DeFi Lending Shatters Records: Highest Activity Since 2022 Bull Run

Decentralized finance just flexed its muscles—lending protocols are pumping harder than a Wall Street intern on espresso.

The yield hunt is back on

Borrowing demand across DeFi platforms just hit levels not seen since the last crypto winter thawed. Turns out when traditional banks offer 0.5% APY, people get creative with their collateral.

Smart contracts eating bankers'' lunch

No loan officers. No credit checks. Just code determining who gets capital—unless you count ETH whales as ''creditworthy'' by default. (Somehow they always are.)

The irony? This surge comes exactly as regulators finalize ''compliance frameworks'' that''ll be obsolete before the ink dries. DeFi moves faster than a hedge fund closing its FTX positions.

The growth in lending shows more trust in the collaterals, as well as improved tools for avoiding liquidations. Most of the lending happens on big protocols, using blue chip assets as collateral. NFT lending is not part of the trend and never recovered, losing 97% of its volumes. 

Active loans have expanded continuously with no drawdowns since January 23, rising even during the March and April market slump. The current trend is expected to continue, raising loans to an even higher range. 

Ethereum supports DeFi lending

While some of the lending protocols saw liquidations of ETH loans, the market regained its footing and is rebuilding ETH liquidity. After the latest market recovery, liquidatable positions for ETH collaterals start at $1,500.

ETH currently has $1B in liquidation positions, with other tokens also growing their influence. Lending also supports the ethereum ecosystem, preserving the legacy status of the chain. Solana and other chains have much smaller lending markets. However, Kamino Lend is breaking out of the pack, with over $2B in collaterals and $1.5B in active loans. The Base ecosystem is also growing, with over $1B in active loans. 

The relative stability of ETH above $2,500 in the past weeks further pushed lending forward. The growth is a mix of the expansion of AAVE as the leading protocol and the growth in value of smaller new lending protocols. 

Aave still leads DeFi lending

The bulk volumes in active loans come from the Aave protocol, which recovered from the bear market to emerge as the main liquidity hub. 

Aave carries over $16.9B in active loans, displacing Compound as the leader from the previous bull cycle. As a result of the growth, the native AAVE token still trades close to its upper range for the past three months, at $286.87. 

Aave carries $24.99 in collaterals, supporting a healthy over-collateralized ratio. In total, the Ethereum ecosystem supplied $33.58B in collaterals, representing around 33% of the entire DeFi ecosystem.

Smaller protocols have also shown significant growth in new loans for the past month. Maple Finance is the leader, with over a 42% increase in borrowing. Morpho, Spark, and Fluid also increased their active loans in the past month. 

DeFi lending is quickly becoming one of the hallmarks of the current cycle. The lending landscape is more diverse, even if it is dominated by Aave. In the coming months, World Liberty Fi, the TRUMP family fund, will also join with its own lending vault and native stablecoin.

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