Research Highlights Tether, Galaxy, and Ledn as Dominant Forces in CeFi Lending While DeFi Borrowing Grows Rapidly

The crypto lending sector is still far from its peak during the 2021 bull market, but signs of recovery are emerging, especially within the decentralized finance (DeFi) space, according to a recent report by Galaxy Research.

At the close of 2024, the total crypto lending market was valued at $36.5 billion, a significant drop from the $64.4 billion peak reached during the 2021 bull run. This decline is largely attributed to the harsh crypto winter of 2022-2023, which resulted in the collapse of key lending platforms such as Celsius, BlockFi, and Genesis.

As a result, the centralized finance (CeFi) lending sector has seen its share of the market shrink dramatically. Tether, Galaxy, and Ledn now control nearly 90% of the $11.2 billion CeFi lending market, though this is down by 68% from the $34.8 billion peak seen in early 2022.

However, the real story is unfolding in the decentralized corner of the crypto lending market. DeFi protocols, which allow users to borrow crypto by locking up collateral in a decentralized manner without relying on a central authority, have seen explosive growth. Since the market’s low point in late 2022, DeFi lending has soared by an astonishing 959%, growing from $1.8 billion to $19.1 billion across 20 different platforms and 12 blockchains, Galaxy reports.

Galaxy Research analyst Zack Pokorny writes that the crypto lending sector is entering a new phase of growth. “The future of crypto lending looks bright, with stronger risk management, increased institutional involvement, and clearer regulatory structures on the horizon,” Pokorny stated.

“As the market matures, crypto lending could act as a crucial link between traditional finance and the growing digital asset ecosystem, paving the way for broader adoption of cryptocurrency-based financial services,” he added.