Decentralized Finance Market Size, Share & Trends Analysis Report By Application (Payments, Stablecoins), By Component (dApps, Blockchain Technology), By Region (EU, North America, APAC), And Segment Forecasts, 2023 - 2030

Report Overview

The global decentralized finance market size was valued at USD 13.61 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 46.0% from 2023 to 2030. The acceptance of DeFi (Decentralized Finance) led to a profound transformation in the financial sector, which is one of the primary factors driving market growth. The interactions of DeFi and decentralized platforms on the blockchain have gained popularity over the past five years. The adoption has increased due to DeFi’s ability to eliminate the intermediaries in the financial processes. Moreover, the utilization of DeFi in the insurance industry has been the most impactful as the conventional system suffers from complex procedures, paperwork, and audit systems.

The utilization of DeFi platforms made it more efficient, hence contributing to industry growth. A surge in e-sports and games has also been observed as a critical driver for DeFi platforms since developers use DeFi tokens for in-app purchases. In addition, trading games and collectibles are becoming popular genres on the blockchain, enabling users to trade tokens and letting them build their ecosystem. For instance, DeFi platforms, such as Augur, allowed users to bet on world events, sports, economics, and more. The emergence of blockchain-based prediction platforms is anticipated to create growth opportunities for the industry over the forecast period.

The advantages offered by DeFi technology providers are propelling the industry's growth. The system eliminates the authority financial institutions, including banks, have over money, financial goods, and financial services. Moreover, it removes the usage fees banks and other financial institutions impose on services. In addition, the ease of accessibility is anticipated to increase the utilization of DeFi platforms as anyone with an internet connection can use it without authorization.DeFi platform features include the ability to transmit money anywhere in the world, store money in cryptocurrency wallets, and trade tokenized versions of investments like stocks and mutual funds.

Users simply need a smartphone; hence the market has a significant potential for revenue growth. Furthermore, these platforms have gained popularity among crypto enthusiasts in recent years, which is expected to fuel industry growth.DeFi platforms associate with certain risks in addition to their many cutting-edge advantages. DeFi’s infrastructure and regulations are still being developed. Consequently, the investments made on DeFi are not subject to regulation or insurance, unlike traditional banking. DeFi loans are secured by additional crypto assets, but during a downturn, these assets can see a severe decrease in value or possibly be liquidated.

However, DeFi platforms are increasing their functionality and strengthening their security & scalability as more people are entering the digital asset industry. This process has already started with the transition to the Ethereum 2.0 network. DeFi platforms and exchanges are expected to improve the privacy and independence of cryptocurrency trading in the near future, thereby driving the development of decentralized finance and the systems that enable it.

COVID-19 Impact Analysis

The outbreak of the COVID-19 pandemic has sparked a revolution in a number of industries with the availability of blockchain technology. During the outbreak, the market’s primary driver was the need for simplifying and automating supply chain applications and business processes. According to the DeFi Pulse, loans on DeFi platforms have increased more than seven-fold since March 2020 to USD 3.7 billion. Investors seek profits at a time when central banks all around the world have lowered interest rates to support economies adversely affected by the pandemic.

Component Insights

The blockchain technology segment dominated the global industry in 2022 and accounted for the largest share of more than 41.0% of the overall revenue. Blockchain technology can replace the existing decentralized business model foundations by lowering transaction costs, fostering distributed trust, and empowering decentralized platforms. Blockchain technology enables the emergence of decentralized financial services in the financial sector, typically more innovative, interoperable, decentralized, borderless, and transparent.

Decentralized financial services driven by blockchain technology can increase financial inclusion, provide open access, promote innovation, and open up new business and innovation prospects. The smart contracts segment is anticipated to witness significant growth over the forecast period. Smart contracts are the foundation of DeFi protocols and applications. A smart contract can operate as a custodian with specific rules for when, how, and who can receive these assets. Moreover, it speeds up decentralized financial operations, including investing, lending, banking, and insurance. In addition, centralized finance platforms can become decentralized through smart contracts, which is anticipated to create unique opportunities for the segment’s growth.

