The collapse of the crypto lending market in 2022, triggered by events such as the fall of LUNA/UST and the FTX bankruptcy, highlighted deep flaws in market structure, ultimately paving the way for a healthier ecosystem in the future.
In a market environment characterized by strong competition and a focus on yield over risk management, many crypto lenders engaged in unsecured lending and relaxed their underwriting practices, contributing to the eventual market collapse.
Despite the fallout from 2022, the crypto lending market is witnessing a recovery, with institutional lenders reporting significant growth in their loan books, signaling renewed confidence and market demand.
The launch of Bitcoin ETFs in the U.S. in January 2024 acted as a catalyzing event for the crypto lending sector, contributing to increased investment and the expansion of institutional lending operations.
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