In the complex ecosystem of cryptocurrencies, the dynamics in the decentralized finance (DeFi) sector have always attracted much attention. Recently, data from Token Terminal has revealed significant changes in this field. As of May 21st, the scale of active loans in decentralized lending applications soared to 23.723 billion US dollars, setting a new historical high.
Meanwhile, the total value locked (TVL) of the DeFi ecosystem dropped by 6.4% compared to January 31, which happened to be the day before former US President Donald Trump officially proposed his import tariff proposal. The changes in these two sets of data not only reflect the strong growth of the decentralized lending market, but also imply the potential impact of macro policies on the DeFi ecosystem.
Since the beginning of April, the lending market has regained vitality as the prices of broader crypto assets rebounded, and the surge in outstanding loans has continued this expansion trend. Driven by the deepening liquidity of platforms such as Aave, Morpho and Compound, the total loan size has increased by approximately 8.5 billion US dollars since April 8th.
This record $23.723 billion in active lending is approximately $3 billion higher than the previous cycle peak set in December 2021, fully highlighting the increasingly crucial role of permissionless credit in crypto-native trading, leveraged staking, and basis trading strategies. Professional traders are increasingly in need of leverage. Many borrow stablecoins to take long positions in Bitcoin and Ethereum, or to capture basis trading and liquidity mining gains.
DefiLlama’s global dashboard data shows that as of May 22nd, the TVL of DeFi was $180.4 billion, a 6.4% decrease from the $192.8 billion registered on January 31st. This benchmark time point is of great significance because it is on the eve of the White House confirming the signing of the executive order to activate new import tariffs, which are currently under a 90-day moratorium.
The official announcement of the tariff plan led to a gradual 27% drop in the price of Bitcoin from February 1st to April 8th, and it reached its lowest price level this year on April 8th. During the same period, the TVL of the DeFi ecosystem also dropped significantly by nearly 36%, and the collateral scale, mainly consisting of Ethereum, staked ETH derivatives, and stablecoins, shrank accordingly, bottling out to approximately 110 billion US dollars in mid-March.
However, the increase in loan balance and the decrease in TVL are not simply inversely correlated. The increase in loan balance indicates that the market’s demand for credit is accelerating, while the decline in TVL cannot be simply attributed to the shrinking of the market. In the DeFi ecosystem, the simultaneous increase in lending and collateral withdrawals may lead to the overall TVL remaining flat or even declining, while credit activities are accelerating. This is because the collateral of these loans is the net result of lending activities in the standard TVL calculation, and an increase in loans does not directly equate to an increase in TVL.
The lending yield rate also plays an important role in it. Since April, the average annualized deposit rate of USDC on Aave and Morpho-Aave has fluctuated between 6% and 8%, and this rate level is much higher than the yield of short-term US Treasury bonds. High yields have prompted stablecoin deposits to shift from passive reserves to lending pools, and higher utilization rates have driven up loan balances. However, since stablecoins usually enter the protocol at a 1:1 US dollar ratio, their impact on TVL is limited.
The record active loan scale of 23.723 billion US dollars and the 6.4% TVL gap indicate that although the total collateral scale is still slightly lower than the peak at the end of January, the market demand for credit is showing a rapid growth trend.
This phenomenon not only reflects the vitality and innovation of the DeFi lending market itself, but also demonstrates its adaptability and resilience in the complex and volatile macroeconomic and crypto market environment. As the crypto market continues to develop, the TVL changes of decentralized lending applications and the DeFi ecosystem will remain a focus of close attention for market participants. Their dynamic development will provide important clues for the future direction of the crypto finance field.
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