In February 2025, overall activity in web3 saw a decline, with daily unique active wallets (dUAW) dropping by 8% to approximately 24 million. This slowdown followed a strong start to the year in January. Despite this, not all sectors experienced a downturn. While decentralized finance (DeFi) continued to be the most widely used category, it faced significant losses. On the other hand, social dapps, non-fungible token (NFT) platforms, and artificial intelligence (AI) applications recorded increases in engagement, reflecting shifting user interests.

DappRadar Industry Report Feb 2025

Market Overview 

Social dapps saw a 9% rise in activity, reaching 2.8 million daily unique active wallets. NFT platforms followed with a 6% increase, engaging 3.5 million users. AI-powered dapps continued to expand, growing by 16% to reach 2.6 million active wallets. This marked AI as the fastest-growing sector within web3 for another consecutive month. From a blockchain perspective, Solana remained one of the most active networks, benefiting from growing interest in gaming dapps and memecoins.

Among the notable developments, the blockchain project Abstract recorded a substantial 1,093% increase in user interactions. This rapid growth propelled it into the top 25 blockchain rankings. With anticipation of an upcoming token airdrop, many users engaged with the network, although no official confirmation of rewards had been announced.

Industry UAW

Security Breaches Reach Record Levels

February 2025 set a new record for cryptocurrency hacks, with a total of $1.5 billion stolen from decentralized platforms. The Bybit exchange hack accounted for the majority of these losses, with $1.4 billion drained due to a multisignature vulnerability. This attack surpassed previous records, making it the largest DeFi exploit in history.

Other security breaches included the zkLend lending protocol, which lost $9.5 million due to a rounding bug, and Ionic Money, which was exploited for $8.6 million through a fake token collateral scam. Nearly all major exploits in February were linked to off-chain vulnerabilities, including social engineering attacks and compromised user interfaces. These incidents reinforced the need for improved security measures across the web3 ecosystem, particularly in the areas of operational security and governance.

Exploits and Hacks in the Dapp World

Shifting Trends in Web3 Adoption

An analysis of the most popular decentralized applications in February revealed several key trends in web3 adoption. Solana and NEAR continued to rank among the top blockchain ecosystems in terms of user engagement. Gaming and AI applications showed the most significant adoption rates, with some platforms experiencing rapid growth. The gaming dapp LOL recorded a 40% increase in activity, while AI-powered platform Alaya AI grew by 72%, reflecting the increasing demand for AI-integrated web3 applications.

In the DeFi space, a shift in trading behavior became evident. Uniswap V3, the latest version of the decentralized exchange, saw reduced activity, while Uniswap V2 experienced an increase in usage. This suggests that users prioritized cost-efficient trading solutions over newer versions of protocols.

New blockchain networks also gained traction, with Matchain emerging as a rising competitor. The gaming dapp LOL played a crucial role in driving adoption on the platform. As web3 continues to evolve, these trends indicate that decentralized applications are gradually becoming more integrated into digital experiences.

Top Dapps by UAW

DeFi Faces Market Volatility as Liquidity Shifts

The DeFi sector experienced a sharp decline in February, with total value locked (TVL) decreasing from $217 billion to $168 billion. This downturn was driven by capital outflows and market volatility affecting both established and emerging DeFi ecosystems. Ethereum, which continues to be the leading blockchain for DeFi applications, saw its TVL drop by 27% to $97 billion. Solana faced an even greater decline, with its TVL falling by 33% to $15.4 billion. The drop in liquidity across both networks was attributed to profit-taking and shifting capital flows.

Berachain emerged as one of the fastest-growing DeFi ecosystems, reaching a TVL of $5.05 billion. Its proof-of-liquidity model attracted users looking for staking and yield farming opportunities despite the broader market downturn. Other networks, such as BNB Chain and Tron, also played key roles in stablecoin-based DeFi. While BNB Chain saw a moderate decline of 11% in TVL, Tron experienced a more substantial 29% drop, reflecting reduced demand for stablecoin transactions. Amid the overall market contraction, Aptos stood out as a rare gainer, growing its TVL by 6% to $1.83 billion.

Total Value Locked (TVL) of the Top Blockchains 

AI-Powered Dapps Continue to Expand

AI-powered dapps recorded significant growth in February, reinforcing AI’s position as a dominant trend in web3. Adoption increased across multiple sectors, including gaming, social engagement, and finance. Some AI-powered platforms reported growth rates exceeding 700%, demonstrating the rising demand for AI-integrated applications.

Among the standout performers, the gaming dapp LOL attracted 5.1 million users, representing a 40% increase in activity. Meanwhile, AI-powered NFT and gaming platforms such as Evermoon and UneMeta saw user engagement rise by 988% and 551%, respectively. The creative sector also saw notable developments, with AI-generated NFT marketplace Fractal Visions experiencing a 721% increase in transactions.

Beyond entertainment, AI adoption extended into financial and social applications. The platform Balance, which utilizes AI for financial decision-making, saw its user base double, growing by 116%. While some AI applications, such as Dmail Network and MomoAI, recorded slight declines, AI remains the fastest-growing category in web3.

Top AI Dapps

NFT Market Declines Amid Crypto Downturn

The NFT market faced a challenging month, with trading volumes decreasing by 50% to $498 million. This decline reflected the broader downturn in cryptocurrency prices, as market sentiment heavily influenced NFT valuations. Despite the slowdown, some NFT categories continued to perform well. AI-generated and sports-related NFT collections demonstrated resilience, maintaining strong user engagement.

Pudgy Penguins remained one of the most actively traded NFT collections, with sales increasing by 25% despite a drop in trading volume. The NFT project Doodles also recorded a surge in activity following the announcement of its new token, DOOD, which is set to launch on Solana. This move was aimed at expanding the project’s ecosystem and generating renewed interest.

AI-driven collections gained traction, with Kaito Genesis, an AI-powered NFT series, reaching an all-time high floor price of 7.65 ETH. The collection benefited from strategic partnerships, including a collaboration with the Azuki NFT project, which integrated AI functionalities into its ecosystem. Another emerging trend was the tokenization of physical collectibles. Courtyard, a platform specializing in digitizing real-world assets such as graded trading cards, saw increased adoption through its NFT offerings on Polygon.

Sports NFTs also gained momentum, with Sorare continuing to lead in the category. A new competitor, CricSage, introduced an interactive cricket-based opinion trading platform where users could buy and sell NFTs tied to real-world sports events. This innovative approach attracted a growing community of users.

NFT Trading Volume and Sales Counts

Final Thoughts

February 2025 presented a complex landscape for web3, with challenges in the form of declining market activity and record-breaking security breaches. However, areas such as AI-powered applications, gaming, and social dapps continued to grow, demonstrating the sector’s ability to adapt and evolve. The downturn in NFT trading and DeFi liquidity highlighted the ongoing volatility within the space, while the rise of emerging blockchain ecosystems suggested new opportunities for future growth.

As web3 continues to develop, security, innovation, and user engagement will remain critical factors in shaping its trajectory. The long-term success of the ecosystem will depend on how projects address security vulnerabilities, enhance utility, and build sustainable decentralized applications.