Decentralized lending protocols in DeFi are experiencing significant growth due to increasing institutional interest in tokenized assets and stablecoins.
Overall Growth of Decentralized Lending Protocols
According to Binance Research, decentralized lending protocols have increased by 72% year-to-date in 2025, raising the total locked value (TVL) from $53 billion to over $127 billion.
Institutional Participation and New Products
As tokenization technology grows, DeFi protocols are becoming more suitable for institutional participants. An example is Aave Labs' Horizon, which allows tokenized real-world assets to be used as collateral for stablecoin loans.
Risks and New Risk Transmission Pathways
While tokenized assets, such as U.S. Treasury bonds, present new opportunities, their use as collateral for loans carries certain risks and may lead to cascading effects for DeFi protocols, as noted in a Moody’s report.
Thus, the growth of decentralized lending protocols in DeFi highlights their importance in the financing system, while also calling attention to the risks associated with new financial instruments.
