The second quarter of 2025 saw a significant increase in borrowing activity in the crypto markets, as reported by Galaxy Research. According to their latest figures, loans backed by digital assets in DeFi protocols reached a record high of $26.47 billion, showing a 42.1% increase from the previous quarter. This surge pushed the total balance of crypto-collateralized loans, encompassing both DeFi and CeFi platforms, to $44.25 billion by the end of June.
The $10.12 billion quarter-over-quarter increase is one of the largest jumps since the bull market of late 2021 and early 2022, when outstanding loans briefly exceeded $50 billion. The report attributes this growth to a combination of rising crypto prices and heightened demand for leverage. Traders are increasingly turning to crypto lending to secure cash without selling their assets, especially with Bitcoin and Ethereum reaching new all-time highs. This trend suggests that more participants are willing to lock up their assets to access liquidity.
In the centralized finance (CeFi) lending space, Galaxy Research found that open loans totaled $17.78 billion as of June 30, representing a 14.66% increase from the previous quarter. Tether, the stablecoin issuer, continued to dominate the CeFi lending market with over half of the market share. Tether closed the quarter with $10.14 billion in open loans, accounting for 57.02% of the market. Nexo followed with $1.96 billion, while Galaxy’s lending unit reported $1.11 billion. Together, the top three lenders held 74.26% of the market share.
This marks Tether’s 12th consecutive quarter as the leader in the sector, a position it solidified following the collapse of several competitors in 2022 due to poor risk management and market turmoil. Tether’s market share has steadily climbed from under 20% in mid-2021 to nearly 70% by late 2022.
While Tether’s dominance has slightly decreased since then, Galaxy Research attributes this shift to multiple factors. Rising asset prices have spurred borrowing demand, and corporate treasuries are increasingly turning to CeFi lenders for funding. Additionally, competition among lenders has intensified, leading to more attractive borrowing rates across the market.
The report suggests that these factors could continue to reshape the landscape of crypto lending, with Tether remaining the undisputed leader in the sector. As borrowing activity in the crypto markets continues to accelerate, it will be interesting to see how the balance of power evolves in the lending space moving forward.