DeFi active loans hit record $23.7 billion, TVL still 6.4% below pre-tariff levels
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DeFi active loans hit record $23.7 billion, TVL still 6.4% below pre-tariff levels
As of May 22, DeFi's TVL was $180.4 billion, only 6.4% lower than the $192.8 billion TVL recorded on January 31.
Navigating Web3 tides with focused insightsAuthor: cryptoslate
Translation: Blockchain Knight
According to data from Token Terminal, as of May 21, the outstanding loan volume in decentralized lending applications surged to a record high of $23.723 billion.
Meanwhile, the TVL of the DeFi ecosystem has declined by 6.4% compared to levels on January 31, which was the day before former U.S. President Donald Trump formally proposed his import tariff plan.
The surge in outstanding loans continues an expansion trend that began in early April, when the lending market regained momentum alongside broader crypto asset price recovery.
Data from Token Terminal shows that total loan volume has increased by approximately $8.5 billion since April 8, driven by deepening liquidity on Aave, Morpho, and Compound.
The $23.723 billion in active loans exceeds the previous cycle's peak set in December 2021 by about $3 billion, highlighting the growing importance of permissionless credit in crypto-native trading, leveraged staking, and basis trading strategies.
DefiLlama’s global dashboard shows that as of May 22, DeFi TVL stood at $180.4 billion, only 6.4% lower than the $192.8 billion recorded on January 31.
This benchmark is significant because it occurred one day before the White House confirmed signing the executive order activating new import tariffs, which are currently under a 90-day suspension period.
The formal announcement of the tariff plan led BTC prices to gradually decline by 27% from February 1 to April 8, reaching the lowest price level so far this year. During the same period, the TVL of the DeFi ecosystem also dropped by nearly 36%.
In addition, collateral dominated by Ethereum, staked ETH derivatives, and stablecoins correspondingly shrank, bottoming out around $110 billion in mid-March.
The rising loan balances indicate increasing demand for leverage among professional traders. Many borrow stablecoins to fund long positions in Bitcoin and Ethereum or to capture basis trade and liquidity mining yields.
However, these loans' collateral represents the net outcome of borrowing activity within standard TVL calculations.
Therefore, simultaneous increases in borrowing and collateral withdrawals could lead to flat or even declining overall TVL while credit activity accelerates. This further confirms the use of lending protocols for on-chain leveraged operations.
Lending yields have also played a role. Since April, average annualized deposit rates for USDC on Aave and Morpho-Aave have fluctuated between 6% and 8%, significantly higher than short-term U.S. Treasury yields.
This has prompted stablecoin deposits to shift from passive reserves into lending pools. Higher utilization has driven up loan balances, but with limited impact on TVL since stablecoins typically enter protocols at a 1:1 dollar peg.
The record $23.723 billion in active loans and the 6.4% TVL gap indicate that despite total collateral still being slightly below the peak at the end of January, market demand for credit is accelerating.
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