{"id":92255,"date":"2025-12-16T13:00:00","date_gmt":"2025-12-16T10:00:00","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=92255"},"modified":"2025-12-17T12:42:08","modified_gmt":"2025-12-17T09:42:08","slug":"collateralised-trust","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/collateralised-trust\/","title":{"rendered":"Lending Trust\u00a0"},"content":{"rendered":"

About half of DeFi<\/a> market is collateralised crypto lending. In Q3 2025, the sector’s\u00a0 hit a record $73bn.<\/p>\n

After the collapses of BlockFi<\/a>, Celsius<\/a> and Genesis<\/a>, CeFi<\/span> platforms lost their dominance as users shifted towards decentralised venues for depositing and borrowing crypto.<\/p>\n

ForkLog examines the state of crypto lending and the challenges facing lenders.<\/p>\n

Trust, betrayed<\/h2>\n

After the collapse<\/a> of Terra and the ensuing bankruptcies of the largest centralised lenders, users became markedly more cautious about platforms that require trusting a third party.<\/p>\n

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Key milestones in crypto lending up to April 2025. Source: Galaxy Research<\/a>.<\/figcaption><\/figure>\n

Despite the broader growth of crypto lending, CeFi platforms have not regained their former scale.<\/p>\n

According to Galaxy Research<\/a>, in Q3 2025 loan volumes on centralised venues rose 37.11% quarter-on-quarter. The $24.37bn achieved is still 34.3% below the ATH<\/span> recorded in Q1 2022.<\/p>\n

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Source: Galaxy Research.<\/figcaption><\/figure>\n

The market leader remains Tether<\/a>, with an open loan book of $14.6bn and a 59.91% share. Nexo ($2.04bn) and Galaxy ($1.8bn) round out the top three.<\/p>\n

The USDT issuer pursues a diversified presence across sectors, including building gold reserves and investing in US Treasuries. Despite borrowing being ancillary to its business, the company has grown its market share by investing<\/a> in Ledn, a top-ten crypto lender.<\/p>\n

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Source: Galaxy Research.<\/figcaption><\/figure>\n

Surviving CeFi platforms have tightened policies. They now resemble bank vaults\u2014regulated businesses leaning on rigorous risk management.<\/p>\n

From 1 July 2025, Ledn sharply narrowed its earning channels, removing Ethereum from its product line and shutting interest accounts for deposited BTC.<\/p>\n

Such steps help the sector stay afloat, gradually restoring institutional trust.<\/p>\n

A tilt to decentralisation<\/h2>\n

Galaxy Research estimates total crypto loans reached a record $73.59bn in Q3 2025, more than 6% above the previous peak at end-2021.<\/p>\n

The main driver was the expansion of on-chain lending across DeFi protocols.<\/p>\n

Analysts say the decentralised share rose to 66.9%, up from 48.6% at the top of the 2021 cycle.<\/p>\n

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Source: Galaxy Research.<\/figcaption><\/figure>\n

Total DeFi loans reached $40.99bn, up 54.84% quarter-on-quarter.<\/p>\n

Growth was fuelled by points-incentive schemes, rising prices for Bitcoin, Ethereum and Solana, and more efficient collateral types such as Principal Tokens on Pendle.<\/p>\n

By Q3, DeFi saw a marked shift: over 80% of volume flowed to lending protocols such as Aave<\/a>, Morpho and Fluid. The share of stablecoins minted against collateral\u2014led by DAI<\/a>\u2014fell to 16%, from 53% in 2021.<\/p>\n

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Top-10 DeFi lending protocols by total borrowed. Source: DefiLlama<\/a>.<\/figcaption><\/figure>\n

Code-governed platforms like Aave and Compound require collateral that exceeds the loan, eliminating most of the credit risk that felled CeFi.<\/p>\n

Automated smart contracts<\/a> remove the counterparty from transactions\u2014an anathema to the most conservative institutions.<\/p>\n

Galaxy Research finds lending is the largest DeFi category across blockchains, with Ethereum the clear leader. As of 31 March 2025, $33.9bn of assets sat on 12 EVM<\/a>-compatible chains, with another $2.99bn on Solana. Ethereum L1 held 81% of all deposits.<\/p>\n

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Source: Galaxy Research.<\/figcaption><\/figure>\n

Aave V3 on Ethereum is the largest lending market, with $23.6bn deposited at the time of the report. The most in-demand assets are stablecoins and unstaked ETH.<\/p>\n

In the view<\/a> of Aave founder Stani Kulechov, cuts in central-bank rates will create favourable conditions for DeFi to deliver higher yields.<\/p>\n

\u201cWe have built a truly powerful infrastructure. We are now moving to the stage where DeFi can integrate into the broader fintech ecosystem, distributing yield,\u201d<\/em> Kulechov said at TOKEN2049 in Singapore in October.<\/p><\/blockquote>\n

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Borrowed crypto on Aave V3 (Ethereum) as of 31 March 2025. Source: Galaxy Research.<\/figcaption><\/figure>\n

Another lender, Maple Finance, blends CeFi+DeFi strategies. It seeks institutional flows by expanding to chains with fast transactions and ample cross-chain liquidity, while complying with KYC<\/span>\/AML<\/span> norms.<\/p>\n

In 2025, to serve large trading firms, Maple integrated Solana, Arbitrum<\/a> and Plasma<\/a>.<\/p>\n

In October, co-founder Sid Powell set out<\/a> his view of institutions\u2019 role in crypto lending:<\/p>\n

\u201cThe role that, in our view, they will play in collaboration with us will be more on the borrower side, as well as in distributing funds into syrupUSDC vaults. We have seen that this has already largely happened when we launched Plasma. A number of institutional hedge funds allocated capital to this vault, and we are seeing more and more such funds raise capital from traditional investors.\u201d<\/em><\/p><\/blockquote>\n

Regulators are also taking note. On 8 December, America\u2019s Commodity Futures Trading Commission (CFTC) launched<\/a> a pilot programme to use digital assets as collateral in derivatives markets.<\/p>\n

This initiative is implemented under the GENIUS Act. In the first phase, Bitcoin, Ethereum, and the USDC stablecoin were included in the list of acceptable collateral assets.<\/p>\n

The programme\u00a0allows futures commission merchants to accept these assets to secure clients’ margin positions.<\/p>\n

Who Benefits from This<\/h2>\n

Companies and individuals participate in depositing and borrowing assets for several reasons:<\/p>\n