Crypto-Collateralized Lending Fell in Q1 as Debt Distribution Evolved: Galaxy
Leverage across the crypto economy is evolving, not evaporating.
Total crypto-collateralized lending fell 4.9% quarter-over-quarter to $39.07 billion, the first decline since late 2023, Galaxy Research’s Q1 2025 report shows. But while the headline figure contracted, underlying dynamics suggest leverage is shifting form, not fading.
Lending in decentralized finance (DeFi) lending took a hit early in the quarter, sliding as much as 21%, before rebounding sharply in April and May. The turnaround was driven largely by Aave’s integration of Pendle tokens, whose yield-bearing structure and high loan-to-value ratios (up to 90%) sparked a wave of fresh borrowing. By late May, DeFi borrowing had surged more than 30% off the lows, with…
