Key Notes
- DeFi lending applications reached $40.99 billion in Q3 2025, growing 54.84% quarter-over-quarter and capturing 55.7% of the total crypto lending market.
- Tether maintained $14.6 billion in outstanding loans as of Sept.30, holding 59.91% of the centralized lending market tracked by Galaxy Research.
- The Oct.10 liquidation event wiped out more than $19 billion in futures positions but did not reflect systemic credit risk in the collateralized lending market.
Crypto-collateralized lending reached an all-time high of $73.59 billion at the end of Q3 2025, according to Galaxy Research.
The figure surpasses the previous peak of $69.37 billion from Q4 2021 by 6.09%, with onchain lending now holding 66.9% market share compared to 48.6% four years ago.
The market expanded by $20.46 billion in Q3, representing 38.5% quarter-over-quarter growth, the report says .
The move toward on-chain lending represents a structural shift from the 2021 cycle, which relied on uncollateralized credit and opaque lending practices.
DeFi lending applications grew to $40.99 billion in Q3, expanding $14.52 billion quarter-over-quarter.
Bitcoin BTC $90 175 24h volatility: 0.1% Market cap: $1.80 T Vol. 24h: $89.39 B served as a primary collateral asset across protocols. The 54.84% growth rate gave DeFi apps a 55.7% share of the total lending market.
Within onchain borrowing, lending applications now account for more than 80% of activity, with CDP stablecoins (assets like DAI that are minted by locking up crypto as collateral) holding just 16%, according to the Galaxy report.
Galaxy identified three primary factors driving DeFi lending expansion. Points farming and airdrop programs incentivize users to maintain borrows despite market volatility.
Improved collateral assets such as Pendle Principal Tokens enable efficient looping strategies. Cryptocurrency price appreciation through Q3 allowed users to borrow more against existing collateral.
The Aave [NC] DeFi lending app captured significant market share on a network identified in the report as the Plasma blockchain.
Galaxy data indicates the chain attracted more than $3 billion in outstanding borrows within five weeks of launch. Aave holds 68.8% of the chain’s lending market, which makes it Aave’s second-largest deployment after Ethereum ETH $2 971 24h volatility: 0.4% Market cap: $358.78 B Vol. 24h: $37.21 B mainnet, according to the report.
Top Lenders Dominate CeFi Market
Centralized finance lending reached $24.37 billion as of Sept. 30, growing 37.11% from the previous quarter.
CeFi lenders shifted to fully collateralized loans only after the 2022 credit implosions. Stablecoin issuer Tether maintained $14.6 billion in secured loans, according to its Q3 transparency report.
Tether holds a 59.91% share of the CeFi lending market tracked by Galaxy Research, up 2.89 percentage points from Q2.
The top three lenders (Tether, Nexo with $2.04 billion, and Galaxy with $1.8 billion) control 75.66% of tracked CeFi lending.
Galaxy noted that surviving CeFi lenders have shifted toward full collateralization and public reporting as they seek institutional investor funding.
Shortly after Q3 ended, the futures market experienced its largest liquidation event on Oct. 10, 2025. More than $19 billion in perpetual futures positions were liquidated across exchanges.
The majority of liquidations came from Hyperliquid HYPE $38.57 24h volatility: 2.8% Market cap: $10.45 B Vol. 24h: $411.52 M at $10.08 billion, with Bybit and Binance following at $4.58 billion and $2.31 billion respectively.
Galaxy Research concluded the liquidation event was triggered by exchanges’ automatic risk control systems rather than systemic credit weakness.
The report stated that collateralized lending standards and onchain transparency distinguish the current cycle from 2021, when uncollateralized lending and opaque practices based on personal relationships dominated the market.
