Crypto Leverage Declines at a Measured Pace in Q2 2026

The state of crypto leverage has been declining steadily since Q4 2022, but this time it's different. In Q2 2026, onchain lending contracted across every category - CeFi, DeFi, and crypto-collateralized portion of collateral debt position stablecoins - for the first quarter in over a year.

The decline is not as sharp as in previous bear cycles, with outstanding loans falling by just 16.78% to $56.16 billion. This measured pace points to a healthier deleveraging cycle, driven by gradual risk reduction rather than forced liquidations or counterparty failures.

CeFi lending saw a contraction of $11.33 billion in Q2, with Tether remaining the dominant lender at 58.54% market share. However, DeFi lending app share fell to 47.05%, down from 52.6% in Q1 2026.

The dollar-denominated value of outstanding loans on DeFi lending apps declined for the third consecutive quarter, contracting by $7.79 billion (27.61%) to $20.43 billion. This reduction was predominantly driven by compression of onchain borrows.