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DeFi Lending Skyrockets—CeFi Fights to Stay Relevant After 2022 Meltdown
The cryptocurrency lending market has been witnessing a stark contrast in its performance, with decentralized finance (DeFi) platforms experiencing an unprecedented surge while centralized finance (CeFi) struggles to regain its footing.
According to recent data, DeFi lending has skyrocketed, fueled by the permissionless and decentralized nature of these protocols. Platforms like Aave and Compound have set the tone for this resurgence, leveraging their robust risk management strategies and resilient protocols to defy market pressures. This explosive recovery is redefining the role of Decentralized Finance (DeFi) as a driving force in the crypto-lending space.
On the other hand, CeFi lending has been fighting an uphill battle to regain its former prominence. Despite a modest rebound, with a 73% increase from the bear market’s lowest point, the sector remains significantly below its 2022 peak. The collapse of giants like Celsius, BlockFi, and Genesis has led to a severe loss of consumer trust, resulting in a dramatic reduction in lending volume.
The limited recovery witnessed in CeFi is characterized by consolidation, with major players such as Tether, Galaxy Digital, and Ledn controlling a substantial portion of the remaining lending volume. Regulatory challenges and reluctance to offer competitive yield products, especially for U.S.-based clients, further complicate CeFi’s prospects for a resurgence.
As DeFi continues to forge new paths in digital finance, it is clear that this shift will define the crypto-lending landscape going forward.
Source: https://crypto-economy.com/defi-lending-skyrockets-cefi-fights-to-stay-relevant-after-2022-meltdown/
