- DeFi’s total locked value fell from $214B to $156B in Q1 2025 amid rising security risks.
- AI-powered dapps grew 29%, reaching 2.6 million daily active wallets.
- Over $2B was lost to crypto hacks, including a $1.4B Bybit exchange exploit.
The operations of decentralised finance (DeFi) showed a decrease in performance during the first quarter of 2025. Total TVL in DeFi reached $156 billion during Q1 2025, which marked a decrease of 27% points from the previous quarter when TVL was $214 billion, according to DappRadar data. The market became volatile, and various cyberattacks contributed to lowering DeFi network values.
The total Value Locked on Ethereum dropped by 37% to become the property of $96 billion. The total value locked (TVL) amounts of Sui, Solana, Tron and Arbitrum fell by more than 30% during the period. Sui suffered its largest Value Locked decline because its TVL numbers dropped by 44%. Operating losses within DeFi protocols intensified because both tokens lost their value and stablecoin reserve levels decreased.
The newly launched Berachain platform succeeded in developing positive TVL growth becoming the only winner among the top 10 TVL platforms. Berachain demonstrated immunity to the market-wide TVL decrease because the network attracted $5.17 billion in new TVL within the February 6 to March 31 period.
Security Breaches Contribute to Confidence Erosion
Bybit sustained what became the biggest security breach in recent times, when attackers made off with $1.4 billion, reducing the cryptocurrency market value. Multiple security breaches within the DeFi sector worsened when Phemex lost $37 million and Infini Stablecoin lost $50 million. The amount of funds and exploits hacked during the first quarter of the year surpassed $2 billion.
The hacking incidents destroyed investor faith, so people withdrew funds from DeFi protocols. Fast capital flight occurs due to technical flaws and market pressure, which causes funds to drain out from under-protected projects.
Shifting User Activity Toward AI and Social Applications
The decline of momentum in DeFi applications resulted in an increase in users across different blockchain sectors. AI-based applications gained a total of 2.6 million active wallets since their initial recording at 2.0 million, which demonstrated a 29% growth rate. Social-application active wallets experienced a 10% growth to reach 2.8 million as the market expanded.
User behaviour has evolved in digital marketplaces because customers welcome blockchain programs which go beyond monetary management systems. Web3 ecosystem applications gained significance when AI agent protocols merged with real-time social tools because together they fulfil market requirements for multiple application use.
NFT Sector Contracts as Real-World Assets Gain Traction
NFT trading volumes throughout the first quarter of 2025 declined 25% to hit a total value of $1.5 billion. The value of RWA NFTs rose during a time of universal market decline. Through this platform, users can follow the complete process of transforming their physical items into digital tokens via Courtyard.
The OKX NFT marketplace positioned itself in first place during the period with $606 million in total sales despite OpenSea and Blur pursuing the market share. The sales of Pudgy Penguins collectables and CryptoPunks combined totaled $177 million along with $63.6 million from CryptoPunks through 477 transactions. Market experts predict that NFTs will expand within specialized categories such as RWAs since basic NFT trading activities are expected to fade.
