Crypto-collateralized loans fell 16.78% in the second quarter, shedding $11.33 billion to reach $56.16 billion. This amount remains 40.13% below the peak of $93.79 billion, signaling a marked decline in borrowing interest. In decentralized finance, outstanding loans dropped from $47.13 billion in April to $21.94 billion in July, but the contraction is occurring through reduced credit demand rather than widespread liquidations. The sector is therefore deleveraging gradually, leaving a smaller but more orderly lending market. Aave alone holds 47.7% of active loans with $11.2 billion, and average monthly lending through this protocol reached $10.3 billion for the first time since its decline, indicating a tentative but concentrated recovery.
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