The crypto loan market is a shadow of its previous size that preceded the brutal 2022-2023 Crypto winter, but under the surface, signs of recovery are appearing, especially at the decentralized corners of the space.
The total crypto loan market was $36.5 billion at the end of 2024, according to the report. This is a sharp decline from the $64.4 billion peak seen at the height of the Bull Run in 2021 when renting Crypto amid a wave of speculative enthusiasm.
The recession, driven by the collapse of major lenders such as Celsius, Blockfi and Genesis, left several large players in control of the Centralized Finance (CEFI) sector of lending space. According to the report, Tether boasts the largest market share, followed by Galaxy and Ledn. These three entities account for almost 90% of the outstanding loans listed in the $11.2 billion CEFI loan book. In particular, CEFI loans have fallen 68% from their peak at the beginning of 2022 by $34.8 billion.
The real growth is to roll out on-chain, the report found.
The decentralized lending protocol has expanded rapidly as users can borrow crypto by locking collateral that operates around the clock and locking collateral without relying on centralized entities. Since the market bottomed out in late 2022, open differential borrowings have skyrocketed 959%, rising from $1.8 billion to $19.1 billion over 20 applications and 12 blockchains, Galaxy said.
“Today, the cryptocurrency lending market appears to be poised for a new stage of growth, featuring improved risk management frameworks, institutional participation and clearer regulatory guidelines.”
“As the sector continues to mature, it could serve as a bridge between traditional finance and the ecosystem of emerging digital assets, encouraging the wider adoption of cryptocurrency-based financial services,” he added.
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