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Institutions can now use Bitcoin as collateral through a new Galaxy Digital lending program, with the company managing the underlying DeFi positions.
Crypto behemoth Galaxy Digital founded by Mike Novogratz is pouring in up to $100 million of its own money into a financing initiative where institutions can secure loans against Bitcoin without having to work with DeFi protocols directly.
In a Tuesday announcement, the Nasdaq-listed crypto firm unveiled its Galaxy Onchain Financing Rate, or GOFR, stating that it will be the direct lender that will execute the underlying process on the DeFi lending platforms.
According to a Galaxy Digital blog post, the financing offering will target institutions, high-net-worth individuals, and accredited investors and begin at $1 million.
- Galaxy Sits Between Institutions and DeFi
- Crypto Lending Has Shrunk From Its 2025 Peak
Galaxy Sits Between Institutions and DeFi
Rather than asking clients to search for loans across different platforms, Galaxy Digital will combine changing rates from Aave, Morpho, Spark, Kamino and other lending protocols into one rate that is regularly adjusted.
Clients will borrow from Galaxy Digital, meaning their direct counterparty is the company rather than the individual protocols holding or lending the funds.
Galaxy Digital will open and manage the underlying positions and stop deploying new funds when certain risk limits are breached. Clients won’t need to set up crypto wallets or approve transactions through smart contracts, per the post.
Read also: Galaxy Digital: Strategy Is the Reason Bitcoin Is Falling
Institutions can also deposit native Bitcoin directly with Galaxy Digital as collateral.
The New York-based company added that it would initially commit up to $100 million of its own capital as first-loss protection. Galaxy Digital will publish indicative GOFR rates for USDC▲$0.9999, USDT▲$0.9991 and ETH▲$1,761.17 each day, along with seven-day and 30-day averages.
Crypto Lending Has Shrunk From Its 2025 Peak
But the launch comes after a difficult period for crypto lending. The total value of crypto-backed loans fell 5.1% during Q1 of 2026 to $67.4 billion, according to a May report from Galaxy Research. That was 14.3% below the market’s third-quarter 2025 peak of $78.6 billion.
Loans outstanding across DeFi lending platforms fell even faster, dropping 13.8% during the quarter to $28.2 billion. By May 1, the figure had fallen further to $23.2 billion, about half its September 2025 record of $47.1 billion.
Source: bitcoinfoundation.org