Crypto asset-backed lending contracted by $11.33 billion in the second quarter of 2026, falling 16.78% to $56.16 billion as borrowing declined across decentralized finance, centralized platforms, and crypto-collateralized stablecoin positions. The total was 40.13% below the $78.69 billion peak reached in the third quarter of 2025, according to the market data provided.
The quarter was the first since the final three months of 2022 in which every tracked lending category recorded a decline. Combined crypto-collateralized loans on CeFi and DeFi venues dropped 19.08% to $43.41 billion, with the largest reduction coming from on-chain applications.
The scale of the move puts the latest three-quarter downturn among the sharpest since the 2022 credit crisis, though it remains less abrupt than that earlier episode. Lending fell 10%, 5%, and 17% over the latest three quarters, compared with a 55% collapse in the second quarter of 2022, followed by 9% and 29% declines in the next two quarters.
DeFi borrowing absorbs the largest reduction
DeFi lending applications recorded the steepest quarterly fall, declining by $7.79 billion, or 27.61%, to $20.43 billion at the end of June. It was the sector’s third consecutive quarterly contraction and pushed DeFi’s share of the overall crypto-backed lending market down to 47.05%, from 52.6% three months earlier.
On-chain borrowing has been falling since DeFi outstanding debt reached a record $47.13 billion on Sept. 19, 2025. By July 21, 2026, outstanding DeFi borrowing stood at $21.94 billion, down $25.19 billion, or 53.45%, from that high.
The decline changed the balance between decentralized and centralized lenders. CeFi outstanding loans exceeded DeFi lending applications at the end of the second quarter for the first time since the third quarter of 2023. The reversal reflects a sharper retreat from smart-contract lending markets rather than growth in centralized credit.
Aave V3 data from Aug. 7 illustrates where remaining on-chain risk is concentrated. The snapshot counted 19,073 open loans after excluding positions with less than $100 of debt and applying a health-factor cap of 50. A health factor measures how close a collateralized loan is to liquidation, with lower readings indicating less buffer against adverse price moves.
E-mode, or efficiency-mode, loans represented only 8.91% of the filtered positions but accounted for nearly half of outstanding debt. These loans had a debt-weighted loan-to-value ratio near 90% and a debt-weighted health factor of 1.06, compared with roughly 49% loan-to-value and a 1.79 health factor for non-e-mode borrowing. The data points to a relatively small group of highly leveraged positions carrying a disproportionate share of Aave V3’s debt.
ETH-linked assets made up most of the collateral in the observed Aave market. WETH represented about 24%, weETH accounted for 16%, and wstETH represented 14%, bringing their combined share to 54.6%. WBTC added about 14%. On the borrowing side, WETH made up just over 37% of liabilities, while USDT and USDC accounted for about 28% and 22%, respectively.
CeFi lending falls but gains market share
CeFi platforms ended June with $22.98 billion in outstanding loans, a $2.45 billion decline from the first quarter, or 9.62%. Although the segment contracted, its smaller drop relative to DeFi increased its share of the market.
CeFi lending remains well above its post-credit-crisis low. Outstanding loans have risen $16.14 billion, or 235.94%, from the $6.8 billion recorded in the fourth quarter of 2023. They are nevertheless 37.16% below the $36.58 billion peak reached in the first quarter of 2022.
Tether held the largest share of tracked CeFi lending at 58.54% at the end of June, though its share fell by 371 basis points during the quarter. Maple’s share rose 52 basis points to 8.91%, while Nexo gained 49 basis points to reach 7.51%. Together, the three platforms accounted for 74.96% of CeFi outstanding loans, down 270 basis points from the preceding quarter.
The crypto-collateral component of CDP stablecoins also declined, falling $1.09 billion, or 7.86%, during the quarter. By the end of June, CeFi accounted for 40.93% of the $56.16 billion lending market, DeFi lending applications represented 36.37%, and crypto-backed CDP stablecoin positions made up the remaining 22.7%.
Borrowing costs diverge between stablecoins and bitcoin
Borrowing rates rose for stablecoin users during the quarter. The seven-day weighted average stablecoin borrowing cost increased by 27 basis points between March 31 and June 30, then continued upward to 3.88% after the quarter ended.
Over-the-counter borrowing benchmarks for USDC ranged between 4.25% and 5% during the quarter and stood at 4.25% at quarter-end, holding at that level through Aug. 3. USDT OTC rates traded within the same 4.25% to 5% range.
Bitcoin-backed borrowing was materially cheaper. WBTC’s weighted on-chain borrowing rate moved between 0.44% and 0.5% in the second quarter, while BTC OTC borrowing rates remained at 1% throughout the period. That gap means the cost pressure implied by higher stablecoin rates was concentrated among traders borrowing dollar-pegged assets rather than bitcoin.
Futures and corporate debt also retreat
Futures positioning declined alongside lending activity. Open interest across cryptocurrency futures contracts, including perpetual swaps, fell 3.08% over the quarter to $103.2 billion before recovering to roughly $114 billion by the end of July.
BTC futures open interest began the quarter at $48.04 billion and finished June at $45.04 billion, a 6.24% decline, after trading between $44 billion and $62 billion. ETH futures saw a steeper reduction, falling 26.31% from $29.84 billion to $21.99 billion over the same period. By early August, BTC open interest had recovered to about $48 billion and ETH open interest to $25.74 billion.
At the end of June, BTC and ETH contracts together represented $67.07 billion, or 65% of total futures open interest. Their dominant share means the reduction in leverage was centered largely in the two largest crypto derivatives markets rather than being confined to smaller tokens.
Crypto-related debt, including borrowing used by companies pursuing digital-asset treasury strategies, fell 15.08% during the quarter to $73.2 billion. Corporate debt tied to those treasury strategies stood at $16.1 billion, with the reported quarterly decline linked in part to Strategy’s $1.5 billion debt repurchase completed in May.
The simultaneous reduction in lending balances, futures positioning, and tracked corporate debt describes a market using less borrowed capital than it did at the 2025 peak. DeFi has borne most of that adjustment, while CeFi’s comparatively smaller decline has restored its lead over on-chain lending in outstanding crypto-backed loans.
As crypto lending contracts, learn how traditional finance intersects with digital assets in our guide to TradFi vs DeFi.
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