What holds the DeFi space back? What drives DeFi usage? What are today’s DeFi users’ needs? Finding answers to these questions was the main motivation to run a comprehensive survey for the broader DeFi community — the DeFi User Survey.
Decentralized Finance (DeFi) is still a fairly new, yet diverse and complex space within the Ethereum ecosystem and our goal is to improve our collective understanding of the needs and goals of users.
That’s why we ran this survey together with other DeFi teams such as Argent, Kleros, Kyber Network, Maker, Ren, Synthetix, and Uniswap. As we are all committed to making DeFi grow and believe in its strong community, the data from the survey is open-source (minus any contact detail) so that everyone can dig deeper and find insights from real DeFi users.
Looking at the survey results, we are more than happy about the quantity of the results given the length and the extent of the survey. In numbers, the survey consisted of 26 questions with an average time to complete of 11:04 min. The total amount of responses we have collected is 467.
Here is a tweetstorm with some of the key findings but if you are curious to get the full picture, continue reading!
Results & Insights
The survey consists of 2 sections, Section 1 explores the DeFi user’s general characteristics including demographics, profession, and more, while Section 2 is deep-dive into the user’s most used DeFi app category, their usage pattern, trust, and frustrations. The following DeFi categories were used: Decentralized Exchanges, Derivatives Platforms, Lending & Borrowing Protocols, Games & NFTs, and Wallets.
The results from Section 1 are commented directly by the dex.blue team while the insights from Section 2 feature comments and feedback from Argent, Kyber Network, dex.blue, and Maker Foundation.
Section 1: Demographics and general user information
The average age of all survey participants is 31 years, ranging from 16 years to 66 years.
As you can see on the map, the geographical origin of the survey participants is roughly equally distributed between Europe, Asia, and North America (2.8% did not disclose their origin).
When looking at the profession of the survey participants, it’s unsurprising that the majority of the people either work in the field of Computers, Technology & Software Development, or in Business, Finance & Management.
Considering the volatility of digital assets and the immaturity of the asset class, the DeFi users hold on average 54% of his/her entire savings in crypto assets.
Looking at the following bar chart, we see that the average DeFi user is pretty active as ~ 75% of all users interact with their DeFi apps at least twice per week. Out of this 75 % of people, almost half of them interact with their DApps on a daily basis.
Section 2: DeFi App category-specific insights
Although Section 2 of the survey features more categories than the one analyzed below, we selected and commented only those categories with a representative sample size of responses (>50): Decentralized Exchanges, Lending & Borrowing Platforms, Wallets.
The number of responses per category:
Decentralized Exchanges 211; Derivatives Platforms 22; Games/NFTs 18; Lending & Borrowing Platforms 95; Lottery 0; Wallets 113
When asking questions on decentralized exchanges (DEXes), the topic of security and trust is key, here is want we found:
We were glad to see that DEXes were given a trust score that averaged at about 8.5/10 points.
The reason for not giving the full score was mostly the novelty of the space and very general skepticism of “I only trust my mom 100%“.
A few respondents, however, did give scores below 6/10. The main reason for doing so was either the fact that they do not trust exchanges in general due to recent and historic attacks or because they can’t verify smart contracts themselves because they are not developers themselves.
Next, we wanted to know what the motivation of our survey participants is when it comes to trading on a decentralized exchange (opposed to a centralized exchange): 60% of DEX users told us that the main objective is to gain financial independence. The remaining answers for that question, “Understanding the underlying tech” and “Pushing the decentralized ideology forward” were both given ~20% each by the survey participants.
It also became clear that this financial motivation was even higher with people using advanced order book-based DEXes as opposed to AMM.
A goal of the survey was to find out when and why people initially start trading. When we asked about this, the majority of the traders (58%) told us they trade when they get an impulse (news, etc.), roughly a third (31%) said they schedule time or trade when they find time to do so. The remaining 11% gave other reasons like specific needs and portfolio adjustments.
