A recent Galaxy report emphasized that, despite the fact that Tether led the crypto -credit market with two other companies, decentralized applications placed almost double the amount in outstanding loans at the end of 2024.
According to the report, the crypto credit market was around $ 30 billion on December 31, excluding collateral debt position (CDP) Stablecoins.
This exclusion offers a clearer picture of the crypto credit market. The report noted that there may be some overlap between the total size of the centralized finance (CEFI) loan books and the delivery of CDP Stablecoins.
The reason is that specific CEFI credit providers use crypto-pursuit to Mint CDP-Stablecoins, which are then borrowed from off-chain borrowers, creating the potential for double counting.
Adding CDP -Stablecoins increases the market size to $ 36.5 billion. Tether, Galaxy and LEDN consisted of 88.6% of the CEFI credit sector, with a combined loan book of $ 9.9 billion. This group represented 27% of the total crypto credit market, including CDP Stablecoins.
The market size of $ 36.5 billion decreases by 43% compared to the peak of $ 64.4 billion in the last quarter of 2021. The market contraction is attributed to the collapse of multiple lenders and a broader decrease in the demand for borrowers.
CEFI for Settings
Cefi Lending consists of three main categories: freely available (OTC) loans, Prime Brokerage Services and Private Credit on the chain.
These offers are aimed at institutional borrowers with adjusted conditions and collateral structures, often off-chain or carried out via hybrid mechanisms.
OTC loans remain usual with accredited investors because of their bilateral adjustment options, including adjustable loan value ratios and duration cities.
Prime Brokers offer margin financing to a narrower series of digital assets and products traded with exchange. At the same time, the private credit on chains enables users to implement capital using off-chain credit agreements through liquidity aggregation in the chain.
Although centralized services offer tailor -made credit products, their reach has been considerably reduced as a result of increased counterparty risk and reduced retail confidence after speeching insolventions between 2022 and 2023.
Defi lends 959% since 2022
Open loans in Defi protocols reached $ 19.1 billion in the fourth quarter, spread over 20 credit applications and 12 blockchain networks.
This represents an increase of 959% compared to the last quarter of 2022, when the Defi market reached a low of $ 1.8 billion in open loans. The report attributes the increase to the resilience of permissionless platforms, cross-chain capital mobility and the rise of specialized credit applications.
Unlike CEFI, Defi Lending enables users to handle smart contracts directly to borrow and borrow assets without intermediaries.
Protocols such as Aave, Compound and newer cross-chain services offer real-time transparency, flexible rates and automated liquidation mechanisms. With the modular design of Defi, protocols can adapt to the demand of the user, activities and evolving liquidity conditions.
This growth reflects a user preference for Trust-Geminimized infrastructure and the operational stability Defi protocols that have been demonstrated during volatile market conditions.
The report concluded that centralized entities such as Tether are crucial for institutional loans. However, the accelerating shift to Defi -platforms reflects a broader redeployment of capital flows and risk frames within the crypto economy.
