Author: Sara Gherghelas, Dappradar
Translated by: Felix, PANews
July was anything but calm for Web3. Despite a slight decline in the overall number of active wallet users, down to 22 million (an 8% drop), the month was still rife with undercurrents. NFT transaction volume surged 96%, and user activity surpassed DeFi, a situation not seen for months. Meanwhile, DeFi locked value reached $270 billion, setting a historical high, while the market value of tokenized stocks skyrocketed by 220%.
However, growth is not without risks. Hacks resulted in losses of $132 million, and while AI remains one of the most promising fields, usage of most AI dapps has seen double-digit declines. Regulation is rapidly catching up, with the United States passing several significant cryptocurrency bills, and a global regulatory framework is gradually becoming clearer.
From the strong momentum of blue-chip NFTs to record DeFi capital flows, this month proves that Web3 is far from slowing down, just shifting gears.
Key points:
In July, 22 million independent active wallets interacted with DApps daily, a month-on-month decline of 8%
Gaming applications accounted for the highest share at 22.4%, followed by AI (18.7%) and NFTs (17.5%)
NFT transaction volume grew by 96%, reaching $530 million, and the average NFT price doubled to $105
DeFi's total locked value (TVL) reached a new high of $270 billion on July 28, a month-on-month increase of 30%
Activity in AI DApps has declined, but Dmail, XPIN, and ChainGPT are steadily growing
In July, losses due to vulnerabilities totaled $132 million, an increase of 16% from June.
1. Dapp activity cools down
As in previous years, July saw a typical summer slowdown, with the number of daily independent active wallets declining by 8% to 22 million.
The social sector experienced the largest cooling, with daily active users (dUAW) declining by 27% to 2.8 million. This is not surprising, as social dapps often fluctuate with the tides of speculation. Currently, InfoFi platforms like Farcaster and the new Base dapp have become the focus, but many such communities still have strict entry barriers. This makes it difficult for new users to participate, even with great potential. However, in the long run, this category may become foundational. The creator economy has already dominated traditional media and is making strong inroads into the Web3 space.
The AI sector also saw a noticeable decline of 14%, with dUAW dropping to 4.1 million. Meanwhile, DeFi shrank by 6%, continuing a recent cooling trend. However, the gaming sector exhibited resilience, growing by 2%, while NFTs remained stable.
The gaming sector continues to lead the DApp ecosystem, capturing 22.4% of market share in July, followed by AI (18.7%) and NFTs (17.5%). A notable change is that DeFi, which was the dominant sector two months ago, has now fallen behind NFTs. This clearly indicates a shift in user behavior and may reflect changing priorities as users interact with Web3.
2. The most commonly used dapps in Web3
Ranking of daily independent active wallets (dUAW)
Solana-based DEX continues to dominate. The memecoin craze is far from over, and these exchanges remain key venues for retail activity.
Outside of DeFi, another notable dapp is (World of Dypians), a gaming dapp that consistently maintains a stable user base and steadily drives up user activity.
Notably, two AI DApps have made it to the top of the rankings. Their emergence indicates that user interest in AI-driven Web3 experiences is not just a passing fad, but has become ingrained in daily activities.
Although DeFi may no longer dominate in overall wallet share, it continues to lead the DApp rankings. Why? Because launching a DeFi DApp and truly gaining users is not easy, but those that succeed often achieve higher activity levels and loyalty.
In contrast, the variety of DApps in areas such as gaming, social, or NFTs is richer, and user attention is more dispersed.
3. AI Dapps: Rise, Fall, and Future
In July, most AI DApps saw a decline in activity, but three projects stood out with steady growth: Dmail Network, XPIN Network, and ChainGPT. These projects and others are worth watching.
Dmail Network: A blockchain-based encrypted email service.
Exorde: Utilizes AI to gather global news and insights.
ChainGPT: A set of AI-based crypto tools, including ChainGPT Pad, a launch platform for early-stage projects. (ChainGPT Pad is also part of our DappLaunch program!)
Additionally, one of the biggest initiatives in the field comes from Lightchain AI, which launched a mainnet specifically designed for on-chain machine learning. With a virtual machine tailored for AI and a 'smart proof' consensus mechanism, it offers a glimpse into the future of decentralized AI infrastructure.
Theta Network has also accelerated its pace, integrating Amazon's Trainium and Inferentia chips to support use cases like 'Quakebot,' an AI agent for the San Jose Earthquakes (MLS).
Protocols like Aethir and Render Network are making decentralized computing a reality. Aethir's compute hours have reached 1 billion, and it has launched an AI-driven crypto credit card, while Render has migrated to Solana for faster and more economical performance.
The ASI Alliance, composed of SingularityNET, Fetch.ai, and Ocean Protocol, officially merged under the $ASI token, aiming to build a fully decentralized AGI stack.
In the gaming sector, Elympics has launched the $ELP token to enable AI-driven 'Agentic Gaming' and connect it with NFT intellectual properties like Pudgy Penguins and Doodles.
