DeFi lending TVL is outpacing DEXs due to more sustainable yield — VC
Total value locked (TVL) in decentralized finance (DeFi) lending has reached $53.6 billion, making it the leading DeFi vertical, while decentralized exchanges (DEXs) have seen a significant decline from $85.3 billion in November 2021 to $21.5 billion. Aave holds $25 billion of the DeFi lending market. The rise in DeFi lending is attributed to its sustainability compared to DEX liquidity pooling, which has become unprofitable due to impermanent loss. Uniswap v3's capital-efficient design and the emergence of intent-based swaps have further contributed to the decline in DEX TVL. DeFi lending accounted for 65% of the total crypto lending market by the end of 2024, maintaining its share against centralized lenders since Q4 2022. The collapse of several centralized lenders led to a 78% decrease in the crypto lending market, but DeFi protocols have driven a resurgence, with a 960% increase in open borrows from Q4 2022 to Q4 2024. Increased institutional participation and clearer regulations are anticipated to boost crypto lending adoption.
