The DeFi crypto lending market flippens the CeFi lending market

Decentralized finance (DeFi) lending has overtaken centralized finance (CeFi) lending in crypto by outstanding loan volume, marking a structural shift in how leverage is provided in digital asset markets. According to Galaxy Research’s Q3 2025 leverage report, DeFi lending applications accounted for about $40.99 billion in outstanding loans at quarter‑end, compared with roughly $24.37 billion in open CeFi borrows, giving DeFi a clear lead and about two‑thirds of total on‑chain borrowing. This “flippening” is occurring even as the combined DeFi + CeFi lending market has pushed to a new all‑time high in total crypto‑collateralized borrowing, surpassing the peak set in late 2021. The shift reflects both the collapse and retrenchment of major CeFi lenders and the resilience and growth of on‑chain protocols. Large centralized lenders such as Celsius, BlockFi, Voyager, and Genesis failed during the 2022–2023 bear market, wiping out billions in deposits and sharply shrinking the CeFi lending segment. By contrast, DeFi lending protocols such as Aave, Morpho, Spark, and Compound have expanded, supported by transparent on‑chain collateralization, algorithmic rate setting, and improved risk controls. For the broader market, DeFi’s dominance in lending means credit creation is increasingly governed by open smart contracts rather than discretionary centralized desks, which has implications for transparency, counterparty risk, regulatory focus, and how quickly leverage can expand or contract in future crypto cycles.

✨ AI-generated background, compiled from web sources — not editorial content.

More coverage

• Crypto Lending Platform Comparison: DeFi vs CeFi - Spark (spark.money)
• The State of Crypto Leverage: Q3 2025 Market Breakdown - Galaxy (galaxy.com)
• The Rise of DeFi Lending and How to Get Involved | Hedera (hedera.com)
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