A new report from Galaxy Digital shows record borrowing reflects a mix of airdrops, new lending products, and crypto price gains.
Lending in decentralized finance hit a new quarter-end high as the total active loans on DeFi applications neared $41 billion, Galaxy Digital said in its latest “State of Crypto” report for Q3.
Galaxy’s research team wrote that DeFi borrowing grew by about $14.5 billion, or nearly 55% in the third quarter, alongside centralized crypto lending.
That growth helped push total crypto lending — across both DeFi and CeFi — to almost $73.6 billion, setting a new all-time high above the previous peak of $69.3 billion at the end of Q4 2021.
It’s worth noting that DefiLlama data shows that the total value locked in DeFi lending protocols was at around $90.9 billion as of early October.
Although TVL doesn’t necessarily reflect the amount actually borrowed from the protocols, if that $90 billion indeed held in early Q4, it could suggest that on-chain lending — combined with CeFi — was significantly higher than Galaxy’s Q3 snapshot.
A spokesperson for Galaxy Digital clarified that the wording about all-time high was meant “as of the end of Q3 2025,” which means that the historic maximum was likely reached in early Q4.
In the report, Galaxy Digital explained that several factors helped borrowing increase. Airdrops, points programs, better collateral products, and rising prices boosted users’ ability to borrow as the value of their collateral grew.
Challenges in Off-Chain Lending
But Galaxy Digital also warned about possible double-counting between CeFi and DeFi numbers. As the report’s author, Galaxy research associate Zack Pokorny, wrote, some CeFi lenders borrow on-chain and then lend off-chain, which can show up twice without clear disclosures
“For example, a hypothetical CeFi lender may pledge its idle BTC to borrow USDC onchain, then lend that USDC to a borrower offchain. In this scenario, the CeFi lender’s onchain borrow will be present in the DeFi open borrows and in the lender’s financial statements as an outstanding loan to its client,” Pokorny wrote in the report.
Galaxy Digital also noted that while DeFi and on-chain CeFi lending numbers can be seen on the blockchain and are easy to access, getting CeFi data “is tricky” because of “inconsistencies in how CeFi lenders account for their outstanding loans and how often they make the information public.”
But still, combined, DeFi and CeFi loans totaled $65.3 billion at the end of Q3, up $21.1 billion from Q2, with most of the increase coming from DeFi. DeFi’s share of the market also grew, rising to 62.7% from 59.8% in the previous quarter.
As The Defiant previously reported, in the weeks following the Oct. 10 market crash, which resulted in record daily liquidations for crypto, the DeFi sector as a whole has struggled. The market shock in early November from the Balancer exploit, followed almost immediately by Stream Finance’s collapse, further eroded trust in the sector.
Total DeFi TVL is down more than 25% since Oct. 10 to $125 billion, down from $170 billion.
