Source: cryptoslate
Compiled by: Blockchain Knight
According to Token Terminal's data, as of May 21, the active loan size in decentralized lending applications has risen to a historical high of $23.723 billion.
Meanwhile, the TVL of the DeFi ecosystem has dropped by 6.4% from the level on January 31, which was the day before the former US President Donald Trump formally proposed his import tariff proposal.
The surge in outstanding loans continued the expansion trend that began in early April, when the lending market regained momentum as broader crypto asset prices rebounded.
Token Terminal data shows that the total loan size has grown by approximately $8.5 billion since April 8, driven by the deepening liquidity of Aave, Morpho, and Compound.
The active loan size of $23.723 billion is about $3 billion higher than the previous cycle peak set in December 2021, highlighting the increasingly important role of permissionless credit in native crypto trading, leveraged staking, and basis trading strategies.
DefiLlama's global dashboard shows that as of May 22, the DeFi TVL was $180.4 billion, only 6.4% lower than the TVL of $192.8 billion registered on January 31.
This benchmark is significant because it occurred the day before the White House confirmed signing the executive order activating new import tariffs, which are currently in a 90-day suspension period.
The formal announcement of the tariff plan caused BTC prices to gradually decline by 27% from February 1 to April 8, reaching the lowest price level this year on April 8. During the same period, the DeFi ecosystem's TVL also dropped by nearly 36%.
Additionally, collateral dominated by Ethereum, staked ETH derivatives, and stablecoins also shrank accordingly, bottoming out to around $110 billion in mid-March.
The rise in loan balances indicates a growing demand for leverage among professional traders. Many borrow stablecoins to fund long positions on Bitcoin and Ethereum, or to capture basis trading and liquidity mining yields.
However, these loans' collateral is the net result of lending activity in standard TVL calculations.
Therefore, simultaneous increases in lending and collateral withdrawals may lead to flat or even declining overall TVL, while credit activity accelerates. This again confirms scenarios of on-chain leveraged operations using lending protocols.
Lending yields have also played a role. Since April, the average annual deposit rates for USDC on Aave and Morpho-Aave have been fluctuating between 6% and 8%, far higher than short-term US Treasury yields.
This has prompted stablecoin deposits to shift from passive reserves to lending pools. Higher utilization has driven up loan balances, but with limited impact on TVL, as stablecoins typically enter protocols at a 1:1 USD ratio.
The record active loan size of $23.723 billion and the 6.4% TVL gap indicate that even though the total collateral size is still slightly below the peak at the end of January, market demand for credit is accelerating.
