How the DeFi Craze Made Its Way to China

Oct 15, 2020 at 14:01 UTCUpdated Oct 15, 2020 at 14:35 UTC.When Nervos co-founder Guoning Lü saw a few China-based decentralized finance projects raise millions of dollars in a matter of hours, he knew the DeFi craze had officially reached the East.One project saw its total value locked climb from $2.9 million to $14.4 million within two weeks after launching in August, before tripling three days later.

So it's not surprising the DeFi craze would find its way to China, which has an active cryptocurrency community despite government restrictions on trading and token sales.

Chinese startups are playing a crucial role in the DeFi boom with highly localized and nimble adaptations of western projects as well as a marketing apparatus that is laser-focused on Chinese crypto communities, industry watchers say.

Major Defi projects, such as NEST, DForce and YFII, all with huge Chinese followings, have raised millions of dollars in the span of a few weeks and topped the TVL ranking on DeFi Pulse.

DeFi-friendly crypto wallets, centralized exchanges' financing schemes for retail investors and targeted marketing strategies are among the localized products and services that Chinese startups have created to pave the way for DeFi inside the country.

"Not many people know how to use DeFi applications directly given its complex technical features and financial schemes," Lü said.

"The crypto space, including DeFi, is very KOL-driven," said Sharlyn Wu, chief investment officer at Huobi DeFi Labs.

In a recent interview with CoinDesk, Binance CEO Changpeng Zhao said centralized exchanges might have to share the crypto trading market with DEXs.Binance, Huobi and Kucoin, three exchange giants birthed in China, have made efforts to get into the DeFi space.

Binance recently rolled out its patented blockchain, where developers can build DeFi applications on the platform, while Huobi launched DeFi Labs to back DeFi hopefuls.

China may not always be in the position of following the West."Even though Asia was initially behind in the first wave of the DeFi from the U.S., I think developers in China will lead DeFi the way they have led CeFi," Sharlyn Wu said.