"The State of Crypto Lending : Bringing Transparency to an opaque market"
This is the title of the report by Galaxy Research published on April 25th 2025. The report aims to explain the nature of Crypto Lending to people. The report is quite difficult to understand because of the complex nature of the topic, as well as the wording. I will simplify as much as I can, from what I understand .
The report focus on 2 types of Crypto Lendings, Centralize Finance - CeFi and Decentralized Finance - DeFi, and each had furthur categorized into 3 types -
for CeFi -
1. OTC Lending
2. Prime Brokerage
3. On Chain Private Credit
for Defi -
1. Lending Applications
2. Collateral Debt Position (CDP) $USDC
3. Decentralized Exchanges (DEXs) ( $UNI , $CAKE )
Because of several Black swam events, both #Defi and #Cefi usages have been down since 2022. They were shrunk by about 78% during the bear market since then, according to the report. The CeFi lending reached 34.8 billions at its peak, but dropped 82% in the bear market. The report said Risk Mismanagement , Poor Credit Risk Management and Poor Internal Risk Controls played a significant role in the collapse of digital assets in 2022 and 2023.
What’s Next for the Crypto Lending Market?
The market has begun to recover in 2024, but still far from its #ATH . Cryptos lending and borrowing capabilities have emerged as foundational pillars of both decentralized and centralized crypto finance, creating essential market mechanisms that parallel traditional financial systems while introducing novel technological innovations. The autonomous, algorithmic nature of onchain lending infrastructure has established a new paradigm for market operations. We are going to see new and clearer regulatory guidelines in 2025, which will bring more institutional participation. The convergence of traditional financial expertise with blockchain-based innovation suggests a future where crypto lending services become increasingly sophisticated and reliable, while maintaining the unique benefits of blockchain technology.
