Losses from hacker attacks fell to their lowest point this year at $434 million, but threats are becoming more sophisticated. 1. Dapp Usage Declines as SocialFi and AI Momentum Lose The average number of daily active unique wallets for Dapps decreased by 22.4%. In Q3, Dapps attracted an average of 18.7 million wallets per day. Throughout the quarter, the number of active wallets in every category declined, with the most significant declines in the SocialFi and AI categories. The AI category saw a decline in traction throughout the quarter, with the average number of active wallets falling from 4.8 million in Q2 to 3.1 million in Q3. This downward trend is evident in the success of Virtuals Protocol, a startup platform for AI agents. In Q2, Virtuals Protocol attracted 10,000 daily active wallets, as millions of users flocked to the platform. It now attracts 1,000 to 1,500 daily active wallets, with an average daily transaction volume of approximately $100,000. Beyond AI, social dapps have also been impacted. In the second quarter of this year, the number of daily active wallets in the Social dapp category reached 3.8 million. In Q3, this number plummeted by more than half, to 1.57 million active wallets. Social dapps such as The Arena, Layer3, and OnchainGM reached peak activity in Q2, but activity has declined significantly over the past three months. By market sector, both Social and AI lost market share over the past quarter. In Q2, AI was the third most active market sector, accounting for 18.6%, but by Q3, this share had fallen to 16.8%. The Social dapp category suffered even more, declining from 15.9% to 8.4%. In terms of market dominance, NFTs have increased their market share and currently hold second place with 18.5%. Meanwhile, the Games category remains dominant within the dapp industry, with a 25% market share. Earlier this year, games, DeFi, and AI dominated, followed closely by social and NFTs. This trend reversed in Q3. Games still dominate, but NFTs have risen in the rankings and are now in second place. DeFi and AI are close behind, while social is now the weakest sector in the market, surpassed by the diverse dapps in the "Other" category. Looking at individual dapps individually, games still dominate. While shopping app KAI-CHING attracts the most active wallets, games make up a large portion of the top five dapps. "World of Dypians" is a social gaming metaverse, with HOT Protocol providing gamification services and KGeN serving as a gaming interaction platform. 2. DeFi TVL Hits a New All-Time High of $237 Billion As cryptocurrency prices rise, innovation is driving the DeFi market to new highs. Lending protocols are booming, cross-chain liquidity has become a hot topic in the industry, and the rise of memecoins and AI tokens has brought significant liquidity to certain ecosystems. Furthermore, the rise of stablecoins is propelling DeFi into the spotlight of traditional finance. In Q3, the United States passed three pieces of cryptocurrency legislation, with the GENIU Act standing out. This bill provides the first legal framework for stablecoins, requiring issuers to hold cash reserves or short-term U.S. Treasury bonds. Meanwhile, corporations and investment funds poured billions of dollars into Bitcoin through Bitcoin ETFs. The launch of the Plasma stablecoin chain, along with network launch announcements from companies like Circle and PayPal, highlighted the demand from traditional financial institutions for these crypto-based alternatives to the dollar, euro, won, or yen. It is against this backdrop that the DeFi sector set a new record for TVL. At the end of Q3, $237 billion was locked in DeFi smart contracts. This is an all-time high, and with the growing tokenization of real-world assets and continued progress in the stablecoin sector, this could be the beginning of a significant influx of liquidity. However, despite being a leader in the DeFi space, Ethereum failed to steal the show in Q3. While it maintained its lead with a TVL of $119 billion, Ethereum's TVL still declined by 4%. Solana managed to hold onto its second position but suffered the largest drop among the top ten blockchains. Solana's TVL fell by 33% to $13.8 billion, primarily due to waning momentum around Pump.fun and memecoins. The situation for the other eight blockchains on the list is much more optimistic. BNB Chain launched Aster, a perpetual DEX, which caused a sensation. Hyperliquid, designed for on-chain perpetual trading, has also been attracting attention over the past year, with its TVL increasing by 29% to $2.85 billion. This is also a trend seen this quarter: DEXs are gradually becoming as feature-rich as CEXs. 3. NFT Sales Reach 2022 Highest Since 2022 Due to the low prices of many NFTs today, transaction volume declined slightly. However, transaction volume increased in 2025. Seven million NFTs were sold in the first quarter, reaching 12.5 million in the second. This upward trend continues. In the third quarter, the market recorded sales of over 18.1 million NFTs, generating $1.6 billion in transaction volume. The increase in sales has not been reflected in actual adoption. Although the number of NFT traders reached its highest monthly number in 12 months, the increase was minimal compared to sales. In the first quarter of 2025, 1.66 million wallets traded NFTs. During the same period, 7 million NFTs were sold, representing an average of 4.2 NFTs per wallet. In the third quarter, 2.14 million wallets traded 18.1 million NFT assets, representing an average of 8.4 NFTs per wallet. Between the two quarters, sales increased by 