DeFi significantly reduces the ETH offer and thus pushes its price up
The rate at which the relatively young DeFi industry is booming is attracting the attention of an increasing number of investors. The volume of ETH, which is locked in smart contracts, is still growing and has increased by an incredible 75% since since the beginning of 2020. On the other hand, the number of ETH held on exchanges is constantly declining and has decreased by 30% over the same period. The statistics were shared with the chart by on-chain data provider Glassnode.
The share of ETH offer allocated on centralized exchanges thus decreased from 17% to 12% and the share of ETH locked in DeFi smart contracts increased from 13% to 22.8%. According to DeFi Llama, up to 9% of ETH are locked out of the Ethereum mainnet. The largest part is on Binance Smart Chain, which operates with more than 8 million ETH, representing up to 7% of the total circulating supply.
In addition, just a few hours ago, ETH managed to create a new ATH at almost $ 4,000, and ETH futures trading volumes even outpaced the BTC market for a period of time.
The Bank of Japan is interested in DeFi, while identifying the opportunities and risks
The Bank of Japan has recently issued a report focusing extensively on the DeFi industry. They concluded that DeFi has the potential for rapid growth in Japan and can create financial services that will meet the needs of a new users generation.
The report quite clearly identifies the potential benefits of DeFi. The most important are, for example, increased competition in the financial sector and better availability of financial products and services. Of course, they did not omit the analysis of potential risks and focused on criticism of regulatory frameworks, failures of poor quality smart contracts and complications associated with the protection of completely anonymous consumers.