Despite deleveraging across decentralized finance, borrowing demand for major tokens like Bitcoin and Solana remains strong as yields tighten across lending platforms.
DeFi Lenders Balance Risk After Market Shock
Digital-asset market maker Flowdesk says the crypto credit sector is finding a fragile equilibrium following recent market turbulence. After Stream Finance disclosed a $93 million default during a broader $20 billion market crash, decentralized finance (DeFi) lenders have begun unwinding risk but not retreating entirely from the market.
According to Flowdesk’s latest market note, borrowing demand for large-cap tokens such as SOL, BTC, APT, ENA, and XLM remains robust, largely fueled by hedging and funding strategies rather than speculative leverage. The firm emphasized that credit lines remain open, even as participants adopt a more cautious stance.
“Leverage is being reduced as counterparties reassess exposures,” Flowdesk’s credit team stated. “But despite deleveraging flows, liquidity for major assets remains intact, and some players are even adding selective leverage at current price levels.”
Yields Compress Across Maple and JitoSOL
The report notes that yields in blue-chip lending pools such as Maple and JitoSOL have compressed but stayed stable, continuing to outperform both the Chainlink DeFi Yield Index’s 5% average and 10-year U.S. Treasury returns. This indicates that, while returns are narrowing, DeFi credit remains comparatively attractive for risk-tolerant investors.
Flowdesk described current market positioning as “defensive,” with most lenders waiting for a clearer recovery signal before reintroducing leverage. “Rates and yields have compressed across the board,” the note added, “with many participants sidelined, awaiting confirmation of a sustained market rebound.”
Analysts caution that the next few weeks could prove pivotal. Data providers warn of bearish signals resembling those seen in 2022, suggesting further yield compression if volatility persists.
Still, Flowdesk maintains that crypto credit has not frozen, highlighting the sector’s growing maturity. The report concludes that while risk appetite is subdued, the continued stability of borrowing for core assets like Bitcoin and Solana underscores a resilient — if fragile — balance within DeFi lending.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.