Tether, Galaxy, Ledn Dominate CeFi Crypto Lending as DeFi Borrowing Soars, Research Shows

The crypto lending market is still a shadow of its former size preceding the brutal 2022-2023 crypto winter, but beneath the surface, signs of recovery are emerging, especially in the decentralized corner of the space, digital asset investment firm Galaxy Research said in a report on Monday.

The total crypto lending market stood at $36.5 billion at the end of 2024, including loans backed by crypto-collateralized stablecoins, according to the report. That's a steep decline from the $64.4 billion peak seen at the height of the 2021 bull run when borrowing against crypto soared amid a wave of speculative fervor.

The downturn, fueled by the collapse of major lenders such as Celsius, BlockFi and Genesis, left a few large players to dominate the centralized finance (CeFi) sector of the lending space. According to the report, Tether boasts the largest market share, followed by Galaxy and Ledn. These three entities account for nearly 90% of the outstanding loans in the $11.2 billion CeFi loan book. Notably, CeFi loans are down 68% from the early 2022 peak of $34.8 billion.

The real growth is playing out onchain, the report found.

Decentralized lending protocols, which allow users to borrow crypto by locking up collateral operating around the clock and without relying on a centralized entity, have expanded rapidly. Since the market bottomed in late 2022, open DeFi borrowings have soared 959%, climbing from $1.8 billion to $19.1 billion across 20 applications and 12 blockchains, Galaxy said.

"Looking ahead, the cryptocurrency lending market appears poised for a new phase of growth, characterized by improved risk management frameworks, greater institutional participation, and clearer regulatory guidelines," Galaxy research analyst Zack Pokorny wrote.

"As the sector continues to mature, it may well serve as a bridge between traditional finance and the emerging digital asset ecosystem, facilitating broader adoption of cryptocurrency-based financial services," he added.

Read more: APX Lending Secures $20M Funding Amid 'Rising Demand' for Crypto-Backed Loans in Canada

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