In a recent report released by Crypto.com, they informed that the number of global crypto users reached 106 million in January 2021. This represented an increase of 15.7% in crypto users. According to Alexander Vasiliev, the co-founder and CCO of Mercuryo, Bitcoin (BTC), Ethereum (ETH) and Decentralized Finance (DeFi) are among the reasons behind this massive crypto adoption.
Bitcoin, Ethereum and DeFi Help Increase Crypto Adoption
Cryptocurrency adoption has grown in recent months as new users wanted to invest in Bitcoin, Ethereum and DeFi projects. During a conversation with UseTheBitcoin, Alexander Vasiliev, explained that the surging interest in cryptocurrencies is primarily related to the rise of corporate and institutional demand for BTC and also the DeFi market.
Bitcoin and Ethereum are now the two largest virtual currencies in the world. According to data provided by CoinMarketCap, Bitcoin has a market valuation of $859 billion and Ethereum is now following BTC with a market cap of $167 billion. The large valuation of these digital assets continues to be close to their records, even despite a 25% drop from their tops.
As virtual currencies reached record highs, this attracted other investors and traders that wanted to get exposure to some of the largest digital assets in the world. More demand acted as more buying pressure behind the entire market, according to Vasiliev.
Regarding the expansion of the DeFi market, Vasiliev said:
“The DeFi market has been a massive allurement for both the savvy audience and the more general public as the DeFi market cap has risen by more than 300% since the start of 2021: from 25.362 billion on 1st January 2021 to 77.067 billion on 25th February 2021, with a high of $91.5 billion earlier this month.”
Decentralized Finance became a hot topic in the last year as new investors started to enjoy the benefits of DeFi platforms. The main selling point includes the high-interest rates that DeFi gives to users.
Liquidity mining, for example, allows investors to get rewarded in virtual currencies without having to sell them. They can indeed provide liquidity to trading pools and get rewarded with the fees paid by users trading in Swapping platforms such as Uniswap.
While with Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus algorithms only those with access to the network (miners and validators) could earn rewards on their coins, the benefits can now reach a larger number of users.