Crypto-Collateralized Debt Hits Record $73.6B in Q3 as Leverage Strengthens, Galaxy Reports
Crypto-collateralized borrowing surged to $73.6 billion in the third quarter, marking the sector’s most leveraged period ever. Galaxy Research notes that the structure of this leverage is healthier and more transparent than during the 2021–22 cycle.
Onchain lending drove most of the growth, now accounting for 66.9% of all crypto-backed debt, up from 48.6% at the previous peak. DeFi lending alone jumped 55% to $41 billion, supported by incentive programs and improved collateral types such as Pendle Principal Tokens.
Centralized lending rebounded as well, with borrowing rising 37% to $24.4 billion, though still about one-third below 2022 highs. Survivors of prior cycles increasingly favor fully collateralized models to attract institutional capital, with Tether holding nearly 60% of CeFi loans.
DeFi lending apps now command more than 80% of the onchain market, while CDP-backed stablecoins fell to 16%. New deployments, including Aave and Fluid on Plasma, fueled borrowing growth, with Plasma surpassing $3 billion in borrows within five weeks.
A post-Q3 leverage-induced liquidation wiped out over $19 billion in a single day, the largest in crypto futures history. Galaxy stresses this reflected automatic de-risking rather than systemic credit weakness.
Corporate digital-asset treasuries also rely on leverage, with $12 billion in outstanding debt, bringing total industry debt to $86.3 billion. Overall, Galaxy concludes that crypto leverage is rising on a firmer, more transparent foundation, with collateralized structures replacing the unbacked credit that fueled prior boom-and-bust cycles.
