According to a research report released by Galaxy Digital on April 14, the overall outstanding loans in DeFi lending have grown nearly tenfold since the lows of the 2022 bear market, becoming a focal point in the market. The report indicates that by the fourth quarter of 2024, the total scale of the crypto lending market will be $36.5 billion, a 43% decline from the historical peak of $64.4 billion in 2021.
Galaxy Digital researcher Zack Pokorny stated that this downturn primarily stems from a collapse on both the supply and demand sides, including the failure of several centralized lending platforms (CeFi), as well as a weakening demand for funds from investors, institutions, and funds. The CeFi lending market began to experience significant declines in 2022, when major platforms such as Genesis, Celsius, BlockFi, and Voyager filed for bankruptcy, triggering a chain reaction. The report estimates that the CeFi lending market lost 82% of its lending scale over two years, severely impacting the overall market.
However, amidst the collapse of CeFi, DeFi lending applications have demonstrated resilience. Galaxy’s data shows that when DeFi lending hit its lowest point in Q4 2022, the total outstanding loans in the market were only $1.8 billion; by the end of 2024, this figure has rebounded to $19.1 billion, marking a growth of up to 959%, spread across 20 DeFi applications and 12 blockchain networks. Pokorny believes that the rapid recovery of DeFi is attributed to its “permissionless” nature, meaning that users can participate in lending activities without the need to trust any intermediaries. Unlike CeFi giants that have gone bankrupt and exited the market, most mainstream DeFi lending platforms have survived and continue to operate normally.
Despite a significant shrinkage in CeFi lending market share, it still maintains a certain scale. The report indicates that by the end of 2024, the total scale of CeFi lending will be $11.2 billion, down 68% from the peak of $34.8 billion in 2022. Among them, the three major platforms Tether, Galaxy, and Ledn combined account for 88.6% of the CeFi market, also representing 27% of the overall crypto lending market.
