Decentralized Finance Returns to Crypto Market as Traditional CeFi Stagnates
The crypto lending market has undergone a major shift since its 2021 crash, with more cautious systems replacing the unsecured loans that previously supported prices.
With the exit of major centralized lenders like Genesis, decentralized finance (DeFi) has taken center stage, buoyed by the surge in total value locked (TVL) in protocols like Aave v3 and Spark v1.
Aave v3 grew from $16.5 billion to $27 billion in a month, benefiting from capital efficiency features and cross-chain support, while Spark v1 nearly doubled from $4.5 billion to $8 billion.
This trend reflects the strength of DeFi, which also benefited from the GMCI DeFi Index’s more than 100% surge in November.
In contrast, the centralized finance (CeFi) market has shrunk sharply since Genesis left, with collateralized loans replacing risky loans, stabilizing the market in the long run.
This shift marks a turning point toward a more transparent and sustainable financial system, as DeFi continues to fill the void left by CeFi with a balance of caution and innovation
