Stream Finance’s recent disclosure of a default and a $93 million loss, coupled with October’s $20 billion crypto crash, has left digital asset lenders scrambling to de-risk while keeping credit lines robust, according to a new note from Flowdesk.
Flowdesk says leverage is being reduced as traders reassess counterparties, but credit is not frozen. Borrowing demand for SOL, XLM, ENA, APT and BTC remains “robust,” Flowdesk wrote, mostly tied to hedging and financing strategies rather than directional bets.
Yields for low-risk blue chip lending pools such as Maple and Jito have seen compression, but remain stable and well above the Chainlink DeFi yield index of 5% and 10-year Treasury yields.
Flowdesk’s credit desk said it has observed “deleveraging flows as counterparties move and reassess amid recent price action,” noting that while capital rotates out of riskier pools, “a few counterparties have stepped in to add leverage at current levels, focused on the majors.”
“Overall, prices and yields are compressed across the board, with widespread defensive positioning and many participants on the sidelines awaiting a clearer market recovery,” the firm wrote.
The question is: when will this market bounce back?
CryptoQuant says the market is flashing bearish warning signs as it did in 2022.
If that crystal ball turns out to be right, the coming weeks could put more pressure on funding rates and further compress yields across DeFi credit pools, bringing them closer to what Treasuries earn.
