Crypto-collateralized borrowing climbed to a record $73.6 billion in the third quarter, marking the sector’s most leveraged quarter, however the composition of that leverage looks healthier than during the 2021–22 cycle.
According to Galaxy Research.
Defi lending alone jumped 55% to an all-time high of $41 billion, supported by points-driven user incentives and improved collateral types like Pendle Principal Tokens.
Centralized lenders also saw a rebound as borrowings grew by 37% to $24.4 billion, although the market remains a third smaller than its 2022 peak.
Survivors of the last cycle have largely abandoned uncollateralized lending, turning to full-collateral models as they seek institutional capital or a public listing. Tether remains CEFI’s dominant lender, holding nearly 60% of monitored loans.
The quarter also saw a decisive shift within Defi itself, with lending apps now capturing more than 80% of the onchain market, and StableCoins-backed CDP shrinking to 16%. New chain deployments, including AAVE and liquid plasma, helped fuel activity, with plasma attracting more than $3 billion in borrowings within five weeks of launch.
It is worth noting that shortly after Q3, a inducing wipeout has occurred resulting in more than $19 billion worth of withdrawals, the largest single-day cascade in crypto futures history.
However, the Galaxy report claimed that the liquidation event did not reflect systemic credit weakness: most positions were mechanically de-risked as automatic exchange systems.
Meanwhile, Corporate Digital-Asset Treasury (DAT) strategies continue to rely on leverage, with more than $12 billion in outstanding debt tied to crypto-acquiring companies. Total industry debt, including DAT issuance, hit a record $86.3 billion.
The data suggests crypto takeover is on the rise again, but at a firmer, more transparent pace, with collateralized structures replacing the murky, unstoppable credit that fueled the last boom-and-bust cycle.
