How exactly does one make money with cryptocurrency without selling it?
Enter the world of crypto lending—a financial ecosystem that’s grown from humble beginnings to over $55 billion in total value locked by May 2025.
Think of it as your crypto assets getting a part-time job while you sleep.
Your crypto isn’t just sitting there looking pretty—it’s clocking in, earning yield, and building wealth while you dream.
The crypto lending market has been on quite the rollercoaster—peaking at $48.4 billion in late 2021, crashing to $9.6 billion in 2022 (ouch!), then bouncing back with impressive 214% growth to reach $30.2 billion by the end of 2024.
That’s like watching your favorite volatile crypto, except this time it’s an entire market sector.
DeFi lending platforms have steadily muscled out their centralized counterparts, growing from just 34% market share in 2020-2021 to a commanding 63% by late 2024.
Though they’ve recently slipped to 56.72% in Q1 2025 as CeFi venues staged a mini-comeback.
The battle for lending dominance continues!
For borrowers, the appeal is crystal clear.
Bitcoin-backed loans exploded by 333% in early 2025, with many borrowers using their crypto to finance real estate purchases.
The magic ingredient? Tax efficiency.
Since borrowing against crypto doesn’t trigger capital gains taxes (the assets aren’t sold), wealthy individuals can access liquidity without a painful tax bill.
Interest rates have become increasingly attractive for borrowers, with stablecoin borrow rates plummeting from 11.59% to just 5% between January and May 2025.
Most loans operate with approximately 50% loan-to-value ratios, triggering margin calls if that ratio exceeds 60%.
The largest player in this space is Aave V3 on Ethereum L1, holding a staggering $23.6 billion in deposits as of March 2025.
With funding times averaging under 10 hours, crypto-backed loans offer remarkably fast access to liquidity compared to traditional finance options—proving that in crypto, you can have your cake and borrow against it too.
The industry offers various lending options including OTC lending with bilateral, customized arrangements for accredited investors who want terms tailored to their specific needs.
The market recently saw Tether emerge as a dominant CeFi lender, controlling over 65% of the centralized lending market with nearly $9 billion in loans.
Understanding the potential risks associated with lending platforms is crucial before diving into this growing financial ecosystem.
