Tether leads the crypto lending market

Tether has solidified its leadership in the crypto lending sector, forming 88.6% of the centralized finance (CeFi) market alongside Galaxy and Ledn. This data was revealed in a new report by Galaxy Digital.

Crypto Lending: Decline and Recovery

As of the end of 2024, the total crypto lending market was valued at $36.5 billion — 43% below the all-time high of $64.4 billion set in 2021. Despite this decline, DeFi lending activity has significantly rebounded, with the metric increasing by 959% from the bear market low to reach $19.1 billion.

The DeFi segment now accounts for over 60% of the lending market and includes more than 20 platforms across 12 blockchains. Meanwhile, the CeFi sector has contracted: the volume of issued loans dropped to $11.2 billion, a 68% decrease compared to its peak in 2022.

Tether at the Forefront

Tether, along with Galaxy and Ledn, dominates the centralized lending space, jointly holding nearly 90% of the CeFi market. Tether's share has surged from under 20% in Q2 2021 to around 70% by the end of 2022.

Analysts attribute this rise to the collapse of major platforms such as BlockFi, Celsius Network, and Genesis Global Capital, which created opportunities for new players. Tether emphasized that it regularly discloses information about its secured loans in attestation reports. These loans are short-term in nature and tightly risk-managed, including through reserve and liquidation mechanisms.

«Tether has never experienced a loan default,» company representatives stressed.

Trends and Forecasts for 2025

In the CeFi segment, the repeal of SEC’s SAB121 rule and the launch of crypto-backed ETFs are expected to drive renewed competition. In DeFi, the focus is shifting toward tokenizing off-chain debt and expanding the use of such assets.

Experts believe the crypto lending market is entering a new growth phase, marked by better risk management systems and clearer regulatory frameworks. This evolution could help bridge traditional finance and the developing Web3 ecosystem, enabling broader access to financial services.

Earlier, the FDIC approved crypto-related business activities as default-allowed in the U.S. In January, mining firm MARA allocated over 7,000 BTC to lending services to generate passive income.