Market reset will increase Defi credit by 959% by 2024 when decline from CEFI

Market reset will increase Defi credit by 959% by 2024 when decline from CEFI

• The entire crypto loan market fell from its high level of $ 64.4 billion in 2021 by over 43 % to $ 36.5 billion to the fourth quarter of 2024.
• centralized (cefi) loans crashed by 68 % from their climax in 2022, driven by the bankruptcy leading lenders (Celsius, Genesis, etc.).
• decentralized (defi) loans rose by 959 % from their low point at the end of 2022 and reached
until the fourth quarter of 2024

The landscape of the cryptocurrency credit market has undergone a dramatic transformation since its climax, characterized by a sharp decline in the centralized financing (CEFI) platforms and a powerful return in the area of decentralized finance (Defi), as a current industry analysis shows.

crypto loan cools off the overheating

Data published by Galaxy Digital on April 14th show a significant cooling of the entire crypto loan market. From a maximum rating of USD 64.4 billion in 2021, the market size had shrunk by more than 43 % to USD 36.5 billion by the end of the fourth quarter of 2024.

This declining tendency began its steep descent in 2022, initiated by the cascading insolvencies of several prominent centralized crypto creditors.

Companies such as Genesis, Celsius Network, Blockfi and Voyager, once titaniums in the industry, succumbed to the pressure of falling crypto prices and then reported bankruptcy.

Your breakdown led to a significant shortage of both the availability of crypto loans and the demand for it.

centralized giant traps, market shrinks dramatically

The effects on the CEFI credit sector were particularly acute. At its climax in 2022, the entire book volume of CEFI loans was $ 34.8 billion

by the end of 2024, however, this number had fallen to only $ 11.2 billion - which corresponds to a drastic decline of 68 %. Zack Pokorny, a research assistant at Galaxy Digital, attributed this sharp decline to fundamental problems on both sides of the market.

"The decline can be attributed to the dismantling of the lenders on the offer side and the funds, individuals and company titles on the demand side," said Pokorny in the report.

he emphasized that the bankruptcy of large actors in principle reduced the options for loans in the centralized ecosystem.

defi defies the decline in explosive growth

While centralized platforms weakened, the area of decentralized finances (defi) tells a completely different story of relaxation and growth.

After the open loans had fallen to $ 1.8 billion during the crypto bear market at the end of 2022, the defi loan was remarkably increased.

By the end of the fourth quarter of 2024, the open loans on Defi platforms reached $ 19.1 billion, which marked an astonishing increase of 959 % over eight quarters.

The report by Galaxy Digital attributes this resilience of the inherent nature of Defi. Their approval-free structure allowed the credit applications to continue to operate, while their centralized counterparts were forced to hire the company due to bankruptcy.

"In contrast to the largest CEFI creditors who registered and no longer active, the greatest credit applications and markets were not all forced to close and continued to work," wrote Pokorny and emphasized a significant operational advantage of the decentralized model during crises.

a story of two sectors: concentration vs. decentralization

This divergence has redesigned the crypto loan ecosystem.

The CEFI area has become significantly more concentrated after shaking the market.

Only three companies-Tether, Galaxy and LEDN-now dominate the remaining centralized credit market and make up 88.6 % of the CEFI credit jet, which corresponds to 27 % of the entire crypto credit market (including Defi).

In contrast, the Defi credit remain more distributed and currently includes 20 different credit applications over 12 different blockchains.

This shows persistent user engagement and diversification in the decentralized area, even in times of significant market loads.

Although the entire crypto credit market has not yet been able to regain its highest ratios of 2021, the robust relaxation and expansion clearly signals a structural change in the defi credit area.

centralized credit options have decreased considerably, while decentralized alternatives have proven to be resistant and experience a new demand. This paints a picture of a market that actively calibrates its preferences towards decentralized financial services.

The contribution "Market adjustment sees defi loans by 2024 by 959 %.