Cryptocurrency yields are growing, but only 1.5% of users earn yield through DeFi protocols, a new report from MoreMarkets shows.
Summary
- More than 20 to 36 million users earn revenue through CEXs, compared to just 500,000 to 700,000 in DeFi
- The majority of users want a return of at least 6% to consider staking
- Security and liquidity concerns continue to hinder retail adoption of DeFi yields
Adoption of crypto yields is still slow, especially in DeFi. According to a MoreMarkets survey published on Friday, October 17, security concerns may be the main reason for this. The research shows that risk considerations still shape the user experience with staking.
Currently, an estimated 20 to 36 million users are actively earning returns on centralized exchanges, including Binance, Coinbase, Crypto.com, and more. At the same time, only 500,000 to 700,000 are actively earning returns on DeFi protocols like Lido and Aave.
According to MoreMarkets, the most likely reason is the ease of betting on CEXs. Furthermore, users fear the smart contract risk associated with DeFi yield.
Users still view returns as risky
The report shows that APY needs to be higher than 6% to generate interest. Returns below this – although competitive with bank rates – are seen by most as too low to justify the risk. It is striking that 43% are concerned about platforms going bankrupt, and 42% are afraid of hacks or breaches. Additionally, 15% of users reported hearing stories about platforms like Celsius and BlockFi going bankrupt.
The research also shows that there is a significant training gap among users. First, 28% of users don’t understand how crypto yields work. Furthermore, only 21% care about car compounding or high-efficiency mechanics. According to MoreMarkets, this shows that simplicity wins when it comes to deploying rewards.
