2020 Global DeFi User Survey Report

In July 2020, ARPA team administered a DeFi questionnaire targeting blockchain practitioners, blockchain users, crypto holders, cutting-edge technology enthusiasts, and other blockchain-related users in ARPA communities. The questions in the survey concerned the use of wallets and DApps, the participation of liquidity mining, and the pain points of using DApps in China and abroad.The Chinese version of the questionnaire collected more than 300 valid responses. The English version received more than 400 valid responses.

Preface

2020 is the year when Decentralized Finance (DeFi) becomes a hot topic. It has many applications, including decentralized exchanges, lending platforms, stablecoins and more, and hundreds of DeFi projects have emerged in the market around these application fields.

Questionnaire Background

The majority of the respondents (about 70%) are senior users who have known crypto for two years or more, 23% of the respondents have used crypto for 1–2 years, and 7% of the respondents are new users who have just gotten to know crypto for less than one year. This user survey covered different regions, age groups, occupations, and genders. Therefore, the respondents are representative of user demographics. We analyzed the survey results, which will be used to understand and explore the awareness level, potential needs, and usage preferences of blockchain-related users towards DeFi. Thus, we can better design DeFi products, address the users’ needs, and ultimately facilitate the DeFi industry’s growth.

Executive Summary

  1. Most of the respondents of this survey are senior crypto users, which does not fully represent the behavior of the inexperienced ones. With reference to the number of active addresses of Compound, Uniswap, and Curve, we expect that the current number of DeFi users is around tens of thousands, with a penetration rate of only 1% compared to the 5 million crypto traders worldwide.
  2. The survey shows that the level of DeFi awareness and its extent of being hyped is much higher than users’ actual participation rate. The single most important reason for user participation is to get rewards from liquidity mining, or significant interest income. The total annualised return would need to exceed 15% to be sufficiently attractive for users to use DeFi products.
  3. Liquidity mining is an innovative and effective mechanism to attract seed users through subsidizing financial returns for lending & borrowing.
  4. Although decentralized wallets are very popular among senior users, both Chinese and global, they are mainly used to transfer and save money. The users of various DApps account for only one-third of all respondents. Using DeFi requires proficiency with wallets, a skill with a long user journey and steep learning curve.
  5. Some respondents feel insecure using the DeFi products powered by smart contracts. The slow interaction speed and poor user experience of smart contracts can lead to user loss. Smart contract gas fees are often as high as $10-$20, significantly higher than the average user’s expectation of $2. This creates a situation where only large crypto holders can participate. Ethereum network is in dire need of upgrading to meet the needs of average users.
  6. Currently, DeFi is mainly focused on ERC-20 tokens and has a relatively low asset richness. Especially lacking BTC collaterals that are secure, offer a better user experience, and low in gas fees to support it. The current emergence of WBTC and RenBTC is expected to open new markets.

Specific data

1)Decentralized wallet usage status

Chinese users
Global users

2) The Status Quo of DeFi Awareness and Engagement

The survey data shows that global users are generally more aware of the DeFi concept and more engaged with products. As many as 97% of the respondents have heard of the concept of DeFi, and 78% have purchased DeFi related tokens.

Chinese users
Global users

3) DeFi user demands and learning curve

We asked both Chinese and global users about their expectations of using DeFi products. The survey data shows that both Chinese and global users are sensitive to gas fee for DeFi products. The general expectation of gas fee is not higher than $2 (76% Chinese vs. 65% global).

Chinese users
Global users

4) The Reasons to Use and not to Use DeFi Products

The survey data shows that 74% of the global respondents use DeFi products.

Chinese users
Global users

Our Vision for Open Finance

From a macro perspective, blockchain is a paradigm shift from traditional finance. Blockchain is decentralized in nature, so there are two traits that it will have for the foreseeable future: first, crypto is speculative in nature; second, it is an upgrade for finance. From the perspective of DeFi, the bigger market in the future is in the Central Bank Digital Currency (CBDC). The emergence of official cryptocurrency will bring more and more assets on-chain. At that time, DeFi will become mainstream and enter the public consciousness.

About ARPA

ARPA is a blockchain-based solution for privacy-preserving computation, enabled by Multi-Party Computation (“MPC”). Founded in April 2018, the goal of ARPA is to separate data utility from ownership, and enable data renting. ARPA’s MPC protocol creates ways for multiple entities to collaboratively analyze data and extract data synergies, while keeping each party’s data input private and secure. ARPA allows secret sharing of private data, and the correctness of computation is verifiable using information-theoretic Message Authentication Code (MAC).

ARPA is a privacy-preserving blockchain infrastructure enabled by MPC. Learn more at arpachain.io