Galaxy reports $11B decline in crypto-collateralized lending in Q2 2026

The crypto lending market shed another $11.33 billion in the second quarter of 2026, bringing total outstanding crypto-collateralized loans down to $56.16 billion. That’s a 16.78% quarter-over-quarter decline and, perhaps more telling, a 40.13% drop from the market’s peak of $78.69 billion recorded in Q3 2025.

Galaxy Research, the analytical arm of Galaxy Digital, published the findings in its Q2 2026 report. The takeaway: borrowers are pulling back from leverage in a measured, voluntary fashion. This isn’t a 2022-style panic.

DeFi takes the bigger hit

The contraction wasn’t evenly distributed. Decentralized finance lending fell 27.61%, landing at $20.43 billion. Centralized finance held up better, declining just 9.62% to $22.98 billion.

That gap produced a notable milestone. CeFi’s share of the lending market now exceeds DeFi’s for the first time since Q3 2023.

The crypto-collateralized portion of CDP stablecoin supplies also decreased by 7.86%, completing a clean sweep. Galaxy’s report noted this marks the first quarter since Q4 2022 where lending declined across all three categories: CeFi, DeFi, and CDP stablecoin collateral.

An orderly retreat, not a rout

Galaxy Research was careful to distinguish the current environment from genuine crisis conditions. When crypto-backed lending cratered more than 55% in Q2 2022, it was driven by forced liquidations cascading through the system. Terra’s collapse, Three Arrows Capital’s insolvency, and a string of centralized lender failures created a vicious feedback loop.

Not every CeFi platform shrank, either. Galaxy itself, along with Coinbase, Ledn, Arch, Sygnum, and Milo, all grew their loan books during the quarter. Tether continues to dominate the CeFi landscape, accounting for 58.54% of the centralized lending market.

July data hints at a floor

The most encouraging signal in Galaxy’s report came from preliminary July numbers. DeFi borrowing rebounded to approximately $21.94 billion, recapturing a chunk of its Q2 losses.

Futures open interest tells a similar story. After declining 3.08% over Q2 to $103.2 billion, it climbed back to roughly $114 billion by late July.

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