DeFi lending has achieved a record in the third quarter of 2025, as reported by Galaxy Digital’s research group. Outstanding loans on DeFi applications ballooned by $14.52 billion, representing a 54.84% increase, ultimately reaching $40.99 billion.

When combined with CeFi (Centralized Finance), the total of crypto-collateralized loans soared to $65.37 billion in Q3, marking a rise of $21.12 billion compared to the previous quarter. This surpasses the historical high of $53.44 billion achieved in Q4 of 2021 by $11.93 billion.

DeFi Lending Drives To All-Time Highs

Galaxy Research attributes the robust growth in DeFi lending to various factors, including:

• The rise of points farming and incentive programs encouraging users to maintain open loans.
• Increased usage of collateral assets like Pendle PTs that allow favorable loan-to-value ratios.
• The overall climbing prices of cryptocurrencies increasing borrowing potential.

However, the report cautions that there’s a risk of double-counting in the combined CeFi and DeFi lending figures. Some CeFi lenders engage DeFi protocols to borrow assets before lending them to off-chain clients, complicating the differentiation between on-chain and off-chain exposures.

As DeFi activities surged, its lending share over CeFi reached 62.71% at the close of Q3 2025, significantly higher than the 59.83% seen in Q2 2025, and surpassing the previous peak of 61.99% in Q4 2024.

Simultaneously, the crypto-collateralized segment of collateral debt positions (CDPs) saw a decline of $658 million, or 7.4%, from the previous quarter. This, again, was accompanied by double-counting risks involving CeFi entities minting CDP stablecoins to serve off-chain borrowers.

Overall, the crypto-collateralized lending sector expanded by $20.46 billion, achieving a new record of $73.59 billion. At the end of the third quarter, DeFi applications held a 55.7% market share, which is up 588 basis points from Q2 2025. CeFi platforms represented 33.12%, experiencing a slight downturn of 36 basis points, while CDP-backed stablecoins accounted for 11.18%, down 547 basis points.

Noteworthy Industry Developments

As Q4 commenced, major players made significant moves to enhance the lending ecosystem. For instance, Ripple partnered with Immunefi in October to improve the XRPL Lending Protocol’s security and initiated a global “Attackathon” aimed at inviting top Web3 security researchers to rigorously test the system ahead of a validator vote.

In November, Tether, a leading stablecoin issuer, made a strategic investment in Ledn, a Bitcoin-backed lending platform, to bolster self-custody, foster financial resilience, and promote broader institutional adoption.