Encryption Lending Market Report: Scale of $36.5 billion, Significant Rise in the Decentralized Finance Sector

According to the latest report titled "The Current State of Cryptocurrency Lending," by the fourth quarter of 2024, the total scale of the crypto lending market reached $36.5 billion, a decrease of 43% from the historical peak of $64.4 billion in the fourth quarter of 2021. The market composition is as follows:

• Centralized Finance (CeFi) lending: $11.2 billion
• Decentralized Finance (DeFi) lending: $19.1 billion
• Cryptocurrency-backed Collateralized Debt Position (CDP) stablecoins: $6.2 billion

Since the bear market low in the fourth quarter of 2022, on-chain lending applications have shown strong rise. As of the fourth quarter of 2024, the total open loans across 20 lending applications and 12 blockchains amounted to $19.1 billion, a rise of 959% compared to eight quarters ago.

The top 3 CeFi lending institutions are Tether, Galaxy, and Ledn, with a loan size reaching 9.9 billion USD by the end of the fourth quarter of 2024, accounting for 88.6% of the CeFi lending market. Among them, Tether accounts for about 73%, reaching 8.2 billion USD.

The recovery speed of DeFi lending is faster than that of CeFi lending. This is attributed to the permissionless nature of blockchain applications and the survival of many DeFi lending applications during the bear market, while several large CeFi lending platforms have declared bankruptcy. This demonstrates the advantages of the design and risk management practices of large on-chain lending applications.

A significant change in the encryption lending market is that DeFi lending applications have demonstrated a stronger dominance than CeFi platforms during the bear market. In the bull market cycle of 2020-2021, DeFi lending applications accounted for only 34% of the total cryptocurrency borrowing; by the fourth quarter of 2024, the market share of DeFi lending applications has risen to 63%.

Future trends include:

1. Institutionalization of CeFi lending: Traditional financial institutions will enter the market, with Bitcoin ETFs used as collateral to promote the rise of leveraged trading.

2. The rise of on-chain private lending: tokenized debt instruments enhance transparency, reduce management costs, and attract venture capital.

3. The Institutionalization and Innovation of DeFi: Institutions accelerate the adoption of Decentralized Finance, and centralized companies build new products based on DeFi protocols.

Overall, the encryption lending market shows a trend of differentiation, with Decentralized Finance demonstrating strong resilience. On-chain lending is expected to become a core component of digital financial infrastructure, but risks such as collateral volatility and regulatory uncertainty must still be monitored.