DeFi Crypto Lending Reaches Over $19 Billion in 2024, Almost Doubling CeFi Lending
A recent report by Galaxy showed that while Tether is leading the crypto lending market, decentralized apps (DeFi) have seen a huge rise, with outstanding loans almost doubling by the end of 2024.
The crypto lending market was worth about $30 billion by December 31, 2024, not counting CDP stablecoins (collateralized debt position stablecoins). The report explains that this gives a clearer picture of the market size, since some CeFi lenders use crypto to create these stablecoins, which could lead to double-counting.
If you include CDP stablecoins, the market size grows to $36.5 billion. Tether, Galaxy, and Ledn make up 88.6% of the CeFi lending market, with a combined loan book of $9.9 billion. Together, they represent 27% of the total crypto lending market, including CDP stablecoins.
However, the market is smaller than it used to be. It was worth $64.4 billion in late 2021, but dropped by 43% due to the collapse of some lenders and lower demand from borrowers.
CeFi Lending for Institutions CeFi lending has three main areas: OTC (over-the-counter) lending, prime brokerage services, and on-chain private credit. These services are mainly for institutional borrowers and offer customized terms.
OTC loans are often used by accredited investors and can be customized with adjustable terms like loan-to-value ratios and maturity dates. Prime brokers provide margin loans tied to specific digital assets. On-chain private credit allows capital to be deployed through off-chain credit agreements with on-chain liquidity.
Although CeFi services offer tailored products, their reach has shrunk due to increased risk and reduced trust, especially after the high-profile failures of lenders between 2022 and 2023.
DeFi Lending’s Huge Growth DeFi lending saw dramatic growth, with $19.1 billion in open borrows by the fourth quarter of 2024. This is up 959% from $1.8 billion at the end of 2022. The surge is credited to the strength of permissionless platforms, cross-chain mobility, and specialized lending apps.
Unlike CeFi, DeFi allows users to borrow and lend directly through smart contracts without intermediaries. Platforms like Aave and Compound offer flexible rates and real-time transparency. The design of DeFi systems allows them to adapt to changes in user demand and market conditions.
This growth shows that many users prefer trustless systems, and DeFi has proven stable even in tough market conditions.
The report concluded that while centralized platforms like Tether are important for institutional lending, the growth of DeFi platforms signals a shift in how capital is flowing and risk is managed in the crypto world.
