Should Nigerian banks be worried about decentralised finance?

Aug 08, 2022|Nnamdi Ifechi-fred

If you take a quick look through “Naija twitter”, you are sure to find a couple of users with the .eth tag added to their usernames. This growing clique of Twitter users gives you an anecdotal sense of the number of people with considerable interest in ETH, Ethereum’s native currency.

Key takeaways:

32% of Nigerians surveyed had owned or used crypto at some point, and approximately 27% of Nigerians hold crypto. This level of adoption makes Nigeria a fertile ground for other blockchain applications such as Non-fungible Tokens (NFTs), blockchain gaming and Decentralised Finance (DeFi).
DeFi plans to eat up orthodox finance, and one area of orthodox finance that DeFi has its eye set on is lending. Lending accounts for the second largest total value locked (TVL) in DeFi—more than $18 billion.
Although DeFi currently faces some challenges that orthodox finance has dealt with over the ages, there are some use cases made possible by its underlying technology—blockchain, to which banks need to give significant attention.

But you see, it is not just ETH; Nigerians have a soft spot for all things crypto. In August 2021, Binance, the largest cryptocurrency exchange by trading volumes, published a report that identified Nigeria as the leading country for cryptocurrency adoption. According to the report, 32% of Nigerians surveyed had owned or used crypto at some point; this was almost 1,000 basis points higher than the following country—Vietnam. Another recent publication by Finder.com, which surveys individuals in 26 countries to understand cryptocurrency adoption, found that approximately 27% of Nigerians hold crypto. The second country globally after India.