- Lending is now the biggest sub-sector within DeFi.
- It overtook liquid staking earlier this year.
- Founders attribute its boom to the failures of centralised crypto lenders and a maturing DeFi ecosystem.
A version of this article appeared in our The Decentralised newsletter on July 8. Sign up here.
The DeFi ecosystem is changing.
On the eve of Ethereum’s 2023 “Shapella” upgrade, liquid staking became the biggest sub-sector in DeFi. By March 2024, liquid staking accounted for more than one out of every three dollars in a DeFi protocol.
But its long reign is over. Earlier this year, lending-and-borrowing protocols such as Aave supplanted liquid staking protocols like Lido as the hottest business in decentralised finance.
Today, $55.6 billion in crypto is sitting in lending protocols, according to DefiLlama data. That’s about 28% of the $198 billion DeFi ecosystem.
And as the liquid staking era ends, another one, dominated by lending stalwart Aave, is just beginning.
The value of crypto deposited in Aave has doubled since the eve of Donald Trump’s November election, and it’s now sitting on about $26 billion.
But Aave isn’t the only lending protocol to see substantial growth over the past year.
Since November 1, the value of crypto deposited in Morpho has tripled, to $4.5 billion. The value of crypto deposited in Maple has grown more than fivefold, to more than $1.7 billion. Euler, the victim of a devastating 2023 hack, saw its deposits balloon from about $10 million to more than $1.1 billion.
At an Ethereum-focused conference in Cannes, France last week, Aave founder Stani Kulechov shared some thoughts on the DeFi lending boom.
“If you go a few years back, even participants in our space necessarily weren’t using DeFi. They were using the centralised alternatives,” he said from one of the conference’s stages.
But centralised crypto lenders such as Celsius filed for bankruptcy amid the cascading failures that began with the collapse of the Terra blockchain in 2022.
Those businesses “were managing their risk so horribly that they were using DeFi in the back end, because that’s all that they could actually do at that point, because they couldn’t add any value,” Kulechov continued.
“So virtually all lending that existed mainly in these centralised platforms moved into DeFi, which is amazing. And I think DeFi has a stronghold now on this category.”
Morpho co-founder Paul Frambot has another theory.
Lending and borrowing “is probably the most important part of finance — credit forms the backbone of any robust financial system, so it doesn’t surprise me to see this emerge as the ecosystem matures,” he told DL News.
But simple metrics like “total value locked” — which measures the dollar value of crypto deposited in a protocol’s smart contracts — also favours lending protocols, Frambot cautioned.
“If we’re measuring TVL, DEXs are incredibly capital efficient at enabling large trades, while lending protocols need substantial idle capital to meet borrowing demand, so by design, they will need higher TVL.”
Top DeFi stories of the week
This week in DeFi governance
VOTE: GMX votes to increase Arbitru, DAO voting power.
VOTE: Arbitrum DAO votes to extend Research and Development Council funding.
VOTE: Optimism Collective votes on upgrade preparing “Superchain” for interoperability.
Post of the week
Derek Guy, menswear enthusiast extraordinaire, weighed in on the Zelensky suit debate that caused a furore among Polymarket bettors.
This ended up raising $5,000 for @feederofcats, so here's a thread on whether President Zelenskyy wore a suit. 🧵 https://t.co/9NhKa7qaT2
— derek guy (@dieworkwear) July 4, 2025
Got a tip about DeFi? Reach out at aleks@dlnews.com.