158%. However, the number of wallets only grew by 28.6%. This suggests steadfast support from existing participants rather than a massive influx of new users. The only NFT category to experience a decline was gaming. Over the past quarter, gaming NFT transaction volume decreased by 17%, while the number of units sold decreased by 32%. In contrast, sports NFT transaction volume increased by 337%, reaching $71 million, and the number of units sold increased by 143%, reaching 4.1 million. The surge in trading volume was also driven by several developments. For example, OpenSea launched a campaign for its upcoming token, rewarding the most active traders on its platform. This encouraged users to trade low-value NFTs to meet daily trading standards. OpenSea successfully increased its sales by 29% to 9.27 million assets. Meanwhile, PFPs (personal NFTs), led by CryptoPunks, Moonbirds, BAYC, and Pudgy Penguins, gained traction. PFP trading volume increased 187% quarter-over-quarter to $544 million. While CryptoPunks remain the holy grail for NFT collectors, Pudgy Penguins is evolving into a Web3-infused entertainment brand encompassing gaming and other forms of entertainment. Yuga Labs, the company behind Bored Ape Yacht Club, sold some of its assets to focus on BAYC, MAYC, and Otherside. This has brought some new life to the Bored Ape community. However, they did sell Moonbirds. Moonbirds stood out as a standout project this quarter, with 8,311 NFTs sold and $88 million in trading volume. The Moonbirds IP is now owned by Orange Cap Games, which announced plans to bring the BIRB token to Solana in the first week of October. Stats aside, real change is happening. NFTs have become far more than just a JPEG picture of a monkey and are merging with the emerging RWA trend and DeFi. A leading NFT series is Courtyard, which tokenizes physical collectible cards and sells them as NFTs on the blockchain. Each NFT on Courtyard is a tokenized physical trading card, such as a Pokémon or baseball card. Users can trade digital versions of their physical collectibles or redeem them for physical cards. In Q3 alone, Courtyard sold 1.55 million items, generating over $145 million in transaction volume. A new trend emerged in September: NFT microstrategies. Token Works launched PunkStrategy, an automated protocol concept for buying and selling CryptoPunk assets. Users acquire PNKSTR tokens, and 10% of transaction fees goes into a pool. Once the protocol raises enough funds, it purchases the cheapest CryptoPunks and lists them for sale at a 20% premium over the purchase price. When CryptoPunks are sold on the open market, the protocol uses the resulting ETH to purchase PNKSTRs from the market. These tokens are then destroyed and removed from circulation. This makes PNKSTR a way to gain exposure to CryptoPunks without having to purchase expensive NFTs. NFTs are no longer just about collectibles. These digital assets can represent ownership of physical assets and can also become part of automated DeFi protocols. 4. Hacker threats continue, with $434 million stolen. In Q3, hackers stole over $434 million worth of cryptocurrency. The largest attacks involved social engineering and vulnerability exploits. In July, a hacker exploited a malicious contract on GMX V1 to manipulate internal accounting safeguards, withdrawing more funds than they were entitled to, resulting in a $42 million loss. Days later, CoinDCX lost $44 million due to a server compromise. Most recently, in September, the social project UXLINK suffered a multi-signature vulnerability attack, resulting in the theft of $21.7 million in assets. The hacker also gained unauthorized minting rights and issued 1 billion UXLINK tokens. A sell-off caused the token's value to plummet 70%. Ironically, the hacker later lost $48 million worth of tokens in a phishing attack. The second-largest incident in Q3 was the hack of the Turkish exchange BTCTurk. However, the largest incident was a single victim who lost 783 Bitcoin (approximately $91 million) through a social engineering scam. The attackers deceived the victim by impersonating exchange and wallet customer service representatives. Details are unknown, but with the rise of AI tools, such attacks appear more likely. These five incidents accounted for the majority of stolen funds in Q3. With $434 million stolen, the intensity of attacks appears to have decreased this quarter. However, with the tokenization of real-world assets, the rise of more advanced DeFi functionality, and institutional adoption of stablecoins, it's certain that crypto wallets will remain a target for scammers and hackers. Recent reports of zero-click vulnerabilities in iOS and WhatsApp suggest crypto users need to remain vigilant. Conclusion: Q3 demonstrated the resilience and adaptability of Dapps in the ever-changing crypto market. Despite a decline in daily active wallets and challenges in the SocialFi and AI sectors, Dapps continue to make steady progress and achieve significant milestones. DeFi's TVL hit a record $237 billion, demonstrating strong growth and growing interest from institutional investors, particularly in stablecoins and tokenized assets. The NFT market saw sales surge to 18.1 million, highlighting its evolving role as it moves beyond collectibles and merges with DeFi and real-world assets. Gaming remains dominant. Dapps are increasingly touching the lives of everyday users seeking financial services, fun games, or rare Pokémon cards. Currently, the number of active wallets is in the millions, but will soon reach billions.
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