Crypto Lending Takes a Dive While DeFi Soars—You Won’t Believe the Numbers! 🎢

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Ah, the crypto lending market! Once a dazzling jewel worth a staggering $64 billion, it now finds itself in a rather unfortunate state, having plummeted over 43% to a mere $36.5 billion by the end of 2024. One might say it’s had a bit of a rough patch—like a socialite caught in a scandal! 💔

Now, let’s not forget the delightful world of decentralized finance (DeFi) borrowing, which has decided to throw a party of its own, surging a jaw-dropping 959% from the depths of despair. It’s as if the DeFi crowd has taken a page from the playbook of a particularly resilient phoenix! 🔥

For those unacquainted with the finer points of crypto lending, allow me to elucidate: borrowers can use their crypto treasures as collateral to secure loans, while lenders, bless their hearts, can lend out their holdings to earn a bit of interest. It’s a charming little arrangement, really—until it isn’t! 😏

According to a rather enlightening report from Galaxy Digital, the decline in crypto lending can be attributed to the unfortunate demise of several lenders on the supply side, coupled with a rather lackluster demand from funds, individuals, and corporate entities. One can only imagine the tea being spilled in those boardrooms! ☕

The crypto lending market began its downward spiral in 2022, when the likes of Genesis, Celsius Network, BlockFi, and Voyager decided to file for bankruptcy—talk about a dramatic exit! Their collective misfortune led to a staggering 78% collapse in the lending market, with CeFi lending losing a whopping 82% of its open borrows. It’s enough to make one weep into their champagne! 🍾

While the overall crypto lending market is still licking its wounds, DeFi lending has made a rather impressive comeback, as some metrics suggest. It’s like watching a comeback kid in a musical—everyone loves a good redemption story! 🎭

DeFi Borrows Grow Nearly 10-Fold

At its nadir, the crypto lending market found itself with a paltry $1.8 billion in open borrows during the bear market of late 2022. But lo and behold! By the end of 2024, DeFi open borrows skyrocketed to $19.1 billion across 20 lending applications and 12 blockchains. That’s a 959% increase, darling! Talk about a glow-up! 💅

“DeFi borrowing has experienced a stronger recovery than that of CeFi lending,” quipped Zack Pokorny, the research associate at Galaxy Digital, who clearly has a flair for the dramatic. He added:

“This can be attributed to the permissionless nature of blockchain-based applications and the survival of lending applications through the bear market chaos that felled major CeFi lenders.”

“Unlike the largest CeFi lenders that went bankrupt and no longer operate, the largest lending applications and markets were not all forced to close and continued to function,” he continued, likely with a twinkle in his eye. ✨

As for the outstanding CeFi borrows? They’re worth a collective $11.2 billion, which is a staggering 68% lower than the peak of $34.8 billion achieved in 2022. It’s a bit like watching a once-glamorous starlet fade into obscurity! 🌟

The three largest CeFi lenders—Tether, Galaxy, and Ledn—now account for a combined 88.6% of the total CeFi lending market and a rather unimpressive 27% of the total crypto lending market. It’s a bit like a party where only a few guests show up, isn’t it? 🎉

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2025-04-14 16:36