9% of all visits, followed by China, Turkey, Thailand, and Peru. Though DeFi adoption continues to be slow in emerging markets, data from UsefulTulips indicates that, aside from the United States, emerging markets account for most peer-to-peer Bitcoin trading volumes, indicating that crypto is being used for payments in countries with poor financial institutions.