The crypto leverage landscape is undergoing a structural shift, and the latest data from Sentora (formerly IntoTheBlock) highlights a milestone moment: on-chain credit has officially become the dominant form of crypto lending. Liquid staking tokens (LSTs), real-world-asset-backed tokens (RWAs), and principal tokens like Pendle PTs are now among the most commonly used collateral types, a stark reversal from the CeFi-heavy market of recent years.
A Rapid Power Shift From CeFi to DeFi
According to the chart published by Sentora, the industry has made a dramatic pivot over the past year.
During Q4 2024, the crypto credit landscape was still dominated by centralized lenders, reflected in a peak lending figure of roughly $88 billion from CeFi providers.
But throughout 2025, this balance shifted aggressively:
- •Q1 2025: DeFi lending jumped to $78B, closing the gap with CeFi from the previous quarter.
- •Q2 2025: DeFi credit climbed further to $90B, marking the first period where it surpassed most legacy centralized lending structures.
- •Q3 2025: The trend solidified, with $73.6B in total outstanding debt, ~67% came from DeFi, making it the clear leader in the market.
This is the strongest evidence yet that crypto leverage is moving fully on-chain.
Why On-Chain Credit Is Taking Over
Three major factors explain why DeFi lending has replaced CeFi as the new default:
1. LSTs Have Become Prime Collateral
Tokens like stETH, cbETH, and other liquid staking derivatives provide yield while being used as collateral – something CeFi platforms cannot match.
2. RWAs Are Bringing Institutional Stability
Tokenized treasury products and RWA vaults have injected reliable, low-volatility collateral into DeFi protocols, enabling safer leverage.
3. Pendle Principal Tokens (PTs) Are Now Widely Adopted
PTs allow users to lock in fixed yields and borrow against future yield streams, creating a more flexible credit market that traditional firms cannot replicate.
Together, these innovations have pushed DeFi lending to record highs, even amid a volatile macro environment.
What This Means for the Broader Crypto Market
The shift toward DeFi-dominated credit reflects the market’s growing preference for transparency and automation. After the collapses of major CeFi lenders in previous cycles, Celsius, Voyager, BlockFi, investors appear increasingly unwilling to rely on opaque, centralized balance sheets.
On-chain credit, by contrast, offers:
- •real-time transparency
- •automated liquidations
- •provable collateral backing
- •reduced counterparty risk
As a result, DeFi lending has transformed from a niche sector into the backbone of crypto leverage.
Looking Ahead
If current trends continue, DeFi lending may soon surpass all-time highs and become the primary venue not just for retail, but for institutional leverage in crypto. With LSTs, RWAs, and principal tokens becoming standard collateral types, the on-chain credit market is positioned for even more rapid growth.
The message from Sentora’s latest data is unmistakable: Crypto credit has gone on-chain, and it’s not going back.