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Q2 was the first quarter since Q4 2022 in which onchain lending declined across every category tracked by Galaxy Research (CeFi, DeFi, and the crypto-collateralized portion of collateral debt position stablecoins), as the market’s deleveraging trend continued. The notable difference between current conditions and those of the previous bear cycle is that outstanding loans are falling in a steady, stepwise decline rather than in outright collapse.
All told, crypto-collateralized lending contracted by $11.33 billion (16.78%) in Q2 2026 to $56.16 billion. This is 40.13% lower than the Q3 2025 high of $78.69 billion.
Outstanding borrows on DeFi lending applications have significantly shrunk since reaching an all-time high of $47.13 billion on Sept. 19. Sitting at $21.94 billion as of July 31, onchain lending has declined by $25.19 billion, or 53.45%. That decline is still shallower than the 80%+ DeFi drawdown seen in the 2022 bear cycle, despite the widespread crypto-market drawdown and the $200 million rsETH exploit that roiled Aave.
For more insights, stay tuned for Galaxy Research’s quarterly leverage report, coming soon.
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