DeFi Lending Surges to $40.99 Billion in Q3 2025, Setting New Record

TLDR

• DeFi lending reached a new all-time high of $40.99 billion in Q3 2025, marking a 54.84% increase from the previous quarter.
• The total value of crypto-collateralized loans, combining DeFi and CeFi, rose to $65.37 billion in Q3 2025, surpassing the previous peak.
• DeFi lending’s market share grew to 62.71%, surpassing CeFi and setting a new record for the sector’s dominance.
• The growth in DeFi lending is attributed to points farming, airdrop incentives, and the increased use of improved collateral assets.
• DeFi lending remained resilient despite market fluctuations, with a daily record of $43.82 billion in outstanding loans in October 2025.

DeFi lending reached a new milestone in the third quarter of 2025. According to a report from Galaxy Digital, outstanding loans on DeFi platforms surged by 54.84%. This rise increased the total value of DeFi loans to $40.99 billion by the end of Q3.

When combined with centralized finance (CeFi), total outstanding crypto-collateralized loans rose to $65.37 billion. This marks an increase of $21.12 billion from the previous quarter. The surge represents an all-time high, surpassing the earlier peak of $53.44 billion from Q4 2021 by $11.93 billion.

Growth Driven by Incentives and Collateral Improvements

The rise in DeFi lending is attributed to various factors. Galaxy Digital pointed to “points farming” and airdrop incentive programs that encourage users to keep loans open. The growing use of improved collateral assets, such as Pendle PTs, also plays a crucial role.

Pendle PTs allow users to implement stablecoin strategies with favorable loan-to-value ratios. Rising crypto asset prices further enhance borrowing capacity as collateral values rise. These developments contribute to the overall growth in DeFi lending, even during market volatility.

Despite this growth, the report raised concerns about double-counting in combined CeFi and DeFi totals. Some CeFi entities borrow through DeFi protocols before lending to off-chain clients. This overlap makes it difficult to distinguish between on-chain and off-chain exposures.

DeFi Lending Dominates Over CeFi

By the end of Q3 2025, DeFi lending’s market share climbed to a record high of 62.71%. This represents an increase from 59.83% in Q2 2025 and surpasses the previous peak of 61.99% in Q4 2024. The rise in DeFi’s dominance marks a shift in the overall lending landscape.

The report also noted a 7.4% decline in the crypto-collateralized portion of collateral debt position (CDP) stablecoin supply. Despite this, DeFi’s share of the crypto-collateralized lending market remains robust. By the end of Q3, DeFi applications accounted for 55.7% of the market.

In contrast, CeFi venues’ market share fell to 33.12%, down from the previous quarter. CDP-backed stablecoin supply represented 11.18%, down from 11.72% in Q2. Combined, DeFi lending apps and CDP stablecoins held 66.88% of the on-chain lending market.

DeFi lending platforms remain resilient despite fluctuating market conditions. On October 7, DeFi lending hit a daily record of $43.82 billion in outstanding loans. By the end of the month, this number eased by only 11.55%, settling at $38.76 billion.

DeFi Continues to Evolve with Strategic Partnerships

In Q4 2025, major players continued to invest in strengthening the DeFi lending ecosystem. Ripple, for example, partnered with Immunefi to enhance security for its proposed XRPL Lending Protocol. The partnership also launched a global “Attackathon” to stress-test the system ahead of a validator vote.

Tether also made strides in expanding the ecosystem by investing in Ledn, a Bitcoin-backed lending platform. This investment focuses on strengthening self-custody and financial resilience to drive broader institutional adoption. These moves indicate that DeFi lending will continue to evolve and expand in the coming months.

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