Crypto-collateralized lending fell by $11.33 billion in the second quarter of 2026, a 16.78% decline that brought the market to $56.16 billion, according to Galaxy Research. This marked the third consecutive quarterly contraction, with no segment spared. Decentralized Finance outstanding borrows dropped 27.61% to $20.43 billion, while Centralized Finance open borrows contracted 9.62% to $22.98 billion. Unlike 2022, when crypto-backed lending collapsed more than 55% in a single quarter, the current deleveraging is gradual across three quarters with declines of 10%, 5%, and 17%. Galaxy Research describes the current trend as an orderly unwind rather than forced selling, with early signs that the market may be finding a floor as DeFi borrows recovered to $21.94 billion by late July.
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