Record $73.6B Crypto Loans Boom with DeFi Dominance

Crypto loans have reached a record $73.6B in Q3 2025, allowing holders to borrow against their assets without selling them. This mechanism is simpler than most beginners expect: deposit cryptocurrency as collateral, receive a loan in stablecoins or cash, repay with interest, and get your crypto back.

The market has split into two camps: centralized platforms (CeFi) like Nexo and Ledn, and decentralized protocols (DeFi) like Aave and Compound. DeFi now commands roughly two-thirds of all lending activity, with Aave being the dominant protocol by a wide margin, crossing $1 trillion in cumulative lending volume in early 2026.

Overcollateralization is standard, requiring borrowers to lock up more value than they receive, as the collateral itself serves as the guarantee. This means that if the collateral drops too far in value, the lender sells it automatically, a process called liquidation, which happens without warning on most platforms. In the Oct. 2025 market crash, $19B in positions were liquidated across the market, affecting more than 1.6 million traders.