DappRadar Q1 2025 Shocker: DeFi TVL Nosedives — Can AI and Social Dapps Sustain Growth Amid $2B in Hacks?

The decentralized finance (DeFi) industry recorded a 27% value locked (TVL) dip in Q1 2025 to $156 billion. Economists point to general economic instability and the $1.4 billion Bybit exploit in February as the reasons for the dip. Ethereum, the largest TVL blockchain, had its value locked decrease 37% to $96 billion, driven by a 45% price decrease to $1,820. Other large blockchains such as Sui (-44%), Solana, Tron, and Arbitrum (all down more than 30%) experienced the same declines.

Berachain Emerges as a Bright Spot

Despite the downturn, Berachain bucked the trend, posting the only positive top-10 blockchain growth. Since its mainnet launch on February 6, it had gained $5.17 billion in TVL as of March 31. It was propelled by a Token Generation Event ($632M BERA tokens), Bepolia testnet launch, and a $142M raise.

AI and Social Dapps Surge Amid DeFi Struggles

Whereas DeFi fared poorly, social decentralized applications (dapps) and AI fared better. AI-based protocols saw 29% growth in daily unique active wallets (DUAW) with 2.6 million average users per month. Social dapps grew by 10% to 2.8 million DUAW.

Key AI projects include:

• Dmail Network – A decentralized AI-powered email system.
  
• Balance – An AI-driven entertainment platform backed by a16z.
  
• LOL – A Telegram-based emotional analysis app rewarding laughter with tokens.
  

NFT Market Contracts but Shows Promise

The NFT marketplace fell 25% in trading volume to $1.5 billion, as OKX’s NFT platform took over the throne from OpenSea as the marketplace leader ($606M in sales). Pudgy Penguins ($177M in sales) led PFP sets, as CryptoPunks ($63.6M) retained premium turf even though there were only 477 sales.

One of the most dominant trends was the rise of Real World Assets (RWAs) within NFTs, where Courtyard led the charge of tokenizing physical collectibles.

Security Concerns: $2B in Hacks and Exploits

Q1 2025 was marked by over $2 billion in crypto-related losses, the highest since the Terra and FTX collapses. The biggest incidents included:

• Bybit Hack ($1.4B) – Allegedly orchestrated by North Korea’s “TraderTraitor” group.
  
• LIBRA Meme Coin Rug Pull ($250M) – Promoted by Argentine President Javier Milei before a 70% supply dump.
  
• Melania Trump’s MELANIA Token Collapse ($200M).
  
• Infini Stablecoin Exploit ($50M) – A major attack on a Hong Kong-based platform.
  
• Phemex Exchange Hot Wallet Hack ($37M) – A security breach in Singapore.
  

Macroeconomic Pressures Impact Crypto Markets

The re-imposition of U.S. import levies by prior President Donald Trump shook the global technological supply chain and sent shockwaves to financial markets and placed extra weight on the crypto world.

Despite the chaos, active wallets per day (24M users) decreased by only 3%, which shows steady user activity. Experts are bullish on Q2 2025 with more innovation in AI, identity solutions, and asset tokenization fueling the next wave of blockchain adoption.

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