Tether, known for its stablecoin products, has emerged as the leader in the crypto-lending arena, followed by Galaxy and Ledn. The sector has undergone a consolidation period following the collapse of former crypto-lending powerhouses Blockfi, Celsius, and Genesis.
An Unlikely Contender Emerges as a Leader in the Crypto-Lending Arena
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Tether Becomes Leader of the Crypto-Lending Business
The crypto-lending business, which involves providing liquidity backed by cryptocurrency to companies and individuals, has undergone a series of transformations that have altered its composition. Once dominated by companies solely dedicated to this field, the sector has seen an unlikely contender emerge as its leader in recent years.
Tether, known mostly for its stablecoin projects, is now dominating the crypto-lending sector with a portfolio that encompassed over 70% of the market share by Q4 2024. According to a recent report from Galaxy Digital, which is currently the second-biggest lender, Tether surged as a lifesaver during a liquidity rout.
Alex Thorn, head of firmwide research at Galaxy Digital, stated:
They started during the downturn, they have probably been a really much needed source of liquidity in this market. They are clearly a huge player.
While some think this newfound play might be a risky bet, Tether maintains that all of his loans are secured, and has disclosed these numbers in several attestations. “As outlined in our latest quarterly report, all loans are widely overcollateralized (in Bitcoin) and managed conservatively in proportion to our equity reserves,” the firm stressed.
Tether sustains that its lending business is sound, even when they don’t disclose the nature or participants of these loans “While we do not disclose the specific structure of each agreement, all lending activity is designed to ensure the full and liquid backing of USDT at all times. Tether never defaulted on any loan,” the firm told Bloomberg.
While still relevant, the crypto-lending market has shrunk enormously after the fall of several relevant players like Celsius, Blockfi, and Genesis, who once led the sector. The centralized crypto lending business has a market of $64.4 billion in Q4 2021, the report stated, and its current size is roughly half of that number.
Read more: Tether to Use Ocean for Decentralized Bitcoin Mining
