Banking jitters in traditional markets and the crackdown by regulators on centralized exchanges may be prompting users to turn to decentralized-finance apps, said Pedro Herrera, head of research at DappRadar, an online store for decentralized applications, or dapps.
“If you start to see how these use cases for DeFi start fitting and give you more autonomy to basically manage your own assets and investments, it’s the answer to why DeFi is [being] highly used,” Herrera told CoinDesk TV’s “First Mover” on Friday.
A new report by DappRadar found that the total value locked for DeFi during the first quarter rose by 37% to $83.3 billion from $60 billion in the fourth quarter of last year.
Part of the increase was due to layer 2 network Arbitrum‘s airdrop of its ARB token last month. The airdrop also marked Arbitrum’s shift to a decentralized autonomous organization structure that gives token holders more input in securing a network, something that’s becoming more popular in the wake of bank failures in the U.S. and regulatory actions against centralized crypto exchanges like Coinbase and Binance.
Projects like Arbitrum “are creating a sense of loyalty and engagement within their community,” Herrera said, which can then in turn “engage developers to build better products,” and ultimately, draw more users into the project.