The tables have turned in the world of crypto lending, and it’s not even close. In an interesting turn of events showing the market growth regarding CeFi vs DeFi, a report by Galaxy Digital shows that by the end of 2024, decentralized finance (DeFi) lending platforms had racked up a staggering $19.1 billion in open borrows. That’s nearly twice as much as their centralized finance (CeFi) rivals, who reported around $11 billion.
To put this in perspective, back in late 2022, DeFi lending was barely scraping $2 billion. Now? It’s surged by nearly 960%. That’s not just a comeback; that’s a full-blown glow-up.
What’s behind the rise? Transparency, mostly. DeFi platforms like Aave, Compound, and newer cross-chain options offer borrowers something CeFi often can’t: instant access, automated terms, and open books. You can see what’s happening on-chain in real-time. No backroom deals, no waiting on approvals.
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Add new tools that let assets move easily across chains, and the recipe works. Users vote with their wallets, and those wallets connect to DeFi protocols.
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That said, CeFi isn’t going away. It’s just playing a different game now.
While retail has drifted toward permissionless DeFi apps, centralized lenders like Tether and Ledn are leaning toward their strengths, catering to institutions. These firms dominate the CeFi scene, controlling nearly 90% of its loan volume.
Some insights from @galaxyhq Research and @syrupsid on the state of crypto lending:
– We are still far from the $64 billion peak of late 2021– Tether, Galaxy and Ledn now account for ~90% of CeFi lending– Onchain lending is steadily gaining market share– @syrupsid thinks…
— Nina Bambysheva (@ninabambysheva) April 14, 2025
The deals here are bigger, more custom, and less visible. OTC lending, collateral flexibility, and white-glove services make sense for hedge funds and large firms that aren’t ready (or willing) to trust smart contracts with eight-figure loan books.
So, while CeFi isn’t growing at DeFi’s pace, it’s still holding steady in the institutional world.
CeFi vs DeFi: Market Contraction and Recovery
Zooming out, though, the entire crypto lending market has shrunk since the bull run. In Q4 2021, the total lending market hit $64.4 billion. Today, it’s down 43% to $36.5 billion.
Why? The collapse of major lenders like Celsius and BlockFi, paired with broader market fatigue, spooked many borrowers. Even now, some are still licking their wounds. Demand hasn’t fully returned, especially in CeFi.
But DeFi’s bounce suggests recovery is underway, but it’s not where people expected. Instead of running back to centralized lenders, users explore decentralized alternatives with fresh eyes and maybe a little more caution.
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The Future of Crypto Lending
Here’s the big picture: the lending world is splitting. CeFi is becoming a backroom affair, mostly for big-money players. DeFi, conversely, is increasingly open to anyone with a wallet and a bit of curiosity.
Will the lines blur again in the future? Maybe. But for now, we’re watching two parallel paths. One is permissioned, institutional, and tailored. The other is permissionless, transparent, and picking up serious momentum.
As crypto lending continues to grow in popularity, it’s clear that DeFi isn’t just back — it’s leading the charge into whatever comes next.
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Key Takeaways
DeFi lending hit $19.1B in open borrows by the end of 2024, nearly doubling CeFi’s $11B and marking a 960% surge since late 2022.
Transparency, automation, and cross-chain support from platforms like Aave and Compound are driving users toward DeFi.
CeFi lenders are shifting focus to institutional clients, offering custom OTC deals and flexible collateral terms.
The overall crypto lending market shrank 43% from its 2021 peak, but DeFi’s rebound signals growing user trust.
Crypto lending is diverging: CeFi serves institutions behind closed doors, while DeFi is leading a transparent, permissionless comeback.
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