Pendle

Major

Shift

DeFi

Liquid

<p>The crypto leverage landscape is undergoing a structural shift, and the latest data from Sentora (formerly IntoTheBlock) highlights a milestone moment: on-chain credit has officially become the dominant form of crypto lending. Liquid staking tokens (LSTs), real-world-asset-backed tokens (RWAs), and principal tokens like Pendle PTs are now among the most commonly used collateral types, a stark reversal from the CeFi-heavy market of recent years.</p>
<h2 id="a-rapid-power-shift-from-cefi-to-defi">A Rapid Power Shift From CeFi to DeFi</h2>
<p>According to the <strong><a href="https://x.com/SentoraHQ/status/1992292166886887578" rel="noopener noreferrer nofollow">chart</a></strong> published by Sentora, the industry has made a dramatic pivot over the past year.</p>
<p>During Q4 2024, the crypto credit landscape was still dominated by centralized lenders, reflected in a peak lending figure of roughly $88 billion from CeFi providers.</p>
<p><img loading="lazy" src="https://www.ethnews.com/wp-content/uploads/2025/11/G6YLKyNXcAA_9ma.png" alt="" width="850" height="444"></p>
<p>But throughout 2025, this balance shifted aggressively:</p>
<ul>
 <li>Q1 2025: DeFi lending jumped to $78B, closing the gap with CeFi from the previous quarter.</li>
 <li>Q2 2025: DeFi credit climbed further to $90B, marking the first period where it surpassed most legacy centralized lending structures.</li>
 <li>Q3 2025: The trend solidified, with $73.6B in total outstanding debt, ~67% came from DeFi, making it the clear leader in the market.</li>
</ul>
<p>This is the strongest evidence yet that crypto leverage is moving fully on-chain.</p>
<h2 id="why-on-chain-credit-is-taking-over">Why On-Chain Credit Is Taking Over</h2>
<p>Three major factors explain why DeFi lending has replaced CeFi as the new default:</p>
<h3 id="1-lsts-have-become-prime-collateral">1. LSTs Have Become Prime Collateral</h3>
<p>Tokens like stETH, cbETH, and other liquid staking derivatives provide yield while being used as collateral – something CeFi platforms cannot match.</p>
<h3 id="2-rwas-are-bringing-institutional-stability">2. RWAs Are Bringing Institutional Stability</h3>
<p>Tokenized treasury products and RWA vaults have injected reliable, low-volatility collateral into DeFi protocols, enabling safer leverage.</p>
<h3 id="3-pendle-principal-tokens-pts-are-now-widely-adopted">3. Pendle Principal Tokens (PTs) Are Now Widely Adopted</h3>
<p>PTs allow users to lock in fixed yields and borrow against future yield streams, creating a more flexible credit market that traditional firms cannot replicate.</p>
<p>Together, these innovations have pushed DeFi lending to record highs, even amid a volatile macro environment.</p>
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<h2 id="what-this-means-for-the-broader-crypto-market">What This Means for the Broader Crypto Market</h2>
<p>The shift toward DeFi-dominated credit reflects the market’s growing preference for transparency and automation.<br> After the collapses of major CeFi lenders in previous cycles, Celsius, Voyager, BlockFi, investors appear increasingly unwilling to rely on opaque, centralized balance sheets.</p>
<p>On-chain credit, by contrast, offers:</p>
<ul>
 <li>real-time transparency</li>
 <li>automated liquidations</li>
 <li>provable collateral backing</li>
 <li>reduced counterparty risk</li>
</ul>
<p>As a result, DeFi lending has transformed from a niche sector into the backbone of crypto leverage.</p>
<h2 id="looking-ahead">Looking Ahead</h2>
<p>If current trends continue, DeFi lending may soon surpass all-time highs and become the primary venue not just for retail, but for institutional leverage in crypto.<br> With LSTs, RWAs, and principal tokens becoming standard collateral types, the on-chain credit market is positioned for even more rapid growth.</p>
<p>The message from Sentora’s latest data is unmistakable: Crypto credit has gone on-chain, and it’s not going back.</p>
<p>The post <a href="https://www.ethnews.com/on-chain-credit-surges-as-defi-overtakes-cefi-in-crypto-lending-market/" rel="noopener noreferrer nofollow">On-Chain Credit Surges as DeFi Overtakes CeFi in Crypto Lending Market</a> appeared first on <a href="https://www.ethnews.com" rel="noopener noreferrer nofollow">ETHNews</a>.</p>

On-Chain Credit Surges as DeFi Overtakes CeFi in Crypto Lending Market

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