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Points of Focus
- CeFi crypto-collateralized loans reached $22.98 billion at the end of Q2, overtaking DeFi lending apps for the first time since Q3 2023.
- Outstanding DeFi loans fell 27.6% quarter-on-quarter to $20.43 billion, compared with a 9.6% decline in CeFi.
- Galaxy Research said the current credit contraction has unfolded gradually, without the cascading failures that defined the 2022 unwind.
Centralized crypto lenders have overtaken decentralized finance (DeFi) lending apps in outstanding loans for the first time in nearly three years, after DeFi borrows fell much faster during the second quarter.
Galaxy Research tracked $22.98 billion of open centralized finance (CeFi) loans as of June 30, down 9.6% from the previous quarter. Outstanding loans across DeFi lending applications fell 27.6% to $20.43 billion, pushing DeFi’s share of the two segments to 47.05%.
The crossover came during a broader reduction in crypto leverage. Total crypto-collateralized lending, including the crypto-backed portion of CDP stablecoins, fell 16.8% to $56.16 billion in Q2.
DeFi lending takes the larger hit
DeFi lending has now contracted for three consecutive quarters. Outstanding loans peaked at $47.13 billion in September 2025 and stood at $21.94 billion by July 21, according to Galaxy, a decline of more than 53%.
Aave remains central to the onchain credit market, where recent work has focused on automating risk controls around more complex collateral such as Pendle principal tokens. Galaxy’s latest Aave snapshot also points to a reduction in highly leveraged e-mode debt, commonly used for staking and restaking loops.
Borrowing costs also rose during the quarter. Galaxy’s weighted average stablecoin borrow rate increased 27 basis points between March 31 and June 30, then climbed to 3.88% after quarter-end. The report also found that Wrapped Ether’s (WETH) share of Aave liabilities had fallen from 51.1% in its previous analysis to just over 37%, alongside the decline in e-mode borrowing.
CeFi books held up better
CeFi lending also contracted, with most of the decline concentrated in Tether’s secured loan book. Galaxy said Coinbase, Ledn, Arch, Sygnum, Milo, and its own lending business recorded growth during the quarter.
Tether still accounted for 58.5% of the CeFi lending market tracked by Galaxy. Changes in one large lender can move the aggregate figure substantially.
The comparison comes with a data limitation. Galaxy warns that CeFi loans can overlap with DeFi loans when centralized lenders borrow assets onchain and then lend them to clients offchain. Private lender figures are also harder to verify because disclosure practices vary.
The unwind looks different from 2022
Galaxy describes the current cycle as measured deleveraging. Crypto-backed lending fell by more than 55% in Q2 2022 as major lenders failed and liquidity disappeared. The latest quarterly declines were roughly 10%, 5%, and 17%, a much slower unwind than the collapse seen in 2022.
Corporate treasury debt and futures open interest also declined, with futures open interest beginning to recover after quarter-end. Recent Bitcoin (BTC) derivatives data still shows large open positions, suggesting leverage has shifted unevenly across the market.
Whether that crossover persists will depend on what happens as onchain borrowing stabilizes.
Galaxy’s data set cannot trace individual borrowers moving between venues, leaving the next quarterly release to show whether CeFi’s lead is durable.
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