Chinese Exchanges Lose Money As Users Withdraw Crypto For DeFi

  • The DeFi market is finally booming in China, but still a bit late compared to the rest of the world.
  • Chinese searches for ‘DeFi’ on WeChat have nearly doubled their record.
  • Meanwhile, exchanges are quickly losing liquidity as users keep withdrawing funds to engage in yield farming.

The year of 2020 may end up forever marked by a rather bad global pandemic, but in the crypto industry, it will be remembered as the year of DeFi. This is the year the DeFi sector exploded around the world, and the trend is finally getting big in China, as well.

DeFi Finally Arrives in China

Chinese users seem to be developing a strong taste for the decentralized finance sector. Daily searches for DeFi on the country’s own social media platform, WeChat, nearly doubled recently.

On September 2nd, the searches reached 900,000 within 24 hours. The previous record was almost half that — 500.000. 

Not only that, but local reports also revealed yesterday that users are massively withdrawing funds from crypto exchanges in order to transfer them to DeFi protocols and earn rewards through yield farming protocols.

While great news for DeFi, this can be very bad for the local exchanges, as it lowers their liquidity. A local reporter, Colin Wu, noted that one example of this happened when ETH price recently dropped. ETH users quickly transferred their funds to DEXes to engage in yield farming.

Arrival to China Gives DeFi a New Boost

The situation is quite bad for the moment. So much so, that exchanges had no choice but to stop withdrawals. Wu also noted that the exchanges are rapidly adding DeFi coins as a desperate attempt to convince users to keep their funds within the platforms.

As mentioned before, the DeFi sector seems to have been a little late with its arrival to China. However, it finally started picking up quite recently, as another local crypto reporter, Molly, recently noted.

Even though DeFi recently took a major hit when the new bear wave took away nearly $2 billion from its TVL, it seems that the trend is only picking up in China, and that it might be time for the surge to come back.

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