Ethereum’s DeFi lending dominance rises to 67% of onchain borrowing

Two-thirds of every dollar borrowed onchain now runs through Ethereum. According to Messari data, Ethereum and its liquid staking tokens account for 67% of all DeFi borrowing activity, a share that grew even as the broader lending market shrank by half. The numbers behind the squeeze Total outstanding onchain lending sits at roughly $23 billion, according to Galaxy Research. That figure is a steep drop from the $46 billion highs reached in 2025, representing an approximately 50% decline by May 2026. The composition of that 67% is worth noting. It isn’t just vanilla ETH serving as collateral. Liquid staking tokens, think stETH from Lido and similar derivatives, make up a meaningful chunk of the borrowing base. Stakers are essentially double-dipping: earning staking yield while simultaneously using their staked assets as collateral to borrow against. Aave’s quiet engine room If Ethereum is the highway, Aave is the toll booth collecting fees on most of the traffic. The lending protocol remains the dominant venue for DeFi borrowing and a primary driver of Ethereum’s outsized market share. What a halved market reveals Liquid staking tokens play a particularly interesting role in this dy...