| Ticker | Status | Jurisdiction | Filing Date | CP Start | CP End | CP Loss | Deadline |
|---|
| Ticker | Case Name | Status | CP Start | CP End | Deadline | Settlement Amt |
|---|
| Ticker | Name | Date | Analyst Firm | Up/Down | Target ($) | Rating Change | Rating Current |
|---|
Fintech may be hitting its stride, especially for those rich in cryptocurrency holdings. As it is, interest rates for collateralized loans on decentralized finance (DeFi) protocols like market leader Aave V4 (AAVE) are lower than current 30-year fixed mortgage rates and most auto loans.
The one saving grace for traditional finance is that most people don't own cryptocurrencies, or know how to obtain a loan through a DeFi company. Singling out that segment of the blockchain market, DeFi lending applications held roughly 59% of the crypto-collateralized lending market by second quarter of 2025, up from 54% in the first quarter. Most of this taking away from crypto lending on centralized finance exchanges, opposed to the bank on Main Street.
This year, DeFi has surpassed centralized financed (CeFi) loans offered up on the blockchain. CeFi has imploded.
When new CeFi giants like Celsius and BlockFi failed in 2022, users fled to the decentralized players.
"DeFi won because everything is run by open, audited smart contracts, not by secretive CEOs," said Jean Rausis, founder of DeFi protocol and automated market maker, SMARDEX. "This shift was massive, as total on-chain loans ballooned to $26.5 billion – a 42% quarterly rise – and that has completely overshadowed CeFi's business."
SmarDex is a decentralized DeFi platform, somewhat like Binance but without any central authority. It started as a DEX that fixed impermanent loss and has grown into a whole ecosystem offering a yield-generating synthetic dollar, peer-to-peer lending, and an AI financial assistant.
What changed to make DeFi the go-to for this burgeoning online lending market?
"Transparency and programmatic risk controls have made it more attractive than CeFi, that's for sure," said Kai Tai Chang, co-founder and COO of Yala, a Singapore-based startup aiming to turn idle Bitcoin into yield-bearing collateral for online lending markets.
“Aave will be the backbone of all credit. Mortgages; credit card loans; consumer loans; business loans; sovereign debt. DeFi is powering the real economy.” — Stani Kulechov, founder and CEO of Aave, posted on X on Nov. 25, 2025.
In DeFi, collateral, borrow limits, and liquidations are visible on-chain and enforced by smart contracts. "I think that visibility proved its value after the failures and restructurings of several CeFi lenders," said Chang. "DeFi's share has risen because borrowers and lenders prefer systems where counterparty and rehypothecation risks are minimized by design. Volumes have returned in 2025, and I think the combination of transparency and efficiency pulled liquidity back on-chain."
Cryptocurrency holders can use their tokens as collateral to get loans. They cannot use the entire value of their Bitcoin holdings, for example, to get a loan. And their position that is used as collateral is frozen until the debt is repaid, unlike a traditional lender's secured loan, where a borrower can secure a lower rate if their loan is backed by funds they have in cash accounts such as savings and bank CDs.
The most tradable DeFi tokens are Uniswap (CRYPTO: UNI), Pancake Swap (CRYPTO: CAKE) and Aave. They have all unperformed Bitcoin (CRYPTO: BTC) year-to-date, with UNI and AAVE losing nearly half their value since January. Over a 12-month stretch, CAKE and AAVE have outperformed BTC likely thanks in part to investors buying into the DeFi dethroning CeFi theme.
The Total Value Locked in DeFi hit $159 billion in August, up 84% over the summer. It hit $166 billion on Oct. 5 before falling over the last month along with a general sell-off in digital asset markets.
CeFi lending volumes remain far below their peak. CeFi loan books shrank from around $35 billion in early 2022 to around $9.9 billion last, according to Galaxy Research. On-chain metrics show DeFi has overtaken CeFi in key areas. The decentralized lending protocols now command over half of all crypto lending market share (~57% vs ~43% for CeFi in Q1 2025).
Tether (CRYPTO: USDT), Ledn, and Two Prime are the top three lenders based on outstanding loan values, according to Galaxy Research.
Borrower and investor risks haven't disappeared with DeFi. They've shifted but are becoming more measurable:
Perhaps the most notorious risk, bugs or vulnerabilities in protocol code can be exploited by attackers to steal funds. Unlike in traditional finance, there is no FDIC insurance or readily available recourse when a DeFi contract is hacked – funds can disappear irreversibly.
In the first half of 2025 alone, crypto hacks led to over $3.1 billion in losses, already exceeding the total from 2024, according to Estonia-based cryptocurrency security company, Hacken (CRYPTO: HAI). They said the first half of 2025 saw the "worst DeFi quarter in years" for exploits, with Uniswap also breached.
In the spring, the Cetus DEX on Mysten Labs' Sui (CRYPTO: SUI) platform was hacked, with $223 million drained in just 15 minutes, making it one of the largest DeFi drains of the year.
Even well-audited protocols are not immune: flash loan attacks, oracle manipulations, and coding errors have hit various DeFi platforms. This constant threat means investors risk losing their tokens to cyber criminals and borrowers might still owe money to the platform.
As a result, DeFi exists in a legal gray area with the risk of financial regulators cracking down on them to protect investors.
For instance, the Mango Markets exploit case – where an individual trader named Avraham Eisenberg manipulated the Mango DeFi exchange in 2022 – has led to ongoing legal proceedings, still raising questions about whether such exploits violate fraud statutes even as people lost funds as a result.
"The main danger isn’t the code – though billions were stolen in 2025 smart contract hacks; it's the regulatory risk," said Rausis from SMARDEX in Switzerland. "Global governments looking at stablecoins could impose restrictions. I think that will be the biggest threat to the DeFi system."
Long term holders of Pancake Swap have been rewarded greatly. Despite being well below its 2021 peak, CAKE has returned over 500% to investors compared over five years. That's not only beating its CeFi rivals, it has given investors better returns than Bitcoin and Ethereum.
Feature Image credit: Author
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
