CeFi lending markets reached $25 billion in Q3, its highest level in over three years, and the market looked very different then, says Galaxy’s Alex Thorn.
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The crypto lending market has become more transparent than ever — led by the likes of Tether, Nexo and Galaxy — and has just hit an aggregate loan book of nearly $25 billion outstanding in the third quarter.
The size of the crypto lending market has increased by more than 200% since the beginning of 2024, to Galaxy Research. Its latest quarter puts it at its highest since its peak in Q1 2022.
However, it has yet to return to its peak of $37 billion then.
The main difference between then and now is the number of new lending platforms and much more transparency, said Galaxy’s head of research, Alex Thorn.
Thorn said on Sunday he was proud of the chart and the transparency of its contributors, adding that it is a “big change from prior market cycles.”
Tether and new players dominate CeFi lending market
The CeFi landscape was dominated by a handful of platforms during the previous market cycle peak.
These included Genesis, BlockFi, Celsius and Voyager, all of which were significantly impacted by their exposure to the exchange FTX, which in November 2022.
Celsius had already filed for bankruptcy in July 2022, before the demise of FTX, primarily due to exposure to Three Arrows Capital.
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However, Thorn argues that following the exit of many FTX-linked platforms, the vacuum has been filled by more transparent players and healthier practices.
Stablecoin issuer Tether has $14.6 billion of open loans, or 60% market share, as of Sept. 30. Nexo and Galaxy were second and third, respectively, with $2 billion and $1.8 billion in loans, reported Galaxy.
Tether publishes quarterly attestations, while Galaxy and Coinbase data are presented in the form of public financial reports. Nexo proactively provides data to Galaxy Research, said Thorn.
CeFi lenders have also become far more conservative after the 2022 collapses.
Uncollateralized lending has largely disappeared as surviving firms adopted stricter risk controls, full collateralization standards and greater transparency to pursue public listings and institutional capital.
DeFi lending hits an all-time high
Meanwhile, the dollar-denominated value of outstanding loans on decentralized finance applications reached another new quarter-end all-time high in Q3, growing by 54.8% to $41 billion, as reported by Galaxy last month.
Combining with CeFi lending venues, there were $65.4 billion of outstanding crypto-collateralized borrows at quarter-end, a new all-time high, it noted.
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