Borrowing activity in crypto markets accelerated sharply in the second quarter of 2025, according to new figures from Galaxy Research.
The study found that loans backed by digital assets across DeFi protocols climbed to a record $26.47 billion, up 42.1% from the previous quarter.
That surge lifted the overall balance of crypto-collateralized loans, including both DeFi and centralized finance (CeFi) platforms, to $44.25 billion at the end of June.
The increase of $10.12 billion quarter-over-quarter represents one of the largest jumps since the bull market years of late 2021 and early 2022, when outstanding loans briefly topped $50 billion.
The report linked the recovery to a combination of rising crypto prices and stronger demand for leverage.
Traders often use crypto lending to secure cash without selling their holdings, and with Bitcoin and Ethereum recently breaking past previous all-time highs, more participants appear willing to lock up assets to capture liquidity.
Tether dominates CeFi lending
Galaxy Research reported that as of June 30, open CeFi loans stood at $17.78 billion, marking a 14.66% increase from the prior quarter. Compared with the bear-market low of $7.18 billion in Q4 2023, the sector has grown 147.5%.
Stablecoin issuer Tether maintained its long-running dominance, controlling more than half of the CeFi lending market. The company closed the quarter with $10.14 billion in open loans, translating into a 57.02% share.
Nexo followed with $1.96 billion, while Galaxy’s lending unit reported $1.11 billion. Together, the top three lenders accounted for 74.26% of the market.
This marks Tether’s 12th consecutive quarter of sector leadership, a position it solidified after the collapse of Genesis, Celsius, Silvergate, BlockFi, and Voyager in 2022.
Those failures, triggered by poor risk management and market turmoil, paved the way for Tether’s share to climb from under 20% in mid-2021 to nearly 70% by late 2022.
While its dominance has eased slightly from those levels, Galaxy attributed the shift to multiple factors.
According to the firm, rising asset prices have created a reflexive cycle in borrowing demand, while corporate treasuries are increasingly turning to CeFi lenders as a funding source.
Moreover, the competition among lenders has also intensified, driving more attractive borrowing rates across the market.
The report suggests that these forces could continue reshaping the balance of power in crypto lending, even as Tether remains the undisputed leader in the sector.