#OnChainLendingSurge

The on-chain lending market has recently experienced a significant surge, with active loans surpassing $20 billion—a level not seen since the peak of 2021. This growth is largely attributed to increased institutional participation, as more entities explore digital asset-backed loans amid tighter monetary policies and heightened competition for dollar funding.

Platforms like Aave have been at the forefront of this expansion, offering diverse lending pools across multiple blockchain networks. The rise in on-chain leverage indicates a more mature market, with protocols spreading to various chains and incorporating a broader range of collateral types, including stablecoins and tokenized real-world assets.

However, this growth is not without risks. The increased leverage has led to significant liquidations during market downturns. For instance, in August 2024, Ethereum's on-chain lending markets experienced liquidations exceeding $436 million, marking the second-largest monthly liquidation event in history.

Overall, the surge in on-chain lending underscores the evolving dynamics of decentralized finance (DeFi