During the second quarter of 2025, borrowing activity in crypto markets surged significantly, as per the latest data from Galaxy Research. The study revealed that loans supported by digital assets in DeFi protocols reached an all-time high of $26.47 billion, up by 42.1% from the previous quarter. This increase propelled the total balance of crypto-collateralized loans, encompassing both DeFi and centralized finance (CeFi) platforms, to $44.25 billion by the end of June.
The $10.12 billion quarterly jump is one of the most significant increases since the bull market of late 2021 and early 2022, when outstanding loans briefly exceeded $50 billion. The report attributed this growth to a combination of surging crypto prices and heightened demand for leverage.
Traders often opt for crypto lending to access funds without selling their assets, and with Bitcoin and Ethereum recently surpassing previous all-time highs, more participants are willing to collateralize their assets to access liquidity.
Tether Leading CeFi Lending
Galaxy Research noted that as of June 30, open CeFi loans totaled $17.78 billion, marking a 14.66% increase from the previous quarter. Compared to the low of $7.18 billion in Q4 2023 during the bear market, the sector has grown by 147.5%.
Stablecoin issuer Tether continued its dominance in the CeFi lending space, controlling over half of the market. By the end of the quarter, Tether held $10.14 billion in open loans, representing a 57.02% market share.
Nexo followed with $1.96 billion, while Galaxy’s lending unit reported $1.11 billion. Together, these top three lenders accounted for 74.26% of the market.
This marks Tether’s 12th consecutive quarter of sector leadership, a position it solidified following the downfall of Genesis, Celsius, Silvergate, BlockFi, and Voyager in 2022 due to poor risk management and market turbulence.
These failures paved the way for Tether’s market share to rise from below 20% in mid-2021 to nearly 70% by late 2022.
While Tether’s dominance has slightly decreased from those levels, Galaxy attributed this shift to various factors.
The firm mentioned that rising asset prices have led to increased borrowing demand, with corporate treasuries turning to CeFi lenders for funding. Additionally, competition among lenders has intensified, resulting in more attractive borrowing rates across the market.
The report suggested that these trends could continue reshaping the landscape of crypto lending, even as Tether maintains its position as the prominent player in the sector.
