Crypto lending has declined 16.78% in Q2, with total crypto-collateralized loans shedding $11.33 billion to reach $56.16 billion. This represents a 40.13% decline from its peak of $78.69 billion. According to a report by Galaxy Research, all categories of lending were down collectively for the first time since 2022. DeFi lending has also decreased, with outstanding loan amounts dropping from $47.13 billion in April to $21.94 billion in July. However, this decline is not as steep as the 80% decrease seen in 2025.
Lending Contraction
The lending contraction is more significant when considering the movement of stablecoins through crypto markets. With fewer outstanding loans, stablecoins have been used for an estimated $41.7 trillion in adjusted transfers on their respective exchanges for 2026, led by USD Coin [USDC].
Stablecoin Trading
Stablecoin trading is significantly tied to auto-borrowing transactions, with flash loans accounting for approximately 65% of all USDC volume traded on the Ethereum [ETH] blockchain.
DeFi Loans
Active DeFi loans stand at $23.6 billion, with nearly half concentrated on Aave [AAVE]. Average monthly lending through AAVE has increased to $10.3 billion for the first time since it started decreasing, but this improvement alone does not confirm broader participation.