DappRadar: DeFi TVL fell 27% in Q1 as AI and social dApps drove web3 growth

The first quarter of 2025 was a turbulent period for web3, with AI and social dApps gaining traction while decentralized finance suffered a sharp decline.

The total value locked in DeFi fell 27% to $156 billion, as per DappRadar’s Q1 2025 report. DeFi’s decline was caused by several high-profile security breaches, falling crypto prices, and macroeconomic uncertainty.

The biggest blow was Bybit’s $1.4 billion exploit, which the FBI connected to the TraderTraitor group from North Korea. In this exploit, hackers stole about 401,000 Ethereum (ETH), converted it to Bitcoin (BTC) and other assets, and distributed it among wallets.

DeFi’s position was further affected by a 45% decline in ETH over the quarter. Except for Berachain (BERA), which grew as a result of its mainnet launch, a token distribution event, and a $142 million funding round, most of the major blockchains saw a drop in DeFi activity.

While DeFi struggled, AI-powered dApps thrived, as shown by the 29% increase in daily unique active wallets to 2.6 million. Furthermore, the number of social dApps grew by 10% to 2.8 million dUAW. This shift was largely due to sites like Pump.fun, which made it simpler for users to launch new tokens. Pump.fun saw a 112% rise in activity.

NFTs had a weaker quarter as well, with a 24% decline in trading volume to $1.5 billion. The fact that sales only fell 10%, however, points to lower prices rather than a mass exit. PFP collections accounted for the majority of sales, making up 56% of the total NFT volume. In terms of transactions, OpenSea continued to be the most popular marketplace, but OKX had the highest trading volume. 

Meanwhile, over $2 billion was lost to scams and hacks. Rug pulls like LIBRA and MELANIA resulted in losses of $450 million, but Bybit’s $1.5 billion exploit was by far the largest security breach event. A $50 million hack of the Infini stablecoin platform also exposed underlying security flaws in the industry.