Crypto Leverage Shocker: $61B Risks EXPOSED [Full Report]

TL;DR

Galaxy Research's Q4 2025 report reveals $61B in total crypto-collateralized borrowing survived history's largest liquidation event without systemic collapse.

Key Points

• 1.Total crypto-collateralized lending hit ~$70B in Q4 but fell nearly 10% from Q3. Combined CFI ($27B) and DeFi ($33B) borrows reached ~$61B, with CDP stablecoins adding the remainder — still below the 2021 peak of ~$75B.
• 2.Tether dominates CeFi lending with 61% market share. The top three CeFi lenders — Tether, Maple Finance (6.6%), and Galaxy (6.5%) — collectively control 75% of the $27B CeFi lending market, which grew 280% since Q4 2023.
• 3.DeFi borrowing dropped 24% in Q4 due to three compounding factors. Looping strategies became unprofitable as yield spreads thinned, collateral values crashed after October's liquidation event, and off-chain borrowing rates fell below on-chain rates for the first time in nearly two years.
• 4.October 10th's liquidation event was the largest in crypto's 17-year history, wiping ~$20B in a single day. Futures open interest collapsed 40% from $197B to $120B; Bitcoin and Ethereum futures each fell ~34%, Solana dropped 46%, and perpetual open interest hadn't recovered even by February.
• 5.Corporate digital asset treasuries (DATs) carried $84B in total crypto-related debt in Q4, down from an all-time high of $91B in Q3. Earliest debt maturities don't arrive until June 2027, with major repayments concentrated in Q2–Q4 2028 — notably, VHF Parent LLC (Virtu Financial) pays $66.2M quarterly in interest, more than Strategy's $17.5M.
• 6.Binance led perpetual futures open interest at 20% market share. CME ranked second at 13%, followed by Gate (~10%) and Hyperliquid (~6%); perpetuals still represent ~80% of all open interest despite collapsing from ~$158B to ~$75B by February.
• 7.The report's key conclusion is that crypto credit markets passed a major stress test without cascading failures. Leverage is now more concentrated, transparent, and split between institutional off-chain borrowing and structured on-chain strategies — though only 1% of VC funding currently flows into crypto lending.