New global research from market-leading digital institutional investment platform VALK shows strong adoption by institutional investors of Decentralised Finance (DeFi) to maximise the returns and usage of cryptocurrency and digital assets they hold.
Its study* among 100 professional investors working for institutional investors in eight major economies for institutions holding more than $1 trillion in assets under management in total found nearly a third (30%) of those investing in digital assets are currently using DeFi, while another 68% plan to do so within a year with 39% doing so within six months, according to the information shared with Finbold.
However, VALK says in most cases those already using DeFi are ‘testing’ the market in terms of how it works, its infrastructure and liquidity.
The growing use of DeFi is driving investment in digital and crypto assets, the research found, with 40% of those questioned expecting a dramatic increase in the level of investment and 52% expecting the level of investment to increase slightly.
The risks of not participating in DeFi outweigh the risks of participation
Almost all the investors questioned in the UK, US, France, Germany, Hong Kong, Singapore, Australia, and Brazil believe the risks of not participating in DeFi outweigh the risks of participation with 28% saying they strongly agree and 67% saying they slightly agree.
On average investors believe the total value locked will grow to nearly $200 billion by the end of next year compared with over $80 billion in May this year and less than $1 billion in 2019. Around 14% of investors expect the value to rise to more than $300 billion by the end of 2022.
Additionally, the research found nearly two-fifths (38%) of investors expect dramatic growth in the cryptocurrency staking over the next three years as more investors use them to earn an income. Around a third (32%) believe lending will increase dramatically and 17% forecast dramatic growth in borrowing.
Around a fifth (18%) expect dramatic growth in the use of digital assets as collateral such as using Bitcoin to borrow US dollars over the next three years while 68% expect slight growth in collateralisation.
Methodology: *Independent research company PureProfile interviewed 100 professional investors working for institutional investors, hedge funds, fund managers, pension funds, investment banks, private equity and venture capital in the UK, US, France, Germany, Hong Kong, Singapore, Australia, and Brazil in October 2021.