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