Assessing the Fragility of Leverage-Driven Crypto Markets in a Downturn Scenario
The DeFi lending ecosystem in 2025 operates at a precarious intersection of innovation and instability. While decentralized finance has democratized access to credit and introduced novel financial primitives, its reliance on high leverage, volatile collateral, and automated liquidation mechanisms creates systemic vulnerabilities. As the crypto market enters a potential downturn phase—marked by declining asset prices and tightening liquidity—investors must scrutinize the fragility of leverage-driven DeFi markets. This article dissects the risks, evaluates the data, and offers actionable insights for navigating the next phase of the crypto cycle.
