The DeFi Market Surges Beyond Expectations: DeFi Lending Grows 959%, DeFi TVL Up 780% Year-on-Year
Have you ever wondered why the number of DeFi users on the Ethereum network tripled within a single year in 2025? While traditional financial markets are stuck in the mire of low interest rates, leading projects like Uniswap, Aave, and Compound are siphoning global capital with an annual growth rate of 200%.
No wonder many market analysts assert that 2025 could mark a pivotal explosion phase for DeFi. There are many factors behind this, including but not limited to financial policies, institutional backing, and the industry’s own development:
The U.S. government plans to establish a Bitcoin strategic reserve
The U.S. government’s ETF and debt issuance plans
The Federal Reserve entering a rate-cut cycle
Deployment and investment in the DeFi ecosystem by major crypto exchanges like Binance
Massive development of core DeFi sectors such as lending
DeFi Market Size and Development Status
Battle reports may deceive you, but the frontlines don’t lie. Market data is the best way to assess the health of an industry. Let’s look at the data to understand DeFi’s scale and development:
DeFi TVL Annual Growth Rate of 780%
According to DeFiLlama, the total value locked (TVL) in the DeFi market grew from under $5 billion at the end of 2020 to over $150 billion by the end of 2023 — an annual growth rate of 780%. With continued market recovery and political changes in 2025, DeFi TVL is expected to keep rising and may even surpass $400 billion.DeFi User Growth and Participation
By the end of 2024, the number of active DeFi users exceeded 10 million, a ~50% increase over 2023. Decentralized exchanges (DEXs) and decentralized lending platforms are the most popular sectors.DeFi Lending Up 959% Since 2022
In Q4 2024, open lending volume across DeFi protocols reached $19.1 billion, spanning 20 lending apps and 12 blockchain networks. This figure marks a 959% increase from the $1.8 billion low in Q4 2022.
According to a Galaxy report, the rapid growth in DeFi lending is due to the resilience of permissionless platforms, cross-chain liquidity flows, and the emergence of professional lending applications. These platforms enable users to interact directly with smart contracts without intermediaries, streamlining the process of borrowing and lending assets. Among them, the emergence of modular, professional DeFi lending apps has played a central role, with designs that adapt to user needs, asset risks, and changing liquidity conditions.
Drivers Behind the Explosive Growth of DeFi
- Trump Administration’s Regulatory Stance on Crypto
At the end of 2024, Trump won re-election, and his administration’s approach to crypto became a central focus. In stark contrast to Biden’s regulatory tightening, Trump’s team promoted “financial freedom” and “deregulation,” taking a significantly more open attitude toward crypto assets, especially DeFi.
Early in his term, a series of policy signals gave the DeFi market a major boost. His advisory team included several crypto-friendly figures who advocated classifying crypto as “strategic national technology” and proposed positioning the U.S. as a global crypto finance hub. The Trump administration also pushed forward the “Financial Freedom Innovation Act,” aimed at offering regulatory exemption windows at the federal level for DeFi projects — encouraging developers to innovate before focusing on compliance.
This deregulation narrative boosted market confidence and attracted more institutional players. Especially in the complex U.S. financial regulatory environment, the “deregulation expectation” enabled many small- and mid-sized DeFi projects to restart or accelerate development. Politically driven, DeFi quickly became an outlet for hedging capital, VC activity, and even traditional financial institutions seeking digital transformation.
- Bitcoin ETFs Driving DeFi Expansion
The SEC’s official approval of multiple spot Bitcoin ETFs was seen as a historic bridge between traditional finance and the crypto world. This development affected more than just Bitcoin prices — it prompted a fundamental revaluation of DeFi infrastructure.
First, ETFs offered institutions a legal and secure entry point. A large inflow of capital from Wall Street entered crypto assets, and this liquidity didn’t stop at Bitcoin. ETF-holding fund companies, hedge funds, and investment advisors began evaluating “opportunities beyond Bitcoin,” leading them to Ethereum, Layer2 networks, and DeFi protocols.
In particular, long-standing DeFi platforms like Aave, Compound, and MakerDAO launched institutional-grade services (e.g., KYC-compliant lending pools, whitelisting mechanisms), allowing capital to flow in smoothly and significantly boosting DeFi lending and trading volume. Additionally, many ETF managers — like BlackRock and Fidelity — directly or indirectly invested in building and supporting DeFi ecosystem projects.
Bitcoin ETFs not only brought liquidity but also drove a recognition shift toward “DeFi asset securitization” — that DeFi products could become prototypes for next-generation financial tools, playing increasingly vital roles in asset allocation and risk management.
- DeFi’s Own Innovation Narrative
DeFi’s nearly 10X growth in a few years wouldn’t have been possible without its evolving narrative and technological innovation. From “permissionless lending” to “modular liquidity pools,” “cross-chain interest arbitrage,” and “real-time collateral adjustment,” the DeFi ecosystem has evolved from “token-based experiments” to functioning as an “efficiency tool platform.”
A prime example is the recent rapid rise of the LRT (Liquid Restaking Token) and RWA (Real World Assets) sectors. LRT protocols eliminated the limitations of traditional staking lock-ups by combining staking and lending, thereby unlocking Ethereum liquidity. RWA, meanwhile, used compliant on-chain bridges to map real-world assets (e.g., bonds, real estate, credit instruments) onto the blockchain, injecting more stable yield sources into DeFi. These asset types enriched the collateral pool for lending protocols while reducing systemic risk.
Since 2024, modular DeFi architecture has matured, enabling developers to assemble functions like trading, lending, and liquidation using open toolkits instead of building entire protocols from scratch. This “DeFi Lego” approach has dramatically lowered the innovation barrier and attracted more developers into the space. At the same time, AI-powered risk controls and on-chain credit scoring mechanisms have begun to emerge, significantly improving lending efficiency and security.
From “product-driven” to “narrative-driven,” DeFi has not only continued its technological evolution but also built a more systemic financial story — one of a permissionless, globally open, and highly composable decentralized financial system. This future vision is what fundamentally drives ongoing capital inflows.
Conclusion
From the Trump administration’s policy signals to the capital gateway opened by Bitcoin ETFs, and ongoing technological evolution within the DeFi ecosystem itself — this explosive wave in DeFi is no longer an isolated event. It is part of a broader transformation of the global financial landscape.
In an environment of falling interest rates, declining trust in traditional finance, and restricted capital flows, DeFi is no longer just a “hotspot for the next bull cycle.” It is gradually becoming a prototype of the new financial order — a new paradigm capable of handling liquidity, credit, risk, and asset repricing.
