Recent reports indicate that centralized crypto lending has surged to roughly $25 billion in outstanding loans within the third quarter of 2025. This significant figure reflects a resurgence of activity across centralized platforms as certain firms that survived recent market turmoil are starting to grow their loan books again.
CeFi Surges
According to a study from Galaxy Research, the broader crypto lending market saw a total of about $36.5 billion as of Q4 2024, down from a peak of $64.4 billion in Q4 2021. This decline is indicative of the fallout from several high-profile platform failures and bankruptcies that affected both supply and demand for crypto loans.
The market dynamics have shifted markedly. Reports suggest that the largest centralized lenders—such as Tether, Galaxy, and Ledn—now command a substantial portion of the CeFi lending market. Collectively, these three entities accounted for nearly $10 billion of CeFi outstanding loans, enjoying an 88.6% share of the segment by the end of the previous year. Notably, Tether emerged as the single most influential player.
DeFi Borrowing Sees A Strong Comeback
Decentralized finance (DeFi) borrowing has rebounded impressively, recovering from the lows experienced during the 2022–2023 downturn. Open borrows on decentralized platforms surged from approximately $1.8 billion in the market trough to around $19 billion by the end of 2024, marking a staggering 959% increase. This sharp rise indicates that many users are gravitating back toward on-chain solutions as centralized options have faced contractions.
Market enthusiasts emphasize the importance of these numbers in revealing where current activity is concentrated: increasingly on-chain and within a tighter cluster of established centralized players. Many lenders today appear to operate with higher collateral levels and more transparent reporting practices compared to their predecessors, contributing to newfound investor confidence. However, it is crucial to note that the total lending market remains significantly reduced compared to its 2021 heights.
Risks Remain
Despite the optimism, concerns linger regarding the concentration of CeFi loans among a limited number of firms. This concentration raises potential risks; should one major lender encounter difficulties, it could trigger a wider contagion. Additionally, price volatility in major cryptocurrencies could leave loans vulnerable to rapid liquidations. Regulatory scrutiny of the sector is intensifying, with potential policy changes on the horizon that could influence the structure of future lending.
What to Watch Next
As the market stabilizes, observers will be keenly tracking quarterly loan volumes, the pace of on-chain borrowing, and any signs of new capital inflow into lending desks. While the crypto lending market is in the process of rebuilding, this recovery is taking place in a transformed landscape; it is smaller than the 2021 peak and more diversified across centralized entities and DeFi protocols.
Featured image from Unsplash, chart from TradingView