AI tokens like TAO, RNDR, and AGIX have garnered significant investor attention, with TAO receiving a $10 million investment from TAO Synergies, the largest public AI fund to date.
Meanwhile, researchers released A1, an AI agent capable of autonomously exploiting smart contract vulnerabilities, indicating that AI as a tool and risk is rapidly evolving.
In terms of regulation, the U.S. has passed several bills providing clear guidance for participants in the AI and cryptocurrency sectors and appointed an AI and cryptocurrency czar, marking an increasing role of AI in the blockchain space.
4. DeFi TVL hits a new high
In July, DeFi performed explosively. TVL grew by over 30%, closing the month at $259 billion. More notably, on July 28, DeFi TVL hit a historical high of $270 billion, clearly indicating increased market confidence, improved liquidity, and a growing user demand for lending, trading, and tokenized assets.
Tokenized stocks have become a highlight. The number of wallets interacting with such assets surged from about 1,600 to over 90,000, while their total market value grew by 220%. This is not just growth; it signals that RWA is beginning to reach critical mass.
Ethereum continues to dominate the DeFi sector, with total locked value (TVL) reaching $166 billion, far exceeding Solana's $23 billion. In July, ETH prices soared nearly 60%, possibly driven by favorable regulations. Meanwhile, staking rewards annualized yield surged to 29.4%, reflecting an increase in market confidence and user participation.
On the Solana front, Hyperliquid performed impressively, generating 35% of that blockchain's revenue in July, thanks to rising demand for derivatives. Currently, Hyperliquid handles over 60% of the 24-hour perpetual contract trading volume, with open contracts reaching $15.3 billion and facilitating $5.1 billion in USDC bridging.
In terms of policy, July was an important moment for cryptocurrency regulation in the United States. Legislators passed:
(GENIUS Act) - Established a framework for stablecoins.
(CLARITY Act) - Clarified the classification of digital assets (SEC vs. CFTC).
More importantly, SEC Chair Gary Gensler announced 'Project Crypto,' outlining a roadmap for the integration of DeFi and traditional finance, which includes proposals for token issuance, custody, and a dedicated compliance framework for DeFi.
5. NFT activity surpasses DeFi
The NFT market shows strong vitality. In July, NFT activity surpassed DeFi, a shift not seen for some time. What is the reason behind this momentum?
Transaction volume nearly doubled, increasing by 96% to $530 million. However, sales fell by 4%, to 5 million. This reflects one thing: NFT prices have risen.
In June, the average price of NFTs was $52. In July, this price rose to $105, an increase of 103%. Blue-chip collections became the focus again, with whales leading the charge.
Thanks to professional traders and their Blend lending protocol, Blur dominates Ethereum NFT trading volume (with daily shares reaching up to 80%). OpenSea maintains user numbers due to long-tail asset listings and cross-chain activities (averaging about 27,000 daily users). Zora gained attention with its creator-first L2 network and $ZORA token, offering cheap and convenient NFT minting services.
Additionally, Starbucks has ended its Odyssey NFT loyalty pilot program. Nike's SWOOSH continues with digital product releases and collaborates with EA Sports to launch virtual sneakers in games. Louis Vuitton, Rolex, and Coca-Cola (China) have launched NFT pilot projects related to authentication and collectibles. Netflix, NBA Top Shot, and FIFA continue to participate, but licensing terms are clearer.
Significant change? NFTs are evolving from speculation into practical tools, transforming from collectibles and culture into identity, ticketing, gaming, and tokenized real-world assets.
6. Vulnerabilities resulted in $132 million in losses
We hope to report a month with no hacks or exploits, but the current Web3 world is not so (at least not yet). Moreover, as market recovery signs emerge, it seems that bad actors are ramping up their attacks.
In July, losses due to exploits exceeded $132 million, a 16% increase from June.
Major vulnerabilities in July 2025:
CoinDCX ($44 million) - An Indian exchange suffered a server breach targeting its internal liquidity accounts. Fortunately, user funds were unaffected, and the exchange continues to operate normally.
GMX v1 ($42 million) - On July 9, the GMX v1 version on the Arbitrum platform encountered a vulnerability that allowed malicious contracts to manipulate internal accounts and withdraw funds exceeding the allowed amount. The GLP mining pool was affected; other GMX versions were not. A bounty has been set to recover the funds.
BigONE ($28 million) - On July 16, the centralized exchange BigONE's hot wallet suffered unauthorized access, resulting in losses across multiple chains. The platform stated that all user assets are safe and they will bear the full loss.
These events serve as a warning that security work in Web3 is still underway. Whether deeply involved in DeFi, NFTs, or AI DApps, be sure to carefully check smart contract permissions, avoid clicking suspicious links, and use hardware wallets whenever possible.
Related Reading: 2025 Q2 Dapp Market Report: AI Agent Applications Strongly Ascend, RWA and Gaming Drive NFT Recovery
