Tether, Galaxy, Ledn Lead Crypto Lending Revival After Billions in Loans Were Wiped Out in 2023

Key Takeaways

• Tether, Galaxy and Ledn now dominate the centralized crypto lending market, accounting for 90% of CeFi loans.
• The crypto lending market has recovered since its 2023 crash but remains 43% below its 2021 peak.
• DeFi remains the sector’s backbone, with Ethereum leading the charge.

The crypto lending industry is on the rebound, clawing its way back after a brutal collapse in 2023 that wiped out billions in loans and shattered confidence in centralized players.

Now valued at $36.5 billion, the market remains well below its all-time high in late 2021 — but signs of resilience are beginning to show.

A new report by Galaxy Digital shows that a new cohort of centralized players — Tether, Galaxy and Ledn — has stepped in to fill the void left by failed lenders like Celsius, Genesis and BlockFi.

The trio accounts for roughly $9.9 billion in outstanding loans, or 90% of the current centralized lending market.

CeFi’s Comeback: Smaller, Sharper, Still Struggling

Centralized finance (CeFi) lenders have bounced back from a low of $6.4 billion in outstanding loans in early 2023 to $11.2 billion today — a 73% rebound.

However, that figure is still nearly two-thirds from the 2021 peak of $29.4 billion when CeFi lending was primarily controlled by the now-defunct trio of Genesis, Celsius and BlockFi.

Their downfall, catalyzed by overleveraged loans and exposure to the collapse of the Terra-Luna ecosystem, triggered a liquidity crunch that rippled across the entire industry.

However, the new wave of CeFi lenders appears more cautious, leaning on stricter lending terms and more conservative strategies. Tether, for example, remains focused on secured loans backed by excess collateral, while Galaxy and Ledn have honed in on institutional clients.

DeFi Reclaims Its Dominance

Despite the CeFi resurgence, decentralized finance (DeFi) remains the primary force in crypto lending.

DeFi now accounts for 63% of total borrowing, up from 33% during the previous bull run. This shift underscores growing confidence in permissionless, transparent protocols — especially in the wake of CeFi’s credibility crisis.

According to Galaxy’s data, DeFi lending platforms now manage over $19.1 billion in outstanding loans across 12 blockchains and 20 platforms — a staggering 10x jump from their Q4 2022 lows. At that time, DeFi borrowing had bottomed out at just $1.8 billion.

Ethereum remains the dominant chain for DeFi activity, hosting $33.9 billion in deposited assets as of March 2025 — far outpacing all competitors.

The sector’s growth is underpinned by smart contracts, which enforce overcollateralization and minimize default risk.

Unlike CeFi, where borrowers can walk away from bad loans, DeFi protocols liquidate positions automatically when collateral thresholds are breached.

Institutions Eye Bitcoin-Backed Lending

With signs of recovery across both CeFi and DeFi, institutional interest is once again growing. Traditional financial players, particularly those focused on Bitcoin financing, are exploring new lending strategies.

Cantor Fitzgerald — a key custodian of Tether’s reserve assets — recently revealed plans to expand into crypto lending, potentially opening the door to more Bitcoin-collateralized loan products from traditional finance firms.

As both centralized and decentralized platforms evolve, the crypto lending landscape in 2025 looks very different from its speculative, loosely governed past.

Whether the market can sustain this newfound stability remains to be seen.