While the broader crypto lending market remains well below its 2021 highs, decentralized finance (DeFi) platforms are leading the way in the sector’s recovery, according to a report by Galaxy Research.
The crypto lending market was valued at $36.5 billion by the end of 2024, a substantial drop from the $64.4 billion it reached during the peak of the 2021 bull run. This decline is largely attributed to the fallout from the 2022-2023 crypto winter, which saw the collapse of several major lending platforms such as Celsius, BlockFi, and Genesis.
In the centralized finance (CeFi) space, Tether, Galaxy, and Ledn have maintained a dominant position, with the three platforms now holding nearly 90% of the $11.2 billion CeFi loan book. However, this sector has contracted significantly, falling 68% from its $34.8 billion peak in early 2022.
In contrast, decentralized lending protocols have experienced explosive growth. These platforms, which allow users to borrow crypto by locking up collateral without relying on centralized intermediaries, have surged since the market bottomed in late 2022. Galaxy reports that DeFi borrowings have skyrocketed by 959%, growing from $1.8 billion to $19.1 billion across 20 platforms and 12 blockchains.
Galaxy Research analyst Zack Pokorny predicts that the crypto lending sector is entering a new phase. “The market is poised for growth, supported by stronger risk management, institutional involvement, and clearer regulatory frameworks,” he said.
Pokorny also noted that as the sector continues to mature, crypto lending could act as a vital link between traditional finance and the expanding digital asset ecosystem, fostering wider adoption of crypto-based financial services.
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