Decentralized Finance active loans exceeded 23.7 billion USD, setting a record, while TVL remains 6.4% lower than before the tariffs.

The global dashboard of DeFiLlama shows that as of May 22, the TVL of DeFi is $180.4 billion, which is only 6.4% lower than the TVL of $192.8 billion recorded on January 31.

Source: cryptoslate

Translation: Blockchain Knight

According to data from Token Terminal, as of May 21, the active loan volume in decentralized lending applications has surged to a historical high of $23.723 billion.

Meanwhile, the TVL of the DeFi ecosystem decreased by 6.4% compared to the level on January 31, which was the day before former U.S. President Donald Trump officially proposed his import tariff plan.

The surge in outstanding loans continues the expansion trend that began in early April, when the lending market regained momentum with the broader recovery of Crypto asset prices.

Token Terminal data shows that total loan volume has increased by approximately $8.5 billion since April 8, driven by the liquidity deepening from Aave, Morpho, and Compound.

The active loan scale of 23.723 billion USD is about 3 billion USD higher than the previous cycle peak set in December 2021, highlighting the increasingly important role of uncollateralized lending in Crypto native trading, leveraged staking, and basis trading strategies.

DefiLlama's global dashboard shows that as of May 22, the TVL of DeFi is $180.4 billion, which is only 6.4% lower than the $192.8 billion TVL recorded on January 31.

This benchmark is important because it comes the day before the White House confirmed the signing of an executive order activating new import tariffs, which are currently in a 90-day postponement period.

The official announcement of the tariff plan prompted the BTC price to gradually decline by 27% from February 1 to April 8, reaching its lowest price level of the year on April 8. During the same period, the TVL of the Decentralized Finance ecosystem also dropped by nearly 36%.

In addition, the collateral mainly consisting of Ethereum, staked ETH derivatives, and stablecoins has also shrunk accordingly, hitting a bottom of about 110 billion dollars in mid-March.

The increase in loan balances indicates a growing demand for leverage among professional traders. Many are borrowing stablecoins to fund long positions in Bitcoin and Ethereum, or to capture basis trading and liquidity mining yields.

However, the collateral for these loans is the net result of borrowing activities in the standard TVL calculation.

As a result, a simultaneous increase in borrowing and collateral withdrawals could lead to a flat or even declining overall TVL while credit activity accelerated. This once again confirms the scenario of using lending protocols for on-chain leverage operations.

The borrowing yield has also played a role. Since April, the average annualized interest rate for USDC deposits on Aave and Morpho-Aave has fluctuated between 6% and 8%, which is much higher than the yield on short-term U.S. Treasury bonds.

This has prompted stablecoin deposits to shift from passive reserves to lending pools. Higher utilization has driven an increase in loan balances, but the impact on TVL has been limited, as stablecoins typically enter the protocol at a 1:1 ratio with the dollar.

A record active loan scale of 23.723 billion USD and a 6.4% TVL gap indicate that, despite the total collateral scale still being slightly below the peak at the end of January, the market for credit demand is accelerating.