Demystified: The number of DeFi users equals the number of unique addresses? How does DeFi gain mass adoption?

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Last Friday, a report from the Ethereum metrics website Dune Analytics showed that the Decentralized Finance (DeFi) ecosystem now has more than 1 million Ethereum unique addresses as its participants, compared with 91,000 on December 6, 2019. Compared with the number of addresses, it has increased by more than ten times.

Although the growth of DeFi is undeniable, some experts warn against understanding this milestone as a sign of widespread adoption. In fact, in order for DeFi to truly enter the mainstream, many supporters of this emerging vertical may have to reconsider its communication and outreach strategies.

The Dune Analytics report summarizes the total number of addresses that have used popular DeFi protocols such as Uniswap, Compound and Aave. The report points out that the “number of users” is calculated based on the “number of unique addresses”, which means that the 1 millionth address tag may not look like So optimistic at first glance.

DeFi has 1 million users — Richard Chen (@richardchen39) December 4, 2020

In order to protect privacy when trading on the Ethereum public network, many DeFi users usually deploy multiple addresses. In addition, conflating “address” and “user” may cause analysts to come up with some suspicious data.

Rabbithole is a startup that helps promote DeFi participation. Its co-founder Brian Flynn said that there are far fewer actual participants in DeFi.

Flynn told Cointelegraph, “The reality is that the number of unique users is only 10% to 15%, which is the real indicator that really matters.”

‘From speculator to participant’

So how can DeFi really reach 1 million users or more? Flynn explained that the first step to attract a large number of unique users will be to become a “speculative killer app” similar to the CeFi trading platform Robinhood. During the closure of the new crown pneumonia, the number of participants in Robinhood surged.

However, in the long run, DeFi can achieve sustainable success by finding ways to incentivize users to participate in governance and DeFi infrastructure layer elements.

Flynn said, “Many users know about trading tokens on Uniswap or aggregators, but don’t know how these protocols work in the background. For example, only a small part of all addresses traded on Uniswap provide liquidity. For those who Only a small percentage of users who provide assets on Compound to earn interest are borrowing money.”

“We need users to transform from speculators to participants in the open economy. This is how we achieve real adoption.”

To this end, Flynn revealed that Rabbithole has planned “several” activities together with the leading DeFi platform to encourage users to participate more in the agreement in exchange for governance tokens.

“This change will not happen overnight, but the most important thing we can do is to educate ourselves by participating in these networks,” he added.

‘Attract different types of users’

Encouraging users to become more active participants in the DeFi field is a promising step to promote adoption, while another step may be to attract completely different types of users.

Patrick Rawson, co-founder of Curve Labs, a DAO engineering and blockchain experiment organization, said that the current user experience of DeFi is tailored to specific groups of people.

Rawson said: “People who use these mechanisms tend to be men and young people. They want to make a profit, and they are often proficient in technology. This type of user needs what makes them the most profitable.”

Rawson believes that if DeFi really wants to “provide banking services for people without bank accounts,” they may have to consider new outreach strategies to better empower users to seek the desired results.

“Let’s look at a different user. An older woman from sub-Saharan Africa, with a family, not proficient in technology. Does she want to make a profit at the expense of everything else? No, she might treat her The surrounding environment is more interested. She cares about the health of her family. She wants a DeFi that is beneficial to the local community, not a DeFi that maximizes profits at all costs.”

Rawson said that in order to achieve this transformation, DeFi must adapt to “a localized institutional structure that reflects local values.” The example he provided is the Sarafu credit card, which is a “community currency” experiment in Kenya that has previously worked with Bancor.

Flynn agrees that putting profit above everything else may limit the spread of DeFi. The way participants in the current ecosystem discuss DeFi with friends and family will also play an important role in future construction:

“We need to stop paying attention to prices and pay more attention to how cryptocurrency networks and decentralization become a new way of building organizations.”