The size of the crypto lending market remains significant down from the $ 64 billion height, but the borrowing of decentralized finance (DEFI) has made more than 900% recovery from the bear lows market.
Allows the lending of crypto The borrowers to use their crypto holdings as collateral to get a crypto or fiat loan, while lenders can loan their holdings to produce interest.
The Crypto lending market dropped by more than 43%, from full time high $ 64.4 billion to 2021 to $ 36.5 billion at the end of the fourth quarter of 2024, according to a research on digital expanse Report Published on April 14th.
“The rejection can be attributed to the removal of lenders on the supply and funds, individuals, and corporate entities on the side of demand,” according to Zack Pokorny, associate of research in the Galaxy digital.
The major crypto lending events. Source: Galaxy Research
The decline in the Crypto lending market began in 2022 when the centralized finance (CEFI) lent to Genesis, Celsius Network, Blockfi and Voyager who filed for losses for two years as crypto values fell.
Their collective collapse led to an estimated 78% collapse in the lending market size, with CEFI lending that lost 82% of its open borrows, according to the report.
While the overall value of the crypto lending market has not reached the previous highs, Defi Lending has made a significant recovery according to some metrics.
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Defi borrows grow almost 10-fold
The Crypto Lending Market found its under $ 1.8 billion in open borrows during the bear market in the fourth quarter of 2022.
However, the DeFI Open Borrows rose to $ 19.1 billion throughout 20 lending applications and 12 blockchains by the end of 2024, representing a 959% increase in the eight quarter from the 2022 bottom of the market.
“Defi Borrowing has experienced a stronger recovery than Cefi Lending,” written by Galaxy Digital’s Research Associate, Pokorny, Adding:
“It can be attributed to the unauthorized nature of blockchain -based applications and the safety of lending applications through disturbances in the bear market that have fallen to CEFI’s major lender.”
“Unlike the largest Cefi lender who is bankrupt and no longer operating, the biggest application of lending and market is not all forced to close and continue to work,” he added.
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The remaining CEFI borrows cost a collective $ 11.2 billion, which is 68% lower compared to the peak of $ 34.8 billion combined with a book of CEFI lenders achieved in 2022.
The size of the CEFI lending market by the quarter end. Source: Galaxy Research
The three largest lender Cefi, Tether, Galaxy and LEDN, provide a combined 88.6% of the total CEFI lending market and 27% of the total Crypto lending market.
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