Crypto Lending Market Shrinks to $56B Amid Shift to Centralized Finance

The crypto-collateralized lending market saw a significant decline in Q2 2026, with outstanding loans dropping to $56.16 billion, down from $68.49 billion in Q1. This represents a quarter-over-quarter decline of 16.78% and a 40.13% drop from the peak of $93.82 billion recorded in Q3 2025.

The contraction was not evenly distributed between decentralized finance (DeFi) and centralized finance (CeFi). DeFi lending fell by 27.61%, while CeFi declined by just 9.62%. This shift has resulted in CeFi's share of the lending market exceeding DeFi's for the first time since Q3 2023.

The crypto-collateralized portion of CDP stablecoin supplies also decreased by 7.86%, marking the first quarter since Q4 2022 where lending declined across all three categories: CeFi, DeFi, and CDP stablecoin collateral.