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.
DeFi leverage is fading.
AAVE borrowing is down ~70% since August as risk appetite fell with prices.
But on @Nexo, borrowing rebounded +155% WoW during the drawdown.
Users are choosing to borrow against collateral, not sell. pic.twitter.com/paqjLMeq5L— CryptoQuant.com (@cryptoquant_com) December 24, 2025
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 declining crypto prices. Since August borrowing volumes on major DeFi protocols have dropped as traders reduce leverage and exposure.
CryptoQuant reports on Aave which is one of the largest DeFi lending platforms, weekly borrowing of stablecoins USDT and USDC has fallen by 69%, declining from a peak of $6.2 billion to just $1.9 billion by the end of November.
This contraction also closely mirrors the broader market downturn suggesting that users are actively unwinding leverage rather than deploying fresh capital.
Despite the sharp pullback in new borrowing Aave still maintains $16.3 billion in outstanding loans, showing the scale of DeFi credit markets even during periods of stress.
The decline in incremental borrowing points to a clear reduction in speculative risk-taking across decentralized markets, reports CryptoQuant.
CeFi Borrowing Shows Early Signs of Rebound
Centralized borrowing activity initially followed a similar downward trajectory during the market correction, but recent data suggest a divergence may be emerging.
CryptoQuant also notes that CeFi platforms are beginning to see renewed borrowing demand even as prices continue to weaken.
On Nexo weekly retail credit withdrawals dropped sharply from $34 million in mid-July to $8.8 million by mid-November. However, the following week saw a strong rebound to $23 million — a 155% week-on-week increase.
This behavior also indicates that users may be increasingly opting to borrow against their crypto holdings rather than selling assets at depressed prices.
The rebound suggests CeFi platforms are serving as a liquidity backstop during market drawdowns, allowing investors to access cash while maintaining long-term exposure to crypto.
Centralized Lenders Play a Structural Role in Downturns
CryptoQuant’s analysis highlights the structural importance of centralized lenders during periods of market stress. While DeFi borrowing tends to contract rapidly as leverage is reduced, CeFi platforms often absorb liquidity demand when investors seek flexibility and capital preservation.
Nexo’s cumulative credit withdrawals reached $817 million in 2025, positioning it as one of the most active venues for crypto-backed lending this year.
The latest data also suggests that centralized lenders complement DeFi markets by offering alternative borrowing channels with different risk profiles and user behavior.
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