{"id":129052,"date":"2025-05-12T06:19:11","date_gmt":"2025-05-12T06:19:11","guid":{"rendered":"http:\/\/cryptospotters.net\/?p=129052"},"modified":"2025-05-12T06:19:11","modified_gmt":"2025-05-12T06:19:11","slug":"defi-lending-tvl-is-outpacing-dexs-due-to-more-sustainable-yield-vc","status":"publish","type":"post","link":"http:\/\/cryptospotters.net\/?p=129052","title":{"rendered":"DeFi lending TVL is outpacing DEXs due to more sustainable yield \u2014 VC"},"content":{"rendered":"

Source: Cointelegraph.com NewsCrypto users could be looking for a more sustainable yield this cycle, as total value locked in decentralized finance (DeFi) lending continues to hit new highs while decentralized exchanges (DEXs) have lagged in comparison.
\nDeFi lending protocols are currently the leading DeFi vertical in TVL at $53.6 billion, representing 43% of the $124.6 billion locked across all DeFi protocols. The figure also surpasses liquid staking.
\nMultichain lending protocol Aave currently holds $25 billion of locked value, accounting for nearly half of the DeFi lending market.
\nChange in crypto lending protocol TVL since 2019. Source: DeFiLlamaIn stark contrast, DEXs, which once held nearly double the TVL of their closest competitor, have dropped from $85.3 billion in November 2021 to $21.5 billion today.
\nExplaining the rise in DeFi lending and fall in DEX TVL, the founder of crypto fund Apollo Capital, Henrik Andersson, told Cointelegraph that lending is arguably the \u201conly sustainable way to produce yield\u201d in DeFi, as DEX liquidity pooling has largely become unprofitable due to impermanent loss.
\nHe also argued that the industry-leading DEX Uniswap v3\u2019s more \u201ccapital efficient\u201d design, relative to Uniswap v2, may have contributed to the DEX TVL fall, as liquidity providers can now earn more rewards with less upfront capital.
\nAndersson also pointed out that the rise of intent-based swaps \u2014 a relatively new crosschain trading mechanism \u2014 may have further reduced the DEX TVL, as market makers typically source liquidity from centralized exchanges to facilitate these swaps.
\nDeFi lending protocols like Aave and Compound Finance enable crypto users to lend assets to earn interest or borrow against collateral. Smart contracts manage deposits, loans and interest rates to ensure trustless transactions.
\nDeFi users who supply Ether (ETH) and Tether (USDT) on Aave, for example, currently earn an annual percentage yield of 1.86% and 3.17%, respectively.
\nProviding stablecoins and Ether to DEX pools such as Uniswap\u2019s can offer higher rewards; however, as Andersson pointed out, they\u2019re far less sustainable, fluctuating by the day.
\nDeFi now dominates CeFi in crypto lending market\u00a0
\nDeFi-based crypto lending accounted for around 65% of the total market by the end of 2024 and has increased or maintained its market share against centralized lenders every quarter since Q4 2022, an April report from crypto investment firm Galaxy Digital showed.
\nThe fall started occurring around the time several centralized crypto lenders such as Genesis, Celsius Network, BlockFi and Voyager fell bankrupt, causing TVL to fall massively.
\nRelated: Bitcoin hits $103K but DeFi is a mixed bag: Finance Redefined
\nTheir collective downfall led to an estimated 78% collapse in the size of the crypto lending market from the 2022 peak to the bear market trough, Galaxy noted.
\nChange in market share between centralized and decentralized crypto lending protocols between Q3 2018 and Q4 2024. Source: Galaxy DigitalHowever, it was DeFi lending protocols that led the resurgence in crypto lending activity, Galaxy noted, pointing to a near 960% increase in DeFi open borrows between Q4 2022 and Q4 2024.
\nGalaxy said the strong recovery of the DeFi lending market is a testament to the design and risk management practices adopted by DeFi lending protocols while showcasing the benefits of algorithmic, overcollateralized and supply-and-demand-driven borrowing models.
\nGalaxy expects increased institutional participation and clearer regulations to drive the next wave of crypto lending adoption.
\nMagazine: Crypto wanted to overthrow banks, now it\u2019s becoming them in stablecoin fightRead More<\/a><\/p>","protected":false},"excerpt":{"rendered":"

Source: Cointelegraph.com NewsCrypto users could be looking for a more sustainable yield this cycle, as total value locked in decentralized finance (DeFi) lending continues to hit new highs while decentralized… <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/129052"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=129052"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/129052\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=129052"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=129052"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=129052"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}