Most individuals use crypto for funding, staking and cost, which emerged as the highest 3 use instances in a current examine. Lending or borrowing was the least standard use for crypto, lagging behind yield farming and governance.

Whereas crypto is especially handled as a monetary asset for now, crypto is by design programmable, which implies that it has nearly limitless potential purposes. 

8 Most Widespread Use Instances for Crypto

We rank the 8 hottest crypto use instances in descending order, from a very powerful to the least vital.

#1 Funding

93.9% or virtually all crypto holders stated they used crypto as a type of long-term funding, which isn’t shocking provided that the market chief and pioneer Bitcoin is taken into account digital gold. Other than Bitcoin, cryptocurrencies have lengthy served the ambiguous operate of elevating capital, and have been accepted as a part of the choice funding asset class.

For greater than 3 out of each 10 holders, crypto is at all times an funding (37.9%). This not solely implies that crypto is probably going a everlasting a part of their monetary portfolio, but in addition that they imagine crypto is right here to remain. On the similar time, their funding focus signifies that this group tends to view crypto as a monetary instrument or enterprise.

For one more 3 in 10 holders, crypto may be very usually an funding (30.9%), whereas 25.1% stated they solely typically or not often used crypto as an funding.

The remaining minority of 6.1% by no means used crypto as an funding, probably as a result of they’re crypto day merchants with a shorter horizon, or as a result of they assume crypto is just too dangerous and risky to be thought-about an funding asset.

#2 Staking

88.8% of crypto holders stated they staked crypto, indicating that staking has turn out to be a well-liked exercise regardless of being a comparatively new growth. The excessive degree of adoption is probably going pushed by the rewards provided as a relatively safer, decrease effort approach to earn from crypto, in addition to the emergence of beginner-friendly staking strategies, akin to on centralized crypto exchanges.

As many as 2 in 10 crypto holders at all times take part in staking (20.1%), probably as a result of their way of life requires a extra passive method, or they’re sturdy believers in Proof of Stake. A bigger variety of crypto holders stated they stake fairly often (27.6%), whereas 41.0% typically or not often staked.

Solely 11.2% by no means tried staking crypto earlier than. 

#3 Fee

Crypto funds ranked because the third commonest use case, with a majority 84.5% having used crypto to make funds. Whereas crypto is technically capable of serve the identical functions as fiat forex, there are solely restricted alternatives to buy items or companies with crypto in the meanwhile. 

This may clarify why simply 3 in 10 holders use crypto for funds at all times or fairly often (31.4%), whereas greater than half use crypto to pay solely typically or not often (53.2%).

Individuals initially began utilizing crypto funds with a purpose to purchase or promote on unlawful marketplaces akin to Silk Highway. In consequence, crypto funds proceed to be related to criminals or doubtful actions, which could be deterring the 15.5% of holders who’ve but to pay with crypto.

#4 Hypothesis

A minimum of 81.0% of holders have speculated on crypto, making it the fourth commonest use case. That is according to the extremely risky actions that the crypto market is understood for, that are attributable to catalysts as irrational as memes or coincidental tweets. Hypothesis can also be facilitated by the low boundaries to entry into the crypto business, such that there isn’t a scarcity of recent tasks and buying and selling alternatives.

1 in 4 holders at all times or fairly often interact in short-term crypto hypothesis (26.5%). These are doubtless crypto day merchants with increased capital and danger tolerance, or traders who particularly put aside a part of their capital for riskier alternatives.

One other 2 in 4 additionally speculate sparsely, both typically or not often (56.2%). Provided that the crypto demographic is usually youthful with an extended funding horizon, total danger urge for food is correspondingly increased.

That stated, 19.0% avoid speculating with their crypto. 

General, individuals nonetheless appear to choose to spend money on crypto greater than speculate on it, with hypothesis being a much less frequent use case by 12.9 share factors.

#5 Participation in Token Gross sales

79.6% of holders have used their crypto to take part in token gross sales, rating it shut behind short-term buying and selling. Token gross sales began out with Preliminary Coin Choices (ICOs), which outlined crypto markets from 2017 to 2018 by elevating thousands and thousands of capital in seconds. Different codecs have emerged since then, together with Preliminary Alternate Providing (IEO) and Preliminary DEX Providing (IDO).

Round 2 in 10 holders stated they at all times or fairly often take part in token gross sales. They doubtless characterize the extra crypto-native individuals who preserve up with the most recent developments within the house and can actively hunt down new tasks, both to assist or speculate on.

One other 56.2% solely typically or not often use their crypto to take part in token gross sales, whereas 20.4% have by no means purchased newly-launched tokens.

#6 Yield Farming

Almost 3 in 4 crypto holders have farmed for yield (74.7%), however making it one of many much less frequent use instances and lagging behind staking by 14.1 share factors. This implies that yield farming may at present be much less accessible to individuals, although it was arguably the preferred crypto exercise throughout DeFi Summer season in 2020.

Out of these 3 individuals, 1 engaged in yield farming at all times or fairly often (25.8%), whereas the opposite 2 solely farmed for yield typically or not often (49.0%). 

However, 1 in 4 have by no means used their crypto to farm for yield (25.3%). 

#7 Governance

Crypto was used for governance virtually as usually as for yield farming, with 74.5% of holders having voted or in any other case participated in tasks which they held the token of.

Simply 2 in 10 holders had been energetic, dedicated members of their DAOs and at all times or fairly often engaged in its governance. One other 5 in 10 did use their crypto for governance, however solely typically or not often. These could be much less concerned DAO members or may not at all times maintain governance tokens.

Crypto holders who’ve by no means participated in governance made up the remaining 25.5%

#8 Lending or Borrowing

Lending or borrowing turned out to be the least frequent means that folks use their crypto, with simply over half or 57.6% having finished it earlier than. This ties in with the comparatively smaller market capitalization of lending within the DeFi house.

Even amongst those that have lent or borrowed crypto, solely a minority of 15.0% at all times or fairly often use their crypto for credit score. One other 42.6% typically or not often used their crypto to lend or borrow.

The hole between frequent versus rare utilization factors to the chance that crypto holders have an aversion in direction of lending and borrowing actions. Though financial institution deposits are an oblique type of lending, most individuals don’t assume that placing cash right into a checking account means they’re loaning it to another person. 

A big 42.4% of holders have by no means used crypto to take part in lending or borrowing. For this group, lending and borrowing could be perceived as riskier or just too obscure.

Methodology

The examine examined 427 responses from the NFT and Crypto Customers Survey, collectively performed by CoinGecko and Blockchain Analysis Lab from December 2022 to January 2023.

For those who use these insights, we’d recognize a hyperlink credit score to this text on CoinGecko. A hyperlink credit score permits us to maintain supplying you with future data-led content material that you could be discover helpful.

Curious to search out out extra about our earlier research research? Try this one we did on the place individuals retailer crypto after the FTX collapse.