DeFi Lending Hits Record 55.7% Share, Outpaces CeFi in Q3
Galaxy Digital’s Q3 report shows DeFi lending soared by 54.8% to $40.99 billion, capturing a record 55.7% market share. Combined with CeFi, crypto-collateralized loans hit $65.37 billion, surpassing the Q4 2021 high by $11.93 billion. Growth drivers include points farming, airdrop incentives and improved collateral like Pendle PTs. Rising asset prices have also boosted borrowing capacity. DeFi lending dominance rose to 62.7% of on-chain vs off-chain lending. Meanwhile, CDP-backed stablecoin debt fell 7.4% to $8.25 billion. Overall, crypto lending reached $73.59 billion in Q3, with DeFi accounting for 55.7%, CeFi 33.1% and stablecoins 11.2%. Daily borrows peaked at $43.82 billion on October 7 and held at $38.76 billion by month-end. Key ecosystem moves include Ripple’s XRPL Lending Protocol security push with Immunefi and Tether’s strategic investment in Bitcoin lender Ledn. Traders should watch DeFi’s resilience and market share gains as collateral values and incentive programs drive lending growth.
Bullish
The report’s record DeFi lending growth signals increased demand for on-chain borrowing. Higher collateral values and incentive programs point to robust liquidity and market confidence. Historically, surges in DeFi lending have coincided with bullish cycles, as seen in 2021 when lending peaked. Short-term, traders may see more leverage opportunities and tighter spreads. Long-term, expanded lending infrastructure and deeper liquidity may bolster market stability and institutional participation, reinforcing a bullish outlook.