DeFi adoption in India

Giottus
4 min readMar 29, 2023

If you are somewhat familiar with the cryptocurrency and blockchain spaces, then you must have encountered the term Decentralised Finance or DeFi. As of March 2023, the TVL (Total Value Locked) of decentralised finance around the globe is around $46 billion. As the amount suggests, DeFi has come to be an attractive space for investors and traders around the world. However, what is the status of DeFi adoption in India? Let’s find out in this post.

What is DeFi or decentralised finance?

DeFi is an umbrella term for financial applications built on decentralised blockchain technology. Such applications remove the concept of intermediaries and aim to provide services like investing, trading, lending, borrowing, etc., without any centralised authority controlling your money.

Decentralised Finance is being used for multiple purposes, some of them being:

  • Lending and Borrowing: DeFi facilitates platforms to bring lenders and borrowers together without an intermediary. The lenders give out their fiat currency in exchange for crypto as collateral. The process has proven to benefit both parties as the lender receives extra interest, and the borrower can take out loans against crypto in a quick and hassle-free manner.
  • Insurance: DeFi-based insurance platforms use blockchain technology to make the process much more efficient and are used by traders and investors to protect themselves from financial losses in cases of security breaches, hacking, or smart contract failures.
  • Payment and Remittance: Payment platforms based on DeFi facilitate the sending and receiving cryptocurrency payments. It is much cheaper and more efficient than traditional payment systems, especially in cases of cross-country transfers.
  • Decentralised Exchanges: DEX or decentralised exchanges are marketplaces of a kind where users can trade cryptocurrencies without the intervention of any third party for custody of funds and facilitating the exchange.

Present state of DeFi adoption in India

According to the 2022 Global DeFi Adoption Index by Chainalysis, India ranks fourth in terms of DeFi adoption among all countries across the globe. While India ranks above the US, the UK, and Russia in terms of DeFi adoption, Vietnam, The Philippines, and Ukraine respectively have left India behind. With this ranking, it is evident that India is steering towards transforming its financial system through the cryptocurrency market and related technologies. However, there’s still a long way to go for us. What are the challenges we’re facing that are hindering DeFi adoption?

Challenges faced in DeFi adoption in India

Since Q2 of 2021, when DeFi adoption peaked in India and across the world, we have seen the DeFi adoption rate fluctuating. Why is this? Our primary concern lies with the lack of a proper regulatory framework to govern our crypto and DeFi space yet.

The Indian government is yet to lay out a certain regulatory structure for the crypto- and in extension, DeFi- space in India, aside from the 30% crypto tax regime that was brought on by Union Budget 2022. DeFi adoption in India can not accelerate until the regulatory barrier is torn down.

Steps to increase DeFi adoption in India

DeFi helps establish services that are more transparent, faster, more efficient, accessible, and global than traditional methods. Decentralised finance can bring about a revolution in the country’s financial system if people start adopting it without scepticism. Hence, certain steps must be taken to ensure that accessing DeFi adoption in India isn’t being restricted.

Improved regulatory measures

As mentioned above, for magnified DeFi adoption in India, government backing is very much required. As states like Telangana are taking steps to ensure blockchain and DeFi adoption is actively encouraged for our country to lead the world in terms of technological advancements, we hope to see similar efforts being replicated all over India by state governments, and the central government in turn.

Using DeFi to create more opportunities

Once you buy crypto and plan to hold it for a long time, the coins lie idle in the interim. Many DeFi-based applications have introduced ways for users to receive interest in said cryptocurrency holdings. More such opportunities for passive income will aid mass DeFi adoption.

Making DeFi accessible

Another way to make DeFi more popular is to work on making these platforms more user-friendly and accessible. Currently, most DeFi platforms require users to have the deep technical knowledge to use them. Much work is needed to make such platforms more accessible and easier to understand for users. Accessibility will increase the chances of better DeFi adoption among the common man.

Conclusion

DeFi has the potential to turn around India’s financial system altogether, but only if the masses would be ready to adopt it as the system, and for that, there is work to be done. One thing that is to be figured out with haste is how to regulate this fast-paced technology while continuing to educate the masses about its working and advantages.

Are you interested in investing in DeFi in India, and contributing to DeFi adoption in our country? The first step is to acquire some DeFi crypto, and Giottus can help you with that! Give our website a visit today to find out how!

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.

--

--