But what do these impulses, that trigger the majority of DEXers, look like?
It did not surprise us to find out that many use Twitter and other social media channels (41%) for initial trading impulses. More research-based approaches like TA (Technical Analysis) and analysis of market sentiment (32%) were also popular among the survey participants.
Lending & Borrowing Platforms
It is reassuring that 56% of respondents say that their goal with using DeFi is to achieve “Financial Independence”. Lending & Borrowing protocols play a critical role in helping users achieve this goal. Especially given that respondents to this survey said they have 54% of their worth in DeFi, borrowing protocols provide the infrastructure needed to not only grow but also utilize that wealth over time.
The by far most popular Lending & Borrowing platforms in the DeFi space is Compound, leading with 44%. Remaining more fragmented than the other categories, Compound is followed by Aave (22%) and MakerDAO (20%). Even more equally distributed among the survey participants are the other Lending & Borrowing platforms, or platforms that include interest generating elements, like Curve/iEarn (7%), Nuo Network (5%), Uniswap (5%), and Synthetix (4%).
But what makes certain platforms more favorable than others? You might think that the interest rate/APY is the most crucial criteria for a platform to be chosen. Yet, the ease of use and UI/UX of Lending & Borrowing platforms seems to be the most crucial factor as 36% specified this as their favorite feature of the underlying platform. The second place is occupied by the interest rate/APY (22%) followed by security and trustworthiness (14%).
With that said, there is clearly an opportunity for borrowing protocols to increase adoption and ease of use. Only 19% of respondents said that they use “Lending/Borrowing” protocols most after DEXs (46%) and wallets (24%), respectively. Certainly, many of these protocols such as Maker, dYdX, and compound can better educate the broader Defi ecosystem how “borrowing/lending” can be used prudently to help them achieve their goals of “financial independence”.
Surprising nobody, MetaMask is by some distance the most popular wallet for accessing DeFi. 71% chose it compared to the runner up, Ledger, on 32%. In bronze was Trust Wallet, on 27%.
After that, there’s not much to separate mobile wallets Coinbase Wallet, Argent, and imToken (all on 12%). While Argent is the most popular smart contract wallet, there’s clearly a lot of work to do for newer players to differentiate themselves. In the hardware market, this differentiation has taken place as Ledger has pulled away from Trezor (32% vs 9%).
Can anyone catch up with MetaMask and Ledger? Perhaps the better question is which mobile wallet can best complement their functionality? Barely anyone in the survey uses just one wallet so it’s not one wallet takes all. In the future though you’d expect to see a less fragmented market.
While crypto is global by default, wallet popularity is heavily influenced by regional factors. imToken is almost exclusively used in Asia, according to the survey. And Trust Wallet in Asia is the closest wallet for catching up with MetaMask’s popularity.
What is holding DeFi back?
The very last question asked in the survey, and probably one of the most interesting, was “What is holding DeFi back?” and the most common answer was education/marketing (45%). This is probably unsurprising for most of us, yet it emphasizes the necessity for more accessible and beginner-friendly learning resources — “Lack of explanation for beginners. Lots of high-level crypto speak” was mentioned by a survey participant.
Following the need for better education and marketing are security concerns (40%), UI/UX (39%), and liquidity (36%). Taking into consideration recent exploits of DeFi apps, the ease of Web 2 applications compared to Web 3, and the growing yet small liquidity of decentralized exchanges compared to centralized platforms, these friction points seem very reasonable but also solvable in the medium run.
Ultimately this survey has helped answer some questions (e.g. Who are DeFi users today, do they trust, what % of their net worth is in crypto, what’s holding back more usage etc.) but many of these answers have also sparked follow on discussions: What educational building block is missing to attract more users into DeFi? If most DeFi users are, understandably, motivated by making money, what more can we do to enable this? What do users really care about in the “De-” part of DeFi?
We invite the community to access the survey data themselves and look for more clues and insights as we will be doing as well, hopefully, this data will prove useful for the community as we all keep on BUIDLing.