The dynamics of crypto lending have shifted significantly, with decentralized finance (DeFi) now leading over centralized finance (CeFi). According to a report from Galaxy Digital, DeFi platforms achieved an impressive $19.1 billion in outstanding loans by the close of 2024, nearly twice the $11 billion reported by CeFi.
In late 2022, DeFi lending was a mere $2 billion. This represents an extraordinary increase of about 960%. Why the surge? The answer primarily lies in transparency. Platforms like Aave and Compound, along with newer cross-chain options, provide immediate access and automated terms—features that traditional CeFi often lacks. Here, users can witness real-time on-chain activities without delays or secretive agreements.
Some insights from @galaxyhq Research and @syrupsid on crypto lending: – The peak of $64 billion from late 2021 is still a long way off. – Tether, Galaxy, and Ledn now account for roughly 90% of CeFi lending. – On-chain lending is steadily increasing its market share. – @syrupsid predicts further changes ahead.
Centralized lenders, including Tether and Ledn, are now focusing on institutional clients rather than the retail market that gravitates towards permissionless apps. While not growing as rapidly as the DeFi sector, CeFi remains stable in institutional finance.
Despite the overall crypto lending market contracting 43% to $36.5 billion since its high in Q4 2021, DeFi’s significant rebound illustrates a shift in user confidence. The crypto lending space is evolving into two distinct branches—CeFi, which services institutions discretely, and DeFi, which is promoting an accessible, open landscape for everyone.
Key Takeaways
- DeFi lending reached $19.1B in 2024, nearly doubling CeFi’s $11B, marking a 960% surge since late 2022.
- Features such as transparency and automation from platforms like Aave and Compound are drawing users towards DeFi.
- CeFi lenders are pivoting their focus to institutional clients through customized OTC deals.
- The broader crypto lending market has shrunk 43% from its 2021 peak, but DeFi’s resurgence indicates increased user trust.
- The paths of CeFi and DeFi are diverging, with CeFi catering to institutions while DeFi leads a transparent and open recovery.
