The size of the crypto lending market has fallen by over 43% from its 2021 high of $64.4 billion, dropping to $36.5 billion by the end of the fourth quarter of 2024, according to a report from Galaxy Digital published on April 14. This decline began in 2022, following the collapse of several major centralized finance (CeFi) lenders including Genesis, Celsius Network, BlockFi, and Voyager. These firms filed for bankruptcy as crypto prices fell, leading to a significant reduction in both the supply and demand for crypto loans.
The impact on CeFi lending was severe. At its peak in 2022, CeFi lending had a combined book size of $34.8 billion. By the end of 2024, this had dropped to $11.2 billion—a 68% decline. According to Galaxy Digital research associate Zack Pokorny, “The decline can be attributed to the decimation of lenders on the supply side and funds, individuals, and corporate entities on the demand side.” He noted that the centralized lenders who filed for bankruptcy are no longer operating, which sharply reduced the available borrowing options in the space.
Despite the downturn in the overall lending market, borrowing activity through decentralized finance (DeFi) platforms has seen a strong recovery. After hitting a low of $1.8 billion in open borrows during the bear market in late 2022, DeFi borrowing surged to $19.1 billion by the end of 2024. This represents a 959% increase over eight quarters. The report states that this recovery is due to the permissionless nature of DeFi platforms, which allowed them to remain operational while CeFi platforms shut down. “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,” Pokorny wrote.
DeFi lending now spans 20 lending applications and 12 blockchains, showing that decentralized platforms have maintained user interest even during periods of market volatility. In contrast, the CeFi sector has become more concentrated. Three firms—Tether, Galaxy, and Ledn—now account for 88.6% of all remaining CeFi lending and 27% of the total crypto lending market.
While the total market has yet to return to its previous highs, the strong performance of DeFi lending points to a shift in the structure of the crypto borrowing landscape. The report highlights that although CeFi has contracted sharply, DeFi platforms have managed to recover and expand, signaling continued demand for decentralized financial services even as centralized options have declined.
