D5, of course, was the hallmark of this report. D5 in north america, theres theres been a lot of hiccups for sure, with the sec cracking down on. In some cases, some people werent even able to get air drops like the dui dx airdrop. Earlier this of this last few months, so theres been some kind of hiccups there, but on the most part, defy has been leading the way for adoption of cryptocurrency in north america naomi. I wan na throw this to you. I guess my question is: im somewhat surprised that north america isnt first place. I think when people see headlines about crypto or bitcoin theyre, all assuming that its happening in north america and then we look at this report. We see nope its actually happening, mostly in europe or and historically its been happening, a lot in east asia and in china, but north america is coming up in the ranks which is uh, probably better for prices. I guess overall but ill leave it there. For you, yeah im actually surprised that north america ranks so highly. Considering that theres been so much crackdown from the sec and theres such regulatory uncertainty out there, so many projects are being pushed offshore. People in america are not getting access to projects, because the sec is making sure that they dont have access to projects, so im actually surprised that its still doing so well. Despite all of this, it makes a lot of sense to me that uh europe would be in the lead right now.

What was interesting about the report uh was that china actually uh it wasnt uh. When china announced the bans that they started to tumble, it was actually april 2020. The volume started to drop in east asia, which was a surprise to me. I didnt realize that um and there was an explanation for why this might have been the case. Obviously, china has been moving towards a long term, big ban for a while this may this year, wasnt the first chinese ban, theyve banned it multiple times in the past um, and so maybe that continued crackdown was making people look elsewhere. In terms of you know, finding a way to have a sustainable business, perhaps it wasnt a smart play to keep it inside china. Maybe people were seeing that, but also there was an interesting note uh that china actually started testing its own central bank digital currency. That month, so the month that it actually started to tumble, so perhaps the chinese miners and chinese companies saw the writing on the wall with that and realized that china did not want a competitor to their central bank. Digital currency turns out that they were correct and now they completely crack down on it. So that was an interesting uh note from the report, but jen ill, throw it to you for your take jen is frozen, so im gon na throw to zach, oh jens, frozen. What the heck all right, yeah! You throw it to me! Yeah d5 man when the regulators get caught up to where crypto is now and not where it was in 2017.

Its gon na get really interesting and numbers like this suggest that its gon na matter for a lot of folks, so this to me, is super duper interesting. We just reported, as we were, going live that uniswap labs, which is obviously the team behind uniswap largest dex on ethereum hired a former obama spokesman as its new head of communications, so um the uh, the the human capital thats flowing into the space to shape these Conversations around defy and regulation in the u.s context, uh were seeing more of that. Its gon na be really interesting to see how these conversations unfold, especially since d5, is surprisingly big over here. So its gon na be interesting to see how it all shakes out but jen. If you are not frozen wave your hands in yeah im, not sure what you guys spoke about. While i was gone for a few moments there. But i saw a headline this morning that said uh. This report said that the trading volume on default platforms outperformed those uh – that of central exchanges, which was really interesting to me, because i think weve spoken about on the show a lot as essential exchanges. Being this on ramp for for people who are new to the space – and there are still a lot of people who are really confused about defend, dont, know how to get involved, and so it was interesting to me that the trading volume is outperforming. That of central exchanges and well, i wonder, is – is this just that people who are operating in d5 are operating in it at a larger scale, and we still need to get that mainstream audience on board, somehow uh ill, give it to naomi.

She looks like she has an answer to that question: yeah. I definitely have a take there. So, if youre looking at centralized exchanges, what theyre great for is the fiat on ramp when people are trading theyre, not going back and forth between fiat and crypto, if theyre going to find a hedge theyre, probably going to go into a stable coin and staying within The crypto ecosystem – they definitely dont, need a centralized exchange. For that honestly, i dont see much relevance for centralized exchanges for a lot of what d5 participants want to do. Theyre all in decentralized exchanges, because theres less kyc in those areas is uh. You know more liquidity, um, theres, better fees, like all of that stuff plays a part. D5 has just become better in so many ways, which is just so far above where we were just a few years ago, where there was no liquidity in the dexes, because we just hadnt figured out how to have these automatic market makers yet and now theyre. Just all through the d5 space and theres so much liquidity there, so yeah people um, the majority of trading is just not going back and forth between uh fiat and cryptocurrencies, so theres, just not as much of a reason to use, centralized exchanges but ill, throw it To will yeah, i disagree in part on some aspects of that. I think centralized exchanges definitely still have their value if youre looking at like bids and spreads on uh purchases, youre still going to get a better price quote on a centralized exchange just because something like uniswap or curve, where youre seeing larger movements of trades, you cant Quite get the the bids that you would on a centralized exchange, i think its getting there.

I think one kind of highlight of this report that coindesk touched on, i think last month in a report, is that otc desks around china have been shutting down, and that makes up a sizable percentage of trades in the crypto market or at large its, not something. The average retailer is really thinking about, but otc desks do matter. Theyre moving large amounts of capital, often bitcoin or ethereum across the ocean, and between different players in the space and a lot of these otc desks in china have had to shut down or move offshore uh. So i think that makes a large reason. Why were seeing that a lot of the kit volume is moving out of that region, maybe ill throw back to you before we get a break, though yeah i just wanted to ask you: will how much of the mine, or how much of the volume is due To liquidity mining because, as we know, you know, block fires been said all of these subpoenas from all over the country and cease and desists and all kinds of things weve got coinbase saying they cant offer their land but product anytime. You have a centralized player like celsius, theyre all being attacked by regulators, but d5 youre still able to earn all this interest, youre still able to move that money and actually uh make the most of all of this liquidity mining um. So what percentage of this volume is coming from? All of that yeah? I dont have a good number off the top of my head, but i think you bring up a really uh.

Salient point is that a lot of the volume in d5 is incentivized to be there by token rewards and thats the question for d5 still to answer: will people be using these applications once those incentives dry up, whether the token prices dry up or the teams decide To stop issuing tokens, for example, compound finance issued their comp token last summer in 2020 and then, after the token rewards started, drying up price went down a little bit and then some other competitors popped up.

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