DeFi Lending: Q3 Skyrockets, Crushes CeFi

What to Know:

• DeFi lending reached record highs in Q3, driven by incentives and improved collateral.
• DeFi’s lending dominance over CeFi climbed to a new all-time high of 62.71% at the end of Q3 2025.
• Key industry players are investing in strengthening the lending ecosystem, indicating continued growth.

Decentralized Finance (DeFi) lending experienced a significant surge in the third quarter, achieving record highs and capturing a substantial market share. The sector’s growth was fueled by various factors, including incentive programs and the increasing use of improved collateral assets. This expansion highlights the growing confidence and activity within the DeFi space.

Galaxy Research’s recent report attributes the DeFi lending expansion to “points farming” and airdrop incentives, encouraging users to maintain open loans. The rising prices of crypto assets, which increase borrowing capacity as collateral values appreciate, have also played a crucial role. The increasing use of improved collateral assets such as Pendle PTs, which allow users to loop stablecoin strategies at favorable loan-to-value ratios, is also another factor.

DeFi lending’s dominance over CeFi venues climbed to a new all-time high of 62.71% at the end of Q3 2025, underscoring the shift toward decentralized financial solutions. Total crypto-collateralized lending expanded significantly, reaching a new all-time high of $73.59 billion. By the end of the quarter, DeFi lending applications accounted for 55.7% of the market, demonstrating their increasing influence.

In Q4, however, major players invested in strengthening the lending ecosystem. For instance, in October, Ripple partnered with Immunefi to boost the security of the proposed XRPL Lending Protocol and launched a global “Attackathon” that invited elite Web3 security researchers to stress-test the system ahead of an upcoming validator vote.

Industry players are making strategic moves to bolster the lending ecosystem. Ripple partnered with Immunefi to enhance the security of the proposed XRPL Lending Protocol, indicating a focus on secure DeFi solutions. Tether’s investment in Ledn, a Bitcoin-backed lending platform, further supports self-custody and broader institutional adoption.

The surge in DeFi lending during Q3 demonstrates the growing maturity and resilience of the decentralized finance sector. With key players investing in security and infrastructure, the future looks promising for continued growth and innovation in DeFi lending applications. As regulations surrounding Bitcoin ETFs and other crypto assets evolve, DeFi is poised to play an increasingly significant role in the financial landscape.

Related: XRP, Ethereum Losses Continue; Bitcoin Support Tested

Source: Original article