Active loans across decentralized lending applications climbed to a record $23.723 billion on May 21, based on Token Terminal data.
Meanwhile, the DeFi ecosystem’s total value locked (TVL) sits 6.4% below the level recorded on Jan. 31, the day before President Donald Trump formalized his proposed import tariffs.
The surge in outstanding loans extends an expansion that began in early April when lending markets regained momentum alongside broader crypto prices.
Token Terminal data shows that the aggregate loans have expanded by roughly $8.5 billion since April 8, lifted by deeper liquidity on Aave, Morpho, and Compound.
At $23.723 billion, active loans now exceed the previous cycle peak set in December 2021 by roughly $3 billion. It highlights the growing role of permissionless credit in crypto-native trading, leveraged staking, and basis-trade strategies.
Tariff shock
DefiLlama’s global dashboard shows DeFi TVL at $180.4 billion as of May 22, just 6.4% below the $192.8 billion TVL registered on Jan. 31.
This benchmark is important because it occurred one day before the White House confirmed an executive order activating new import tariffs, which are currently on a 90-day hold.
Officializing the tariff plans prompted a gradual 27% drop in Bitcoin (BTC) from Feb. 1 to April 8, when it hit its lowest price level this year. The DeFi ecosystem’s TVL followed with a nearly 36% decrease in the same period.
Furthermore, collateral dominated by Ethereum (ETH), staked-ETH derivatives, and stablecoins contracted accordingly. It bottomed near $110 billion in mid-March.
Potential appetite for yield and leverage
The rising loan balances suggest a greater demand for leverage among sophisticated traders. Many borrow stablecoins to finance directional BTC and ETH positions or capture basis and liquidity-mining yields.
However, the collateral for those loans is the net result of borrowings in standard TVL calculations.
Consequently, a simultaneous increase in borrowing and collateral withdrawals can leave overall TVL flat or even lower while credit activity accelerates. This reiterates the scenario of on-chain leverage using lending protocols.
Lending yields also play a role. Average supplied-USDC rates on Aave and Morpho-Aave have hovered between 6% and 8% annualized since April, well above short-dated US Treasury bills.
This draws stablecoin deposits away from passive reserves and into lending pools. Higher utilization pushes loan balances upward but exerts only a muted effect on TVL because stablecoins generally enter protocols at a one-to-one dollar ratio.
The record $23.723 billion in active loans and the TVL’s 6.4% shortfall highlight a market where credit demand is accelerating even as aggregate collateral remains slightly below its late-January peak.
