Q3 Sees Crypto Leverage Reach All-Time High as DeFi Reshapes Market Dynamics, Galaxy Reports

Crypto-Collateralized Borrowing Surges to $73.6B in Q3 as Market Leverage Strengthens, Galaxy Finds

Crypto-collateralized debt reached a record $73.6 billion in the third quarter, marking the sector’s most leveraged quarter ever. According to Galaxy Research, the structure of this leverage is significantly healthier than during the 2021–22 cycle.

Onchain lending drove much of the growth, now accounting for 66.9% of all crypto-backed borrowing, up from 48.6% at the previous peak. DeFi lending alone jumped 55% to a record $41 billion, fueled by incentive programs and improved collateral types such as Pendle Principal Tokens.

Centralized lending rebounded as well, with borrowing climbing 37% to $24.4 billion, though still about a third below 2022 highs. Market participants that survived the prior cycle have shifted toward fully collateralized models to attract institutional capital or pursue public listings, with Tether maintaining a dominant 60% share of CeFi loans.

Within DeFi, lending apps now command more than 80% of the onchain market, while CDP-backed stablecoins have declined to 16%. New chain deployments, including Aave and Fluid on Plasma, drove growth, with Plasma surpassing $3 billion in borrows within five weeks.

Shortly after the quarter, a leverage-driven liquidation event wiped out over $19 billion in a single day—the largest in crypto futures history—but Galaxy emphasizes this reflected mechanical de-risking, not systemic credit weakness.

Corporate digital-asset treasuries also remain active, with $12 billion in leveraged positions. Total industry debt, including DAT issuance, reached $86.3 billion.

Galaxy concludes that crypto leverage is rising, but now on a firmer, more transparent foundation, with collateralized structures replacing the opaque, unbacked credit that fueled prior boom-and-bust cycles.

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