Crypto borrowing activity is undergoing a huge shift as decentralized finance (DeFi) contracts sharply during this latest current market correction while centralized finance (CeFi) shows early signs of recovery. New research from CryptoQuant highlights how changing risk appetite and liquidity needs are reshaping borrowing behavior across the crypto ecosystem. DeFi Borrowing Contracts as Risk Appetite Fades According to CryptoQuant’s latest dashboard decentralized borrowing has fallen in line with decli ...

Coinbase has expanded its loan lineup with a new option that lets eligible users borrow up to 1 million dollars in USDC by putting their ETH up as collateral. The feature runs through the on‑chain lending protocol Morpho on Base and adds another layer to Coinbase’s growing set of crypto‑collateral products. How The ETH Loan Works The offer is available to users in the United States, except for New York residents, and lets them lock up their ETH to receive a USDC loan. The borrowing cap for this product s ...

Core Insights - Two Prime Lending issued record-breaking bitcoin-backed loans of $827 million in Q3 2025, increasing total committed loan volume to $2.55 billion since its launch in March 2024 [1][2] Company Overview - Two Prime has established itself as one of the largest bitcoin-backed lenders globally, serving institutions such as miners, hedge funds, trading firms, and digital asset treasuries [2] - The firm received $20 million backing led by bitcoin miner MARA Holdings earlier this year [2] Clientele and Growth Factors - Two Prime's lending clients include publicly listed companies like CleanSpark, Hut 8, Kindly MD, and Fold [3] - The company's growth is attributed to competitive rates and its focus on institutions seeking yield and risk management [3] Market Trends - The success of Two Prime reflects rising institutional adoption of bitcoin and the increasing demand for sophisticated lending and derivatives solutions [3][4] - As more institutions, including large corporate treasuries and sovereign wealth funds, purchase and hold bitcoin, Two Prime has developed advanced lending and derivatives strategies to generate risk-adjusted yield [4]

Core Insights - The new generation of digital asset institutions is increasing risk exposure and launching new forms of cryptocurrency lending driven by soaring digital asset prices [1] - The cryptocurrency market is recovering, with significant investor interest returning, aided by Bitcoin's price surge and support from political figures [1][5] Group 1: Emerging Lenders and Loan Products - Divine Research has issued approximately 30,000 unsecured short-term loans since December, targeting consumers in cash-strapped regions with loans under $1,000 at fixed interest rates between 20% and 30% [2] - Borrowers include individuals typically overlooked by traditional financial institutions, with a first-time loan default rate of about 40% [2] - Other startups like 3Jane and Wildcat are expanding unsecured credit lines, with 3Jane recently securing $5.2 million in seed funding to offer unsecured USDC credit lines on the Ethereum blockchain [1][2] Group 2: Technological Innovations in Lending - 3Jane is developing a new loan platform involving AI agents that can execute tasks based on user instructions, potentially allowing for lower interest rates [3] - Coinbase has partnered with OpenAI to create AI agents equipped with crypto wallets to enhance business functionalities [3] - Wildcat has provided approximately $170 million in loans, offering customizable, fixed-rate, low-collateral credit tools for market makers and crypto trading firms [3] Group 3: Historical Context and Market Dynamics - The cryptocurrency lending sector faced significant challenges in 2022, leading to defaults and bankruptcies, including the collapse of FTX [4][5] - Traditional financial institutions, including JPMorgan, are now considering lending against clients' crypto holdings, with Cantor Fitzgerald launching a $2 billion Bitcoin financing plan [5] - Unsecured loans currently represent a small portion of the overall cryptocurrency lending market, which is primarily dominated by institutions like Coinbase, Tether, and Galaxy [6]