According to a report on lending data for the first quarter released by the research department of Galaxy Digital on June 4, 2025, systemic risks are on the rise due to the increasingly close leverage interdependence among centralized finance (CeFi), decentralized finance (DeFi), and cryptocurrency pools. The relevant analysis is as follows:
Closely related performance: As of March 31, 2025, there were over 39 billion US dollars of outstanding cryptocurrency collateralized debt among decentralized lending apps, centralized lending institutions, and cryptocurrency-backed stablecoin issuers. Among them, DeFi protocols account for 45.3%, centralized venues for 34.6%, and collateralized stablecoins for 20.1%. Many centralized trading platforms raise short-term liquidity through DeFi channels and then use the funds for off-chain lending, which leads to the same debt obligation appearing simultaneously in on-chain data and private ledgers. Under market pressure, the overall lending data is artificially exaggerated, complicity real-time risk assessment.
Interaction risks: A significant price drop usually triggers automatic clearing on DeFi platforms first, as smart contracts immediately enforce margin rules. Centralized trading platforms that borrow from DeFi may thereby recover loans or liquidate the collateral of exchange clients, further exerting pressure on prices. These forced sales will be fed back into the market, intensifying volatility and triggering more on-chain liquidations, especially for assets widely used on various platforms such as Bitcoin, Ethereum and staked Ethereum. For instance, the Pendle token demonstrated this reflexivity in the second quarter. After Aave enabled high loanto-value collateral, users deposited nearly 1.4 billion US dollars and borrowed stablecoins. By May 26th, the total supply of DeFi exceeded 54 billion US dollars. Once the price dropped, Large-scale liquidations may affect centralized trading platforms with similar risk exposures.
The impact of the enterprise Treasury: The enterprise Treasury adds another layer of credit to the system. The report shows that listed companies have issued at least 12.7 billion US dollars of convertible bonds and zero-coupon bonds to fund cryptocurrency holdings, including companies such as Strategy, Riot Platforms and Twenty One Capital. Strategy alone is in debt of 8.2 billion US dollars and pays 17.5 million US dollars in interest every quarter. Most of the bonds will mature between mid-2027 and the end of 2028, which forms a refinancing peak with the debts assumed by peers pursuing similar Treasury policies. To manage short-term debts, many companies rely on off-exchange stablecoin loans, whose interest rates are usually 2% to 4% higher than the current DeFi rates. This spread indicates that centralized trading platforms are actively referring to DeFi for pricing, linking the cost of private credit to on-chain conditions. When DeFi interest rates change, the cost of off-exchange lending will adjust rapidly, tightening the margin requirements for borrowers and other participants in the Treasury.
The report of Galaxy Digital concludes that although the diversification of credit channels has increased borrowing capacity, it has also strengthened the transmission of shocks throughout the system. In the absence of standardized disclosure or risk exposure attribution at the on-chain entity level, neither regulatory authorities nor market participants have any knowledge of the entire scope of risks embedded in the crypto credit market.
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