By Krisztian Sandor|Edited by Nikhilesh De
Updated Apr 8, 2025, 4:04 p.m. Published Apr 8, 2025, 2:53 p.m.
DeFi Borrowing Demand Plunges as Crypto Traders Deleverage Amid Market Turmoil
The total value of borrowings on large DeFi platforms like Aave and Morpho has sharply dropped from the mid-December peak, as investors scrambled to reduce outstanding debt or got liquidated.
What to know:
- Borrowing demand in decentralized finance (DeFi) has significantly decreased due to recent crypto market turmoil, indicating widespread deleveraging.
- The vaults.fyi U.S. dollar stablecoin rate, which measures the average yield paid to DeFi lenders, fell to 2.8%, its lowest reading in a year.
- Major DeFi lending protocols like Aave and Morpho experienced a sharp decline in the value of borrowed assets over the past months, a sign of investors reducing risk, Ryan Rodenbaugh of Wallfacer Labs said.
Borrowing demand across decentralized finance (DeFi) protocols plunged sharply in the wake of the recent crypto market turmoil, a sign of widespread deleveraging as crypto investors unwound risky positions.
The average U.S. dollar stablecoin yield — what protocols pay out to lenders for lending out their assets — fell to 2.8% on Tuesday to its lowest level in a year, measured by DeFi yield-earning application vaults.fyi’s benchmark. That’s well below the average U.S. dollar money market rates on traditional markets (4.3%), and a hefty decline from mid-December’s crypto market peak, when DeFi rates topped 18%.
