The crypto lending market has experienced a significant shift, with its total size declining by 43% from its 2021 peak of $64.4 billion to $36.5 billion by the end of 2024, according to a Galaxy Digital report published on April 14.
This downturn is largely attributed to the collapse of major centralised finance (CeFi) lenders such as Genesis (CRYPTO:GEN), Celsius Network (CRYPTO:CEL), BlockFi, and Voyager during the market crash of 2022-2023.
CeFi lending saw an 82% drop in open borrows following these bankruptcies, with outstanding CeFi loans now valued at $11.2 billion—68% below their 2022 peak.
Despite this contraction, Tether (CRYPTO:USDT), Galaxy, and Ledn have emerged as dominant players in the CeFi space, collectively managing nearly 89% of the remaining market.
In contrast, decentralised finance (DeFi) borrowing has demonstrated remarkable resilience and recovery.
DeFi open borrows have surged by 959%, rising from a bear market low of $1.8 billion in late 2022 to $19.1 billion across 20 platforms and 12 blockchains by the end of 2024.
This recovery highlights the growing preference for blockchain-based lending applications that operate without intermediaries.
Zack Pokorny, a research associate at Galaxy Digital, noted that DeFi borrowing outpaced CeFi recovery due to its permissionless nature and ability to withstand market turmoil.
“The largest DeFi platforms continued to function during the chaos that forced major CeFi lenders to shut down,” Pokorny explained.
DeFi platforms like Aave (CRYPTO:AAVE) and Compound (CRYPTO:COMP) have gained traction by requiring over-collateralisation, which reduces credit risk compared to CeFi models.
Ethereum (CRYPTO:ETH) remains the leading blockchain for DeFi lending, with over $33 billion in deposits as of March 2025.