It wasn’t long ago that crypto lending looked like the industry’s most radioactive ruin. BlockFi, Celsius, Voyager, Genesis, once industry’s leaders, imploded in the great 2022-2023 washout, wiping out $25 billion in loans and much of the sector’s credibility.
Now, a new report from Galaxy Digital suggests a partial resurrection is underway, led by a familiar cast of survivors. Tether, Galaxy and Ledn have emerged as the dominant players in centralized finance (CeFi) lending, holding a combined $9.9 billion in outstanding loans at the end of 2024. That’s nearly 90% of the CeFi market, according to Galaxy’s research associate Zack Pokorny.
Crypto lending exists for many of the same reasons as traditional borrowing. Traders borrow to short tokens or increase leverage, long-term holders unlock liquidity without selling, businesses take loans to fund operations, and lenders earn passive yield on idle assets.
Today, the total crypto lending market stands at $36.5 billion, still 43% below its $64.4 billion peak in late 2021. But the composition of that market is shifting fast. DeFi platforms now account for 63% of crypto borrowing (excluding crypto-backed stablecoins), nearly double their share during the last bull run.
At its height in late 2021-early 2022, centralized crypto lending was dominated by Genesis, Celsius, and BlockFi, which together controlled 76% of the market. Then came the crash: falling token prices, sloppy risk management and toxic collateral triggered an industry-wide credit unwind. By Q1 2023, CeFi’s total loan book had collapsed to $6.4 billion. It has since grown back to $11.2 billion, a 73% rebound, but is still down two-thirds from its peak.
A new trio has filled the void:
- Tether, long known for its dollar-pegged stablecoin, has become a heavyweight lender.
- Galaxy Digital, billionaire Mike Novogratz’s crypto conglomerate, self-identifies as operating one of the largest active loan books in the industry.
- Ledn, a Toronto-based bitcoin-focused lender, rounds out the new cartel.
Together, they control 89% of what remains of centralized crypto lending and 27% of the overall crypto lending market when including crypto-backed stablecoins.
While institutional lenders like Galaxy and Ledn fought to stay afloat, DeFi protocols quietly expanded their market share. Platforms like Aave and Compound, governed by code, require borrowers to post more collateral than they borrow, thus eliminating much of the credit risk that crippled CeFi.
At the bear market bottom in Q4 2022, DeFi borrowing had dropped to just $1.8 billion. It’s since surged more than tenfold to $19.1 billion across 20 platforms on 12 blockchains. Ethereum remains the primary blockchain for DeFi lending, with $33.9 billion in assets deposited as of March 2025. Lending, in fact, remains the largest use case for decentralized finance.
Crypto-backed stablecoins like the $7 billion USDS and the $5 billion Ethena USDe—the third- and fourth-largest stablecoins after Tether and Circle’s USDC—add complexity. In the case of USDS, users lock their crypto (for example, ether) into a smart contract as collateral, which then issues stablecoins. To minimize default risk, the value of the collateral must exceed the value of the issued tokens. USDe, by contrast, relies on a delta-hedging strategy, pairing crypto collateral with short positions in derivatives markets to maintain its $1 peg. Galaxy notes there may be some double-counting between centralized and decentralized loan books, as institutional lenders often use these and other DeFi protocols to originate loans for their clients.
“The rate for borrowing against bitcoin, is now hovering anywhere from 5.5%-7%. That’s down from what we’ve seen over the last few months. It suggests a lot of people are sitting on the sidelines while the tariff wars play out, but the lending market is still in a relatively strong position today,” says Sid Powell, CEO and cofounder of Maple Finance, an institutional lender with a loan book of over $300 million that operates on the blockchain. “I think a lot is riding on whether the 10-year-yield comes under control a bit, and if the Fed will start seeing some inflation reduction and an improvement in employment numbers. Then we’ll see a rate cut, and that will be beneficial for crypto asset prices.”
Winds have already been shifting in favor of a broader institutional reentry. In July, Cantor Fitzgerald, the primary custodian of Tether’s collateral, announced plans to launch a $2 billion bitcoin financing business to provide leverage to bitcoin holders (U.S. Commerce Secretary Howard Lutnick is Cantor’s former chairman and CEO. Though he has agreed to divest his interest in the company to comply with U.S. government ethics rules, the reins now belong to his sons). And in January, the U.S. Securities and Exchange Commission rescinded Staff Accounting Bulletin (SAB) 121, easing restrictions on how publicly traded companies treat client-held crypto assets. That move removed a major roadblock for banks and institutions to participate in crypto custody and lending. U.S.-listed bitcoin ETFs have also opened new doors. As Galaxy notes, the entrance of prime brokers offering lending and leverage on these products is already expanding the market.
“[Cantor’s launch] will set an interesting trend, because bitcoin is a very liquid asset that trades 24/7 around the world. It’s much more liquid and transparent than conventional fixed income, while paying a yield that’s comparable to an investment-grade bond. A lot of large institutions are holding bitcoin, and being able to turn that into a fixed income-style product where they can earn yield is very attractive,” adds Powell. “We, among others, are looking at how we can package and tokenize that asset for institutional consumption.
Maple recently launched a product in partnership with Core, the creator of a yield-bearing bitcoin token, that lets institutions earn yield on their bitcoin in kind. “We’ve already seen $50 million in inflows in under two months,” Powell says. “I’m interested in whether that becomes something of a Trojan horse for institutions to do more on-chain.”
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