Galaxy Report Highlights Market Restructuring
The global crypto lending market has contracted sharply, falling 43% from its 2021 peak of $64.4 billion to $36.5 billion by the end of 2024, according to an April 14 report from Galaxy Digital.
The decline began in 2022 after the collapse of several major centralized finance (CeFi) lenders—Genesis, Celsius, BlockFi, and Voyager—which triggered widespread bankruptcies and drastically reduced both lending supply and borrowing demand.
CeFi Lending Decimated as Borrowers Exit
At its peak in early 2022, CeFi lending platforms held a combined book size of $34.8 billion. That figure has now plummeted to $11.2 billion, marking a 68% drop, as noted by 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,” Pokorny said.
The implosion of key CeFi firms left a gaping hole in the crypto credit market, with the bankruptcy filings of Genesis, Celsius, and others effectively removing large swaths of lending infrastructure overnight.
DeFi Lending Rebounds Nearly 10x Since 2022 Low
While CeFi has struggled, decentralized finance (DeFi) platforms have experienced a remarkable resurgence. After hitting a bear-market low of $1.8 billion in open borrows in late 2022, borrowing activity through DeFi protocols rebounded to $19.1 billion by Q4 2024—a 959% increase over eight quarters.
Galaxy attributes this dramatic comeback to the permissionless and resilient design of DeFi platforms:
“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 noted.
DeFi lending now spans 20 applications across 12 blockchains, reflecting user confidence in decentralized solutions despite crypto market volatility.
CeFi Lending Now Concentrated Among Few Survivors
Today, just three players—Tether, Galaxy, and Ledn—account for 88.6% of all remaining CeFi lending, and 27% of the total crypto lending market, according to the report. The sector’s contraction has led to consolidation, while DeFi has expanded and diversified.
While the overall crypto lending market is still well below its 2021 high, the growth of DeFi suggests a long-term structural shift. As centralized lenders collapsed under pressure, decentralized alternatives have proven resilient and scalable.
The Galaxy report concludes that demand for borrowing in crypto hasn’t vanished—it’s simply migrating from CeFi to DeFi. As regulatory scrutiny grows and investors favor transparency, decentralized protocols appear poised to lead the next chapter of crypto finance.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.