Aave News Today: Transparent DeFi Protocols Drive Unprecedented Growth in Crypto Lending

Crypto-backed lending reached a record $73.59 billion in Q3 2025, fueled by a 54.84% quarter-over-quarter jump in decentralized finance (DeFi) lending, which climbed to $40.99 billion,

. The combined value of outstanding loans in both DeFi and centralized finance (CeFi) now stands above $65.37 billion, outpacing the previous high of $53.44 billion from Q4 2021 by $11.93 billion .

By the end of the quarter, DeFi commanded 62.71% of the sector, up from 59.83% in Q2 and 61.99% in Q4 2024, signaling a move toward more transparent, on-chain lending systems. This growth is propelled by incentive mechanisms such as "points farming" and airdrops, which motivate users to keep loans open despite market swings, as well as the use of advanced collateral types like

Principal Tokens (PTs), which support higher loan-to-value ratios .

New blockchain networks, especially Tether's platform, have become significant players. more than $3 billion in loan volume within five weeks of its debut, with accounting for almost 70% of these loans. Aave's version 3 markets also expanded notably on layer-2 networks like Base and , while the Plasma rollout pushed Ethereum layer-2 Arbitrum out of its spot as Aave's second-largest deployment .

At the same time, Maple, a lending platform for institutions, achieved a milestone by increasing its loan portfolio by $630 million during the quarter . The adoption of high-throughput environments that enable "looped" strategies—depositing crypto, borrowing stablecoins, and reinvesting—has further fueled growth .

Centralized finance lending, though smaller in scale, rebounded with a 37% quarterly rise to $24.37 billion. Nonetheless, CeFi’s share of the market remains limited at 33.12%, down from 36.78% in the previous quarter.

leads the CeFi sector, holding 59.91% of tracked loans with $14.6 billion in secured lending, followed by ($2.04 billion) and ($1.8 billion) . Unlike the riskier lending seen in 2021, current CeFi lenders require strict over-collateralization, mainly accepting and stablecoins to reduce insolvency risk .

However, the sector’s rapid expansion has led to increased volatility. On October 10, 2025, the crypto futures market saw its largest liquidation event yet, with $19 billion in perpetual futures positions erased in just 24 hours.

rather than widespread credit issues, emphasizing that today’s collateralized models prevent the lender failures seen in earlier cycles .

The lending surge in 2025 stands in stark contrast to the opaque, unsecured credit practices of 2021. DeFi protocols now represent over 80% of on-chain borrowing, while CDP-backed stablecoins like

make up only 16% of the market. The move toward code-enforced collateralization and institutional-grade transparency is drawing traditional institutions, such as trading firms and corporations, back into the market as liquidity stabilizes .

With leverage at unprecedented levels, Galaxy concludes that the industry has shifted from counterparty risk to volatility risk. Automated liquidations now safeguard protocol solvency but also allow for sharp price swings. The report highlights a maturing sector where transparency and strong collateral requirements replace speculative lending, even as leverage continues to climb .

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