Q2 2025 Signals Crypto Lending Renaissance: Tether Fortifies Market Leadership

The crypto lending landscape experienced a remarkable rebound during the second quarter of 2025, with activity recovering to levels unseen since the 2021-2022 bull cycle. Research from Galaxy Research reveals that the resurgence was driven by converging factors: appreciating asset values and heightened demand for leverage among market participants seeking liquidity without liquidating positions.

Market-Wide Expansion Across Multiple Channels

Across decentralized and centralized platforms, crypto-collateralized lending reached $44.25 billion by the end of June—a striking recovery trajectory. The DeFi sector alone captured $26.47 billion in outstanding loans, representing a 42.1% increase from Q1 2025. This quarter-over-quarter expansion of $10.12 billion marks one of the most significant gains since the speculative peaks of late 2021 and early 2022, when total lending volume briefly approached $50 billion.

The acceleration reflects two interconnected phenomena: institutional and retail borrowers are capitalizing on recent breakthroughs by Bitcoin and Ethereum, while simultaneously becoming more confident in the stability of lending counterparties following several years of market maturation.

How Tether Cemented Its Position Atop CeFi Lending

Centralized finance lending platforms saw $17.78 billion in active loans as of June 30—a 14.66% quarterly increase and 147.5% growth compared to Q4 2023’s bear-market trough of $7.18 billion. Within this segment, Tether has emerged as the dominant force, commanding approximately 57% market share with $10.14 billion in outstanding loans. This represents the stablecoin issuer’s 12th straight quarter at the helm of CeFi lending.

Tether’s sustained dominance reflects the competitive eliminations of 2022, when operational failures at Genesis, Celsius, Silvergate, BlockFi, and Voyager reshuffled the market hierarchy. Prior to these collapses, Tether controlled less than 20% of CeFi lending; its current position reveals how significantly the sector consolidated around reliable operators. The next-largest competitors—Nexo with $1.96 billion and Galaxy Digital’s lending division with $1.11 billion—together with Tether comprise 74% of the centralized lending market.

Market Dynamics Shifting the Competition

Despite Tether’s commanding position, recent quarter data suggests modest erosion from late 2022’s near-70% peak. Galaxy Research attributes this shift to multiple pressures reshaping the competitive landscape. Rising valuations in underlying collateral have created self-reinforcing demand cycles, prompting corporations to increasingly allocate treasury resources through CeFi lending platforms. Simultaneously, intensifying competition among lenders has compressed rates, making borrowing more accessible across the ecosystem.

These structural forces point toward continued recalibration in crypto lending hierarchies, though Tether’s operational consistency and infrastructure advantages position it to retain leadership even as alternatives gain incremental share in an expanding market.