Reports have disclosed that centralized crypto lending climbed to roughly $25 billion in outstanding loans in the third quarter, a figure that signals renewed activity among centralized platforms. Activity has picked up this year, and some firms that survived the recent shake-out are growing their loan books again.
CeFi Surges
According to Galaxy Research, the broader crypto lending market totaled about $36.5 billion as of Q4 2024, down from a high of $64.4 billion in Q4 2021. That drop reflects the fallout from earlier platform failures and bankruptcies that cut into both supply and demand.
The makeup of the market has shifted. Based on reports, the largest centralized lenders — including Tether, Galaxy and Ledn — now account for a large share of CeFi loans. Those three together held close to $10 billion of CeFi outstanding loans, equal to roughly 88.6% of that segment by the end of last year. Tether alone represented the biggest single slice.
Source: Galaxy Research
DeFi Borrowing Sees A Strong Comeback
DeFi borrowing has recovered sharply from the lows of the 2022–2023 downturn. Open borrows on decentralized platforms climbed from about $1.8 billion in the trough to $19 billion by the end of 2024, an increase of 959% over the period. This shows many users moved back to on-chain solutions as centralized options contracted.
Source: Galaxy Research
Why Numbers Matter Now
Market watchers say the new totals matter because they reveal where activity lives today: more on chain, and concentrated among fewer centralized players. Some lenders appear to be operating with higher collateral levels and clearer reporting than some of the failed firms of past years. That has calmed some investors. Still, the total lending market is far below its 2021 size.
Risks Remain
The concentration of CeFi loans in a handful of firms raises questions about single-point stress. If one large lender faces trouble, contagion could spread. Price swings in major cryptocurrencies also leave loans vulnerable to rapid liquidations. Regulators are watching the sector closely, and policy changes could reshape where and how loans are made.
What To Watch Next
Observers will be watching quarterly loan books, the pace of on-chain borrowing, and any signals of new capital flowing into lending desks. The market is rebuilding, but it is rebuilding in a changed form — smaller than the peak in 2021 and more split between centralized players and DeFi protocols.
Featured image from Unsplash, chart from TradingView