Tether, Galaxy & Ledn Dominate CeFi Lending as DeFi Takes 63% of $37B Crypto Market
Once left in disarray after the 2022–2023 crypto collapse, the lending sector is making a cautious comeback. A new report from Galaxy Digital reveals that centralized crypto lenders—specifically Tether, Galaxy, and Ledn—have taken the reins of a shrunken but recovering market.
As of late 2024, these three entities command nearly $9.9 billion in active loans, representing close to 90% of the CeFi (Centralized Finance) lending space, according to Galaxy analyst Zack Pokorny.
From Collapse to Consolidation
Just a few years ago, centralized crypto lending was at its peak, with giants like BlockFi, Celsius, Genesis, and Voyager controlling most of the market. That dominance crumbled under the weight of risky lending practices, poor risk management, and falling asset values, resulting in $25 billion in lost loans.
By early 2023, centralized lending had hit a low point of $6.4 billion in total loans. Since then, the market has rebounded by 73%, reaching $11.2 billion, although it remains significantly below its all-time highs.
Now, Tether—long recognized for its USDT stablecoin—has emerged as a major lender. Galaxy Digital, led by Mike Novogratz, and Canada-based Ledn, focused on Bitcoin-backed loans, complete the trio leading CeFi’s revival.
Collectively, they now also hold 27% of the total crypto lending market, which includes crypto-backed stablecoins.
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DeFi’s Quiet but Strong Rise
While centralized players were reeling, DeFi (Decentralized Finance) protocols like Aave and Compound steadily gained ground. These platforms, which rely on overcollateralization and smart contracts rather than human discretion, now account for 63% of all crypto borrowing, a stark contrast to their market share during the previous bull run.
DeFi lending has surged from a low of $1.8 billion in Q4 2022 to more than $19.1 billion spread across 20 protocols and 12 different blockchains. Ethereum remains the core platform, hosting $33.9 billion in total deposits for DeFi lending as of March 2025.
Stablecoins Complicate the Picture
The role of crypto-backed stablecoins such as USDS ($7B) and Ethena’s USDe ($5B) adds another layer of complexity. USDS issues tokens against locked crypto collateral, while USDe uses a delta-hedging model, combining collateral with short derivatives positions to maintain a $1 peg. Some overlap in data may occur, as institutional lenders often use DeFi protocols to originate or secure loans.
Where Things Stand
Borrowing against Bitcoin currently ranges from 5.5% to 7%, reflecting a more stabilized interest rate environment, says Sid Powell, CEO of Maple Finance. Despite macroeconomic uncertainties—including tariff disputes—Powell believes the lending sector is showing resilience.
“The market’s not overheated, but it's definitely healthy,” Powell says. “Many participants are watching from the sidelines, yet lending remains one of the most vital functions in the crypto economy.”
