The overall crypto lending market remains significantly lower than its 2021 highs, but decentralized finance (DeFi) platforms are seeing substantial growth as the sector starts to rebound, according to Galaxy Research’s latest report.
As of the close of 2024, the total value of the crypto lending market stood at $36.5 billion, a considerable drop from the $64.4 billion peak it reached during the 2021 bull market. This decline is primarily attributed to the crypto winter of 2022-2023, which saw the collapse of major centralized lending platforms like Celsius, BlockFi, and Genesis.
In the centralized finance (CeFi) sector, Tether, Galaxy, and Ledn continue to dominate, collectively holding nearly 90% of the $11.2 billion CeFi lending market. However, CeFi lending has dropped 68% from its early 2022 peak of $34.8 billion, reflecting the challenges the sector has faced in recent years.
On the other hand, decentralized lending protocols have seen rapid expansion. These DeFi platforms, which enable users to borrow crypto by locking up collateral without relying on a central entity, have grown significantly since late 2022. According to Galaxy, DeFi lending has increased by a remarkable 959%, rising from $1.8 billion to $19.1 billion across 20 platforms and 12 blockchains.
Galaxy Research analyst Zack Pokorny suggests that the crypto lending market is now entering a new phase of growth. “The industry is moving towards more robust risk management, greater institutional participation, and clearer regulatory frameworks,” Pokorny noted.
He further added that as the sector evolves, crypto lending could play a key role in bridging traditional finance and the rapidly growing digital asset ecosystem, supporting broader adoption of crypto-based financial services.
