Decentralized Protocols Dominate Crypto Lending by End of 2024

The crypto lending landscape is undergoing a quiet transformation. While centralized giants like Tether continue to dominate headlines, the real momentum is building elsewhere—in decentralized finance.

A recent report from Galaxy shows that by the close of 2024, DeFi lending volumes had nearly doubled those of centralized platforms, signaling a major realignment in how capital flows through the digital economy.

Total crypto loans—excluding CDP-based stablecoins—stood at roughly $30 billion as of December 31. But once those collateral-backed stablecoins are factored in, the market size expands to $36.5 billion. Still, even with this broader scope, the industry is down 43% from its late-2021 peak, dragged by a collapse in borrower demand and a wave of lender failures.

Tether, along with Galaxy and Ledn, holds a commanding 88.6% share of the centralized loan market, managing a combined $9.9 billion. These firms still matter—especially in institutional circles where OTC deals, prime brokerage, and hybrid off-chain lending are common. Yet trust issues linger. After multiple centralized lenders went under between 2022 and 2023, the appetite for off-chain credit has noticeably cooled.

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Meanwhile, DeFi is thriving. Loans across 20 decentralized platforms and a dozen blockchains climbed to $19.1 billion in Q4 2024, marking an eye-popping 959% rebound from the lows of 2022. The resurgence is driven by DeFi’s transparency, real-time risk management, and composability—features that appeal to users wary of centralized blowups.

Galaxy’s report doesn’t downplay the continued relevance of CeFi, particularly for large institutions. But the numbers tell a clear story: capital is increasingly flowing toward decentralized protocols that offer trustless infrastructure and resilience under pressure.

Alexander Stefanov

With over 8 years of experience in the cryptocurrency and blockchain industry, Alexander is a seasoned content creator and market analyst dedicated to making digital assets more accessible and understandable. He specializes in breaking down complex crypto trends, analyzing market movements, and producing insightful content aimed at educating both newcomers and seasoned investors. Alexander has built a reputation for delivering timely and accurate analysis, while keeping a close eye on regulatory developments, emerging technologies, and macroeconomic trends that shape the future of digital finance. His work is rooted in a passion for innovation and a firm belief that widespread education is key to accelerating global crypto adoption.