Injective, the blockchain built for finance, published its DeFi Trader Survey 2023. The research draws from various cryptocurrency trading communities, aiming to provide a comprehensive understanding of how professionals and amateurs approach cryptocurrency trading, their motivations, and valuable lessons for the wider trading community.
Most respondents (63.8%) trade on both a centralized and decentralized exchange. 14.7% trade only on centralized exchanges, and 11.2% trade only on decentralized exchanges. Surprisingly, 10.3% of people weren't able to discern the types of exchanges.
For 62.1% of respondents Incentives provided by DeFi projects is the main factor that influenced them to engage in DeFi trading. The remaining main factors include Potential for high returns (59.8%) and Access to a wide range of tokens (52.1%).
Most respondents (41%) consider Liquidity as the primary factor that influenced which DEX they've chosen to trade on, followed by Trading Fees (38%) and Security Measures, Privacy, and Anonymity (29%).
Most respondents (55%) highlighted Security risks and vulnerabilities as the main challenges they have encountered in DeFi trading, followed by Transaction speed and network congestion (54%), and Limited liquidity (46%).
For 37.3% of respondents trading is their main source of income, and an additional one for 62.7% of them. 30.3% have 26-50% of their overall investment portfolio allocated to DeFi trading, followed by 29.3% of respondents with 11-25% of their portfolio allocated.
Most respondents (71%) usually prefer to trade on Binance Smart Chain and Polygon (62%), followed by Ethereum (52%) and Injective (51%). Remaning blockchains include Solana (23%), Avalanche (15%), Fantom (8%), Polkadot (4%), and Cardano (2%).
“While DeFi has experienced massive growth in the past few years, we have to continue to tackle issues such as scalability and liquidity”, said Eric Chen, Co-founder, and CEO at Injective Labs. “Traders are understanding the benefits of this technology, and we're supporting their transition.”
Multiple options for trading
In addition to trading possibly on the traditional financial markets, traders in crypto utilize other strategies and leverage rewards provided by protocols to improve their returns. Most respondents (64%) highlighted HODLing (long-term holding) as their preferred strategy when it comes to DeFi trading, followed by Yield farming (40%), and Day trading (32%). Other strategies included Swing trading and Liquidity provision both at 29%, Position trading (28%), Arbitrage (16%), and Market making (9%).
In recent years, the cryptocurrency market has attracted a diverse range of participants, from seasoned financial professionals to enthusiastic amateurs, due to its volatility and profit potential. Experienced professionals in the cryptocurrency community leverage their financial market expertise, including technical analysis, risk management, and trend interpretation, to navigate the complex landscape of digital currencies. Conversely, the rise of amateur traders in the cryptocurrency sphere is driven by curiosity, quick gains, and a desire to engage in technological innovation. Despite lacking formal financial education, these traders are eager to adapt and embrace the fast-paced nature of crypto markets.
Injective is a lightning-fast interoperable layer-one blockchain optimized for building the premier Web3 finance applications. Injective provides developers with powerful plug-and-play modules for creating unmatched dApps. INJ is the native token that powers Injective and its rapidly growing ecosystem. Injective is incubated by Binance and is backed by prominent investors such as Jump Crypto, Pantera, and Mark Cuban. For more information, please visit https://injective.com/