Crypto Lending Rises from the Ashes: $25B in New Loans-But Don’t Get Too Comfortable

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Ah, the sweet smell of a comeback! Despite the wreckage of past failures, centralized crypto lending has clawed its way back from the abyss. Reports indicate that the once-noble industry has reached a dazzling $25 billion in outstanding loans by Q3-this after a little “house-cleaning” in the past few years. As the dust settles, some platforms, those who survived the catastrophic earthquakes of previous bankruptcies, are back in the business, giddy as ever to grow their loan books again. But let’s not get carried away-yet.

CeFi Surges

According to a rather reassuring study by Galaxy Research (yes, the same outfit that tracks the latest crypto chaos), the overall crypto lending market hit $36.5 billion as of Q4 2024. That’s a far cry from the stratospheric highs of $64.4 billion in Q4 2021. It’s almost as if that massive drop was the result of failed platforms and bankruptcies… strange, right?

But hold your applause. The market is no longer as sprawling as it once was. The heavyweights of CeFi lending-Tether, Galaxy, and Ledn-now have a firm grip on a large portion of the loans. These three institutions alone held nearly $10 billion in outstanding loans, which is a staggering 88.6% of the CeFi segment by the end of last year. Tether, of course, holds the largest chunk-after all, someone has to be the king, right?

DeFi Borrowing Sees A Strong Comeback

And, wouldn’t you know it, DeFi (Decentralized Finance) has also made a triumphant return from its darkest days. DeFi borrowing soared from the rock-bottom $1.8 billion in 2022 to a staggering $19 billion by the end of 2024, representing a mind-blowing 959% increase. Apparently, as centralized options shrunk and faltered, people decided to go back to good old decentralized solutions. Who saw that coming? Everyone. Probably.

Why Numbers Matter Now

So, why should we care about these numbers? Because they reveal the pulse of the market today. And where does that pulse lie? More on-chain (who could’ve predicted that?) and concentrated among a select few centralized players. While some of these lenders operate with better collateral and more transparent reporting than their disastrous predecessors, the ghosts of 2021 still linger in the shadows. Despite the recovery, the total lending market is still far below its glory days.

Risks Remain

But let’s not kid ourselves-the risks are still lurking around every corner. With CeFi loans now concentrated in the hands of just a few players, any trouble in the ranks of one could trigger a domino effect. And with the volatility of major cryptocurrencies, those loans might get liquidated faster than you can say “unstable market.” Regulators are watching the sector like hawks, and any new policy changes could drastically change the game. Stay tuned, folks, the rollercoaster isn’t over yet.

What To Watch Next

What should we keep an eye on, you ask? Well, quarterly loan books, the pace of on-chain borrowing, and whether any new capital starts flowing into lending desks. Sure, the market is rebuilding, but it’s now a shadow of its former self-more fractured, smaller, and split between the titans of CeFi and the rebels of DeFi. What will come next? A revolution or another round of ruins? Grab your popcorn.

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2025-12-02 03:19