The DeFi sector experienced significant acceleration in 2025, driven by new segments such as tokenization, largely due to regulatory clarity in the U.S.
On-chain credit also resumed in H2 2025, reaching a record high of $45 billion before cooling off.
New trading venues, such as Hyperliquid, dominated narratives amid rising demand for derivatives, which has also boosted DEX volumes, albeit with increasing competition.
Here’s a recap of the DeFi market in 2025 and what to look out for in 2026.
Top protocols: Lending market hit record levels
On-chain lending reached record levels of $45 billion, led by Ethereum-based protocols Aave and Morpho. In particular, Aave posted the strongest growth.
As of January, the protocol’s active loans were around $15 billion. At the peak of risk appetite in late 2025, AAVE’s active loans reached $30 billion, representing a 100% or double growth.
Source: Token Terminal
Solana-based lending protocols also showed traction, with Kamino and Jupiter Lend featuring amongst the top credit platforms.
In fact, Kamino has released competitive credit products with yields ranging from 8% to 24%, including a home equity line of credit that has seen significant demand.
The declining Fed rate could encourage more users to seek yield on-chain across trusted platforms.
That said, DeFi’s 2025 traction was not driven solely by lending.
New DeFi narratives: Perps, tokenized assets & more
New trading venues like Hyperliquid saw an explosive demand for its derivatives markets, also known as perpetual markets (perps).
They allow users to trade with leverage to maximize potential profit, but also come with liquidation risks.
While Hyperliquid had a +60% market share in H1 2025, the second half of the year saw rivals such as Lighter and Binance-backed Aster eat into its dominance to 18%.
However, overall perps volume hit $1 trillion in October and November, but has since eased to $638 billion in December amid a broader cooling off in risk appetite.
Source: The Block
Tokenized assets also gained momentum ahead of expected regulatory clarity in 2026.
Issuers such as Ondo Finance, Backed Finance (xStocks), Securitize, Dinari, Remora Markets, and others have successfully scaled tokenized stock offerings across Ethereum, Solana, and other blockchain networks.
In fact, this was one of the segments that recorded double-digit growth, despite the broader risk-off environment in Q4 2025.
Source: RWA
The monthly transfer volume of tokenized public stocks increased by 70% over the past 30 days to $1.9 billion.
Holders have surged 15% to 132K, suggesting some crypto traders, likely foreign users, were gaining exposure to U.S. stocks via these new on-chain products.
The overall tokenized market, excluding stablecoins, has grown by $10 billion in 2025 to a total locked value (TVL) of $16 billion, and is projected to expand in the next few years amid the push for U.S. capital markets to go on-chain.
Impact of prediction markets
Finally, prediction markets have become a source of truth, and their growth has also been notable in 2025.
Top contenders, such as Polymarket and Kalshi, have partnered with various platforms and chains to scale their distribution.
For example, you can wager directly on mobile wallets like Phantom, yet under the hood, you’re using Kalshi.
The results? Prediction market volumes have doubled in Q4 compared to Q3, led by the two platforms.
Source: The Block
Overall, the traction across lending, perps, tokenized, and prediction markets expanded on-chain activity to new levels. For asset managers like Grayscale and Galaxy Research, 2026 could provide even more momentum.
2026 DeFi outlook
In its 2026 outlook, Grayscale projected that DeFi will accelerate, led by lending. The asset manager added that,
“We expect core DeFi protocols to benefit — including lending platforms like AAVE, decentralized exchanges like UNI and HYPE, and related infrastructure like LINK.”
Regarding tokenization, the firm stated that the sector is expected to grow 1,000 times by 2030, and the aforementioned assets will be key beneficiaries.
On its part, Galaxy Research predicted that decentralized exchanges (DEXs) will capture 25% total spot trading volumes in 2026. Currently, DEXs handle 15% of total volumes.
Even so, Galaxy’s head of firmwide research, Alex Thorn, cautioned that DeFi apps will face legal issues, especially if they’re exempted from legal responsibilities while handling tokenized assets.
“The SEC will face a lawsuit by a traditional market participant or trade group over the innovation exemption.”
Already, Citadel Securities had called for DeFi regulation, yet lawmakers are split on how to approach it.
Final Thoughts
- Regulatory tailwinds sparked renewed DeFi growth in 2025, across lending, tokenized assets, and prediction markets.
- While the growth is expected to continue into 2026 and beyond, experts warned of potential legal hiccups.