Stream Finance’s recent disclosure of a default and a $93 million loss, combined with the $20 billion cryptocurrency crash in October, has left digital asset lenders scrambling to reduce risk while keeping credit lines strong, according to a new note from Flowdesk.
Flowdesk says leverage is reducing as traders reevaluate counterparties, but credit has not been frozen. Lending demand for SOL, XLM, ENA, APT and BTC remains “solid,” Flowdesk wrote, primarily tied to hedging and funding strategies rather than directional bets.
Yields on low-risk prime lending pools like Maple and Jito have compressed but remain stable and well above the 5% Chainlink DeFi Yield Index and 10-year Treasury yields.
Flowdesk’s credit desk said it has seen “deleveraging flows as counterparties reposition and revalue amid recent price action,” noting that while capital is moving out of the riskiest pools, “some counterparties have stepped in to add leverage to current levels, focusing on large corporates.”
“Overall, rates and yields have compressed across the board, with widespread defensive positioning and many participants sidelined, awaiting a clearer market rebound,” the firm wrote.
The question is: when will this market recover?
CryptoQuant says the market is showing bearish warning signs as it did in 2022.
If that crystal ball proves correct, the coming weeks could put more pressure on funding rates and further compress yields on DeFi credit funds, bringing them closer to what Treasuries earn.
