Active DeFi loans reach historic peak of $23.7 billion as Total Value Locked approaches pre-tariff figures.

Active loans across decentralized lending platforms reached an all-time high of $23.723 billion on May 21, according to recent data.

In parallel, the total value locked (TVL) within the DeFi ecosystem is currently 6.4% lower than the figure recorded on January 31, just before significant import tariffs were proposed.

This increase in active loans signifies an ongoing trend that started in early April, as lending markets regained traction in alignment with a rise in overall cryptocurrency prices.

Data reveals that the total loans have surged by approximately $8.5 billion since April 8, driven by enhanced liquidity in platforms like Aave, Morpho, and Compound.

The active loans figure surpasses the prior cycle peak of December 2021 by about $3 billion, underscoring the escalating importance of decentralized credit in crypto trading, leveraged staking, and basis trading.

DeFi Llama’s global dashboard indicates that, as of May 22, the total value locked in DeFi is at $180.4 billion, which is 6.4% lower than the $192.8 billion recorded on January 31.

This measure is significant as it was documented just one day prior to the announcement of an executive order activating new import tariffs that are currently on hold for 90 days.

The confirmation of tariff plans led to a gradual 27% decline in Bitcoin (BTC) from February 1 to April 8, marking its lowest price level for the year. During this period, the TVL within the DeFi landscape also experienced a nearly 36% drop.

In addition, collateral predominantly made up of Ethereum (ETH), staked-ETH derivatives, and stablecoins saw a corresponding decrease, bottoming out around $110 billion in mid-March.

The increase in loan balances points to a heightened interest in leverage among savvy traders. Many choose to borrow stablecoins to support directional positions in BTC and ETH or to seize basis and liquidity-mining yields.

However, the collateral backing these loans affects standard TVL calculations as a net result of all borrowings.

Consequently, simultaneous borrowing increases and collateral withdrawals could keep overall TVL stable or even cause it to decline, even while credit activities rise. This situation emphasizes the role of on-chain leverage through lending protocols.

Lending yields also contribute to this trend. Average rates for supplied USDC on Aave and Morpho-Aave have remained between 6% and 8% annualized since April, surpassing short-dated US Treasury bill rates.

Such favorable rates attract stablecoin deposits from idle reserves into lending pools. Increased utilization raises loan balances, though it exerts a limited impact on TVL since stablecoins typically enter protocols at a one-to-one dollar ratio.

The peak of $23.723 billion in active loans, along with the 6.4% shortfall in TVL, illustrates a market where demand for credit is on the rise, despite total collateral still being slightly below its late-January levels.