Crypto Borrowing Dynamics Shift with DeFi Decline and CeFi Recovery, CryptoQuant Reports
According to CryptoQuant, the landscape of crypto borrowing is undergoing a shift as decentralized finance (DeFi) contracts decline amid a market correction while centralized finance (CeFi) borrowing shows early signs of recovery. DeFi leverage is fading as traders reduce their position sizes.
Data from leading protocols illustrate this trend. On Aave, the weekly borrowing of stablecoins USDT and USDC has dropped 69% from a peak of $6.2 billion to $1.9 billion by the end of November, though total outstanding loans on Aave remain steady around $16.3 billion. The overall decentralized borrowing volumes have been declining in line with price downturns, with major DeFi protocol volumes dropping since August.
Conversely, CeFi platforms are signaling a rebound amid the drawdown. Nexo, a major crypto-backed lender, observed a 155% week-over-week increase in retail credit withdrawals during this period, with cumulative credit withdrawals reaching $817 million in 2025. This suggests renewed borrowing demand on CeFi platforms.
Borrowers are increasingly opting to borrow against their crypto collateral rather than selling their assets outright. CeFi lenders thus serve as important liquidity backstops during market drawdowns, enabling users to access cash liquidity while maintaining long-term crypto exposure.
Centralized lenders have emerged as structurally important players in downturns by absorbing liquidity demand when DeFi activity contracts and by providing alternative risk profiles for crypto users.
