Crypto-collateralized borrowing surged to a record $73.6 billion in the third quarter, marking the sector’s most levered quarter on record, yet the composition of that leverage looks significantly healthier than during the 2021–22 cycle.

According to Galaxy Research, the sharp rise was driven overwhelmingly by onchain lending, which now represents 66.9% of all crypto-collateralized debt, up from 48.6% at the previous peak four years ago.

DeFi lending alone jumped 55% to an all-time high of $41 billion, supported by points-driven user incentives and improved collateral types such as Pendle Principal Tokens.

Centralized lenders also saw a rebound as borrows grew 37% to $24.4 billion, though the market remains a third smaller than its 2022 peak.

Survivors of the last cycle have largely abandoned uncollateralized lending, turning toward full-collateral models as they seek institutional capital or public listings. Tether remains the dominant CeFi lender, holding nearly 60% of tracked loans.

The quarter also saw a decisive shift within DeFi itself, with lending apps now capturing more than 80% of the onchain market, and CDP-backed stablecoins shrinking to 16%. New chain deployments, including Aave and Fluid on Plasma, helped fuel activity, with Plasma attracting more than $3 billion in borrows within five weeks of launch.

It's worth noting that shortly after the end of Q3, a leverage-induced wipeout occurred resulting in more than $19 billion worth of liquidations, the largest single-day cascade in crypto futures history.

Still, Galaxy's report claims the liquidation event did not reflect systemic credit weakness: most positions were mechanically de-risked as exchanges’ auto-deleveraging systems kicked in.

Meanwhile, corporate digital-asset treasury (DAT) strategies continue to rely on leverage, with more than $12 billion in outstanding debt tied to crypto-acquiring firms. Total industry debt, including DAT issuance, hit a record $86.3 billion.

The data suggests crypto leverage is rising again, but on firmer, more transparent footing, with collateralized structures replacing the opaque, unbacked credit that fueled the last boom-and-bust cycle.