The on-chain crypto lending market has recently experienced significant growth, reaching record highs in active loans. Data from Token Terminal indicates that total active loans have surpassed $22.85 billion, reflecting a resurgence in decentralized finance (DeFi) lending protocols.
This surge is closely linked to the increasing market capitalization of stablecoins, which has exceeded $200 billion—a 13% rise over the past month. Investors are channeling funds into DeFi platforms to capitalize on higher yields, with stablecoin borrowing and lending rates reaching annualized figures of 10-20% on platforms like Aave and Compound.
The growing demand for leverage in the crypto market has also contributed to this trend. As cryptocurrency prices rise, investors seek to amplify their gains through leveraged positions, further driving activity in DeFi lending protocols.
Additionally, the total value of high-risk loans—those nearing their liquidation thresholds—has increased to $55 million, indicating a rise in risk tolerance among investors.
Overall, the on-chain lending market's expansion underscores the growing integration of decentralized financial services within the broader crypto ecosystem, offering investors new avenues for yield generation and capital allocation.