DeFi Borrowing Surges as Crypto Lending Shifts: CeFi Activity Rebounds in 2025

Crypto lending isn't dead—it's just moving house. A seismic shift is underway as decentralized finance protocols siphon activity from traditional crypto lenders, while centralized platforms stage a surprising comeback. The smart money is building new pipes.

The DeFi Takeover

Forget waiting on bank-like approvals. DeFi contracts are cutting out the middleman, letting users collateralize and borrow directly from liquidity pools. It's faster, often cheaper, and operates 24/7—a direct challenge to the old guard. This isn't just a niche play; it's a fundamental rewiring of credit in digital asset markets.

The CeFi Counter-Punch

Don't write off the centralized players just yet. After a brutal period of consolidation—and a few spectacular blow-ups that would make a traditional banker blush (though they'd never admit it)—regulated platforms are seeing renewed interest. Why? For some, the perceived safety of a known entity and clearer regulatory handrails still hold weight, especially for institutional players dipping their toes in.

The landscape is splitting. DeFi for the agile, CeFi for the cautious. This dual-track rebound signals one thing: the demand for crypto leverage is stronger than ever. The tools are just getting an upgrade. After all, in finance, the only constant is the relentless pursuit of a cheaper loan and a higher yield—some things never change.

DeFi Borrowing Contracts as Risk Appetite Fades

According to CryptoQuant’s latest dashboard decentralized borrowing has fallen in line with declining crypto prices. Since August borrowing volumes on major DeFi protocols have dropped as traders reduce leverage and exposure.

CryptoQuant reports on AAVE which is one of the largest DeFi lending platforms, weekly borrowing of stablecoins USDT and USDC has fallen by 69%, declining from a peak of $6.2 billion to just $1.9 billion by the end of November.

This contraction also closely mirrors the broader market downturn suggesting that users are actively unwinding leverage rather than deploying fresh capital.

Despite the sharp pullback in new borrowing Aave still maintains $16.3 billion in outstanding loans, showing the scale of DeFi credit markets even during periods of stress.

The decline in incremental borrowing points to a clear reduction in speculative risk-taking across decentralized markets, reports CryptoQuant.

CeFi Borrowing Shows Early Signs of Rebound

Centralized borrowing activity initially followed a similar downward trajectory during the market correction, but recent data suggest a divergence may be emerging.

CryptoQuant also notes that CeFi platforms are beginning to see renewed borrowing demand even as prices continue to weaken.

On NEXO weekly retail credit withdrawals dropped sharply from $34 million in mid-July to $8.8 million by mid-November. However, the following week saw a strong rebound to $23 million — a 155% week-on-week increase.

This behavior also indicates that users may be increasingly opting to borrow against their crypto holdings rather than selling assets at depressed prices.

The rebound suggests CeFi platforms are serving as a liquidity backstop during market drawdowns, allowing investors to access cash while maintaining long-term exposure to crypto.

Centralized Lenders Play a Structural Role in Downturns

CryptoQuant’s analysis highlights the structural importance of centralized lenders during periods of market stress. While DeFi borrowing tends to contract rapidly as leverage is reduced, CeFi platforms often absorb liquidity demand when investors seek flexibility and capital preservation.

Nexo’s cumulative credit withdrawals reached $817 million in 2025, positioning it as one of the most active venues for crypto-backed lending this year.

The latest data also suggests that centralized lenders complement DeFi markets by offering alternative borrowing channels with different risk profiles and user behavior.