Application Insights

The data & analytics segment dominated the global industry in 2022 and accounted for the maximum share of more than 18.0% of the overall revenue. DeFi protocols offer significant benefits for decision-making and data analysis. Owing to DeFi protocols’ openness in data and network activity, DeFi protocols help in risk management and generate business opportunities. With the help of the capabilities offered by DeFi platforms, users can compare yield and liquidity and evaluate platform risks using various dashboards and tools.

The payments segment is expected to register the fastest growth rate over the forecast period. Peer-to-peer payment is the fundamental use case for the DeFi industry and the blockchain ecosystem as a whole. Users may securely and directly exchange cryptocurrencies with one another using blockchain technology, thereby eliminating the need for intermediaries. DeFi payment solutions assist large financial institutions in optimizing market infrastructure and better serving their wholesale and retail customers. Furthermore, it also fosters a more open economic system for underbanked and unbanked communities.

Regional Insights

North America dominated the global industry in 2022 and accounted for the largest share of more than 35.0% of the overall revenue. The dominance can be ascribed to the presence of prominent players, such as Compound and Uniswap. In addition, North America is one of the world’s largest crypto markets, which bodes well for adopting DeFi platforms. According to the 2021 Geography of Cryptocurrency Report by Chainalysis, from July 2020 to June 2021, DeFi transactions accounted for 37% of all transactions in North America, with inhabitants contributing about USD 276 billion in cryptocurrency to DeFi platforms.

Asia Pacific, on the other hand, is expected to register the highest CAGR over the forecast period. This can be attributed to strong economic growth and rapid technology adoption in Asian countries. There are currently numerous instances of DeFi platforms and other organizations operating with blockchain technology in the Asia Pacific region. In June 2022, Huobi Global, a digital asset exchange company, launched Ivy Blocks, which is a new investment arm focusing on DeFi and Web3 projects. Such strategic initiatives taken by industry players are contributing to the region’s growth.

Key Companies & Market Share Insights

Strategic collaborations between industry players have been observed in the market. For instance, Sheesha Finance and EQIFI partnered in May 2021 to broaden access to the DeFi platform and international banking solutions. As it provides a single platform for lending, borrowing, and investing, the alliance is expected to redefine DeFi. The EQIBank platform, which enables customers to apply for bank loans, powers EQIFI. While Sheesha Finance makes DeFi easily accessible to investors by producing convertible assets, account credit, and debit cards. Companies are making efforts to enhance their product offerings.

For instance, Trust Token introduced the TrueFi DeFi lending system in December 2020, enabling customers to obtain consistent high returns. This methodology offers qualified customers speedy fixed-term loans with fixed rates and no additional requirement for collateral. After establishing its platform, the platform reached USD 35 million in Total Value Locked (TVL) in under 24 hours. Alameda Research, a quantitative cryptocurrency trading company that created the crypto derivatives exchange FTX is already utilizing TrueFi. Some of the prominent players in the global Decentralized Finance (DeFi) market are:

• Compound Labs, Inc.

• MakerDAO

• Aave

• Uniswap

• SushiSwap

• Curve Finance

• Synthetix

• Balancer

• Bancor Network

• Badger DAO

Decentralized Finance Market Report Scope

Global Decentralized Finance Market Segmentation 

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2020 to 2030. For this study, Grand View Research has segmented the global decentralized finance market report based on component, application, and region:

• Component Outlook (Revenue, USD Million, 2020 - 2030)

  • Blockchain Technology

  • Decentralized Applications (dApps)

  • Smart Contracts

• Application Outlook (Revenue, USD Million, 2020 - 2030)

  • Assets Tokenization

  • Compliance & Identity

  • Marketplaces & Liquidity

  • Payments

  • Data & Analytics

  • Decentralized Exchanges

  • Prediction Industry

  • Stablecoins

  • Others

• Regional Outlook (Revenue, USD Million, 2020 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Spain

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa