1、 Quarterly Core Overview: DeFi Black Swan Ignites Market Fluctuations, Industry Embarks on Structural Deleveraging

In the first quarter of 2026, the cryptocurrency leverage market will undergo a phase of deep adjustment, presenting an overall pattern of DeFi being heavily hit by black swan attacks, CeFi's resilience being highlighted, and the entire market orderly deleveraging. This quarter, the decentralized financial sector has experienced a series of major security incidents, with Drift protocol, LayerZero, and KelpDAO being attacked by hackers, resulting in a cumulative loss of over 575 million US dollars. Attackers use stolen funds as collateral in the Aave protocol, directly triggering a chain liquidity panic and triggering large-scale capital outflows in the industry.

Within the two weeks of the crisis brewing, Aave platform experienced a cliff like outflow of funds: the stock of stablecoins flowed out by over 5.5 billion US dollars, the scale of stablecoin loans settled reached 3.1 billion US dollars, over 24000 bitcoins and 943000 encapsulated Ethereum (WETH) were withdrawn, and on chain liquidity tightened sharply.

Compared to the intense volatility of DeFi, the centralized finance (CeFi) lending market has shown strong resilience. Since the series of liquidation scandals in October 2025, CeFi's lending scale has experienced a quarterly decline for the first time, but the overall stock is still higher than the level in the third quarter of 2025. BTC, ETH, and SOL have fallen by 34%, 48%, and 59% respectively compared to their previous highs. The continued weakening of the market has suppressed the willingness to lend, but has not triggered a systemic collapse.

From the long-term perspective of the industry, this round of adjustment belongs to a benign structural deleveraging. After multiple rounds of risk clearance, the industry has completely eliminated high-risk business models such as unsecured, weak collateralized, and duplicate pledged assets, and the quality of collateral assets and institutional risk control capabilities have been comprehensively upgraded. At the same time, this crisis has also forced DeFi project parties to accelerate the iteration of their risk control system, relying on the strong self-healing and autonomous capabilities of the cryptocurrency industry to lay a solid foundation for a more stable ecological development in the future.

2、 Overall market data: Leverage continues to shrink, with on chain lending being the main drag

In Q1 of 2026, the total scale of global encrypted asset collateralized lending decreased by $3.62 billion month on month, a decrease of 5.1%, and the overall volume fell back to $67.42 billion, a decrease of 14.3% from the historical peak of $78.67 billion in the third quarter of 2025. From a track by track perspective, DeFi is the core driving force behind this round of scale contraction.

The scale of outstanding DeFi loans in this quarter has declined for the second consecutive quarter, with a month on month decrease of $4.53 billion, a decrease of 13.82%, and a closing balance of only $28.22 billion. On the other hand, the CeFi lending market saw a slight quarter on quarter contraction of $1.98 billion, a decrease of 7.23%, with a final stock of $25.43 billion. According to the combined statistics of the two major tracks, the total scale of encrypted lending fell by 6.51 billion US dollars month on month, a decrease of 10.82%.

It is worth noting that collateralized debt position (CDP) stablecoins are showing a counter trend growth trend. In the first quarter, the supply of encrypted asset collateral increased by $2.89 billion compared to the previous quarter, with a growth rate of 26.54%. Among them, the Sky ecosystem USDS and DAI contributed the vast majority of the increase, with a total increase of $2.88 billion. The three types of track patterns have been restructured accordingly: DeFi lending accounts for 41.85%, CeFi lending accounts for 37.72%, CDP stablecoin collateral assets account for 20.43%, and the overall on chain lending volume accounts for 62.28%, with a slight increase compared to the previous period.

The derivative market simultaneously deleveraged, and in the first quarter, the open position of encrypted futures (including perpetual contracts) decreased by 12.83% month on month, falling from $119.52 billion to $104.19 billion. However, market sentiment did not continue to be sluggish. After the position hit bottom at the end of February, it began to rebound, and as of May 1st, it has rebounded by a total of $24.04 billion, an increase of 26.62%. The market leverage sentiment is gradually recovering.

In addition, the overall risk of treasury debt in encrypted projects is controllable. The current scale of outstanding debt used for asset acquisition and treasury strategy supplementation exceeds 17.5 billion US dollars, and the total amount of on chain and off chain debt for all categories of encrypted chains has dropped to 85.1 billion US dollars, falling for two consecutive quarters. The risk of short-term systemic debt explosion is low, and the maturity window for related debts is mainly concentrated in 2027-2028.

3、 CeFi lending pattern: highly concentrated top tier, significantly improved industry resilience

The Q1 of 2026 marks the first quarter on quarter decline in CeFi lending in nearly three years, ending the sustained upward trend since the bear market low in the fourth quarter of 2023. Nevertheless, the current CeFi lending scale of $25.43 billion has increased by 271.69% from the low point of $6.8 billion in the fourth quarter of 2023, and has only fallen 30.47% from the historical peak of $36.58 billion in the first quarter of 2022, significantly enhancing its ability to resist risks.

The pattern of top institutions is highly solidified, and market share continues to concentrate towards the leading companies. Tether still maintains its position as the industry leader, occupying 62.25% of the CeFi lending market share, with a slight increase of 8 basis points compared to the previous period; Maple and Nexo followed closely behind, with market share of 8.39% and 7.02% respectively, an increase of 174 basis points and 55 basis points month on month. The three major institutions collectively control 77.66% of the market share, further increasing industry concentration.

Segmented institutions show significant differentiation, with a few platforms achieving growth against the trend: Maple added $309.59 million in loans in the quarter, an increase of 16.97%; Milo, Coinbase, and Nexo achieved slight growth of 9.36%, 6.65%, and 0.63% respectively. It is worth noting that the Tether lending business, which has maintained long-term growth, has experienced a month on month decline for the first time since the fourth quarter of 2021, becoming an important signal for the CeFi market this quarter.

The current CeFi industry ecosystem has completed a deep clearance, and after multiple rounds of institutional reshuffling in 2022-2023, the industry has completely abandoned high-risk models. High risk businesses such as unsecured loans, weak collateral loans, and asset duplicate pledges have been basically cleared, and the collateral review and risk control processes have been fully standardized. The ability of both borrowers and lenders to resist market fluctuations has significantly improved. However, the volatility of the DeFi market and the sluggish secondary market continue to constrain the expansion space of CeFi business.

4、 DeFi lending deep drawdown: largest decline of the year, returning to the same period in 2024 level

Compared to CeFi's steady adjustment, the DeFi lending market has suffered a heavy blow, with a pullback far exceeding market expectations. Since reaching a historical peak of $47.13 billion in September 2025, the scale of DeFi lending has continued to shrink. As of May 1, 2026, the balance of on chain lending has dropped to $23.29 billion, with a cumulative decline of over 50.58% and a six-month evaporation of $23.84 billion. The lending scale on the Ethereum chain fell by $19.58 billion from a high of $37.52 billion, which is the core force of this round of drawdown.

The adjustment of DeFi in this round has exceeded the decline caused by the market turmoil in spring 2025, and the overall scale has fallen back to the level of the third and fourth quarters of 2024. The core cause was the security incidents of rsETH, LayerZero, and KelpDAO series in April, where hackers stole funds and circulated them through Aave, triggering a liquidity panic in the entire market and causing users to withdraw from on chain lending assets.

From the perspective of track characteristics, DeFi lending is inherently more volatile, extremely sensitive to security risks and fund sentiment, and highly dependent on on on chain liquidity. Once a black swan event occurs, the chain reaction of fund runs, asset sell offs, and liquidity tightening will quickly spread, which is also the core reason why DeFi's decline far exceeds CeFi's. At the same time, the on chain composability and fund reuse rate of niche DeFi assets are far higher than mainstream treasury bond and gold RWA assets, with stronger risk linkage, further amplifying the volatility.

5、 Black Swan Impact Review: Analysis of the Whole Process of Aave's Liquidity Run

The series of security incidents that erupted in mid April were the most critical risk event in the Q1 2026 cryptocurrency market, causing a strong impact on Aave and even the entire DeFi system, triggering a rare on chain liquidity run in history. Attackers pledged billions of stolen funds to Aave, causing market panic. Users concentrated on withdrawing and clearing loan positions, directly leading to a rapid increase in platform asset utilization.

From the perspective of the speed of asset runs, there are significant differences in the degree of liquidity pressure among various types of assets. WETH has the weakest risk resistance ability, only 2 hours and 16 minutes