Credit DeFi protocols surpassed DEX in volume

The volume of funds in credit DeFi protocols in the current market cycle has reached record levels, while decentralized exchanges (DEX) continued to lose ground.

Among the protocols, Aave leads. Data: DeFiLlama. The total TVL of such projects amounts to $53.3 billion — 43% of the total volume of $124.6 billion across the entire industry. Aave leads with $24 billion. This figure also exceeds the liquid staking segment.

For comparison: the volume of locked value in DEX decreased from $85.3 billion in November 2021 to $21.5 billion at the time of writing.

The founder of the Apollo Capital fund, Henrik Andersson, linked this to the fact that lending has become the only sustainable source of income in DeFi. According to him, DEX liquidity pools are losing their appeal due to impermanent losses and increasing competition.

The "capital-efficient" design of Uniswap v3 allows for greater earnings with smaller investments, but it reduces the overall TVL, noted Andersson. He explained that intent swaps, where liquidity is taken from centralized exchanges (CEX), are pulling funds away from DEX.

Credit protocols like Aave offer holders of Ethereum and stablecoins an annual yield ranging from 1.86% to 3.17%. In DEX pools, the profit is higher but volatile and depends on daily fluctuations.

The share of DeFi lending in the market reached 65% by the end of 2024, surpassing centralized platforms. This occurred after the bankruptcies of Celsius, BlockFi, and other CeFi players, which reduced the market by 78% from the peak of 2022.

According to Galaxy Digital, the volume of loans in DeFi has increased by 960% since the end of 2022.

Change in market share between CEX and DEX lending protocols from Q3 2018 to Q4 2024. Data: Galaxy.

“Institutional players and regulatory clarity will be the drivers of the next stage of growth,” forecasts Galaxy.

Let us remind you that in the first quarter of 2025, the TVL of DeFi protocols fell by 27%, the volume of NFT trading decreased by 24%, while social and AI applications showed the highest growth.