The crypto lending market has reached an all-time high of $61.76 billion, exceeding its previous peak in 2021, according to recent industry data. The surge comes from both centralized finance (CeFi) and decentralized finance (DeFi) platforms, signaling a resurgence of lending activity. But beneath the record-breaking numbers, questions about sustainability are emerging.
CeFi Makes a Strong Comeback
CeFi loans, thought to be in decline after the 2022 downturn, have bounced back impressively. Galaxy Research reports $17.78 billion in CeFi loans as of June 30, 2025, marking a 14.66% increase in just one quarter. When including $12.74 billion from DATCO debt and an additional $3–$6 billion from crypto ETF-backed loans, the total surpasses the $34.8 billion record set in 2021.
Industry experts attribute the rebound to competitive interest rates, stronger risk management, and rising corporate demand for structured returns. As Galaxy notes, “Players like Ledn have streamlined their offers and secured their collaterals, driving confidence back into the CeFi lending market.”
DeFi Explodes – But Adoption Slows?
DeFi lending has also soared, reaching $26.47 billion by the end of June, a 42.11% quarterly growth and the highest level ever recorded. However, the number of active Ethereum addresses has dropped by 27% compared to May 2021, raising concerns about actual user adoption.
The growth, analysts suggest, may be inflated by looping strategies—where users borrow ETH against stETH, restake it, and repeat the cycle to arbitrage yields against borrowing costs. “Looping creates volume but doesn’t necessarily indicate organic growth,” Galaxy warns.
Is This Boom Sustainable?
While the numbers suggest a renewed golden era for crypto lending, much of the current expansion may rely on circular leverage and incentive-driven activity. If market conditions change or yields compress, the trend could reverse.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.