Tether, Galaxy and Ledn Lead Recovery in Crypto Lending Market

Tether, Galaxy, and Ledn lead the crypto lending market’s recovery, dominating 88.6% of the CeFi sector and representing 27% of the total crypto lending market by Q4 2024. The market’s valuation was $36.5 billion, down from its peak but up significantly from a low last year. DeFi lending outperformed CeFi in recovery, and Tether reported substantial profits amid growing stablecoin adoption.

Tether, Galaxy, and Ledn have established themselves as leaders in the recovering crypto lending market, which regained strength after a significant downturn two years ago. As of the conclusion of the fourth quarter of 2024, these three companies dominated 88.6% of the centralized finance (CeFi) lending segment and represented 27% of the entire crypto lending sector, which encompasses crypto-backed collateral debt position (CDP) stablecoins, according to Galaxy’s report from April 14.

The crypto lending market was valued at approximately $36.5 billion at the end of the fourth quarter, a decline of 43% from its peak of $64.4 billion in Q4 2021, but exhibiting a notable increase of 157% from its low recorded in Q3 2023. Concurrently, the total outstanding borrows in the CeFi market amounted to $11.2 billion, down 68% from the all-time high of $34.8 billion in Q1 2022, yet showing a recovery of 73% from the low of $6.4 billion in Q3 2023.

CeFi, or centralized finance, encompasses off-chain financial entities that provide lending and borrowing services for cryptocurrencies and related assets. Many of the major CeFi lenders encountered bankruptcy during the market collapse, which resulted from declining crypto prices and dwindling liquidity in 2022 and 2023.

The report highlighted that decentralised finance (DeFi) lending has shown a more robust recovery compared to CeFi lending. This disparity is largely due to the permissionless characteristics of blockchain applications which remained operational despite market chaos, contrasting with major CeFi lenders that filed for bankruptcy and ceased operations. The largest DeFi lending applications survived the downturn.

In March 2024, Tether was reportedly engaging with a prominent accounting firm regarding an audit of its reserves, although no specifics were disclosed regarding the firm or the timing of the audit. Additionally, it was noted in January that Tether achieved profits of $13 billion in 2024, which can be attributed partly to the increasing acceptance of stablecoins.