The third quarter of 2025 reveals a complex picture in the decentralized application (DApp) space, with record-breaking liquidity in DeFi but declining user engagement across several categories. Despite a surge in institutional investment and total value locked (TVL) in DeFi protocols hitting unprecedented highs, retail participation appears to be waning. This disconnect underscores ongoing shifts in the crypto markets toward institutional support versus retail activity, shaping the future landscape of blockchain-based finance.

DeFi protocols reached a new record of $237 billion in total value locked (TVL), despite a 22.4% drop in daily active wallets.
While institutional crypto investment fuels DeFi liquidity, retail engagement declined sharply, especially in Social and AI DApp categories.
Stablecoins played a pivotal role, with inflows surpassing $46 billion, bolstering DeFi growth and fueling infrastructure like Plasma.
Ethereum remains the leading DeFi network, although Solana and BNB Chain showed contrasting growth trends amid shifting dynamics.
Concerns about data integrity emerged around BNB Chain’s new perpetual DEX Aster, leading to its delisting from major aggregator sites.

The decentralized application industry closed the third quarter of 2025 with contrasting signals. The DeFi sector set new liquidity records, with protocols locking in a total value of $237 billion, marking the highest ever. Yet, user activity across DApps revealed a significant decline, particularly among retail users, illustrating a divergence between institutional investment and retail engagement in blockchain ecosystems.

According to DappRadar, daily unique active wallets averaged 18.7 million in Q3, down 22.4% from Q2. The largest declines appeared in social media and AI-focused DApps, with AI applications losing over 1.7 million users, dropping from 4.8 million daily users in Q2 to 3.1 million in Q3. SocialFi platforms experienced an even steeper decline, falling from 3.8 million to just 1.5 million users.

Unique active wallet categories in the decentralized apps ecosystem. Source: DappRadar

DeFi’s Record Liquidity Driven by Institutional Investment

The record-breaking DeFi liquidity has been attributed to multiple factors, including increased institutional exposure to Bitcoin and stablecoins, clearer regulatory frameworks in the U.S. bolstered by the GENIUS Act, and advancements in infrastructure supporting real-world asset (RWA) tokenization. Stablecoins, especially Tether (USDT) and Circle’s USDC, attracted over $46 billion in inflows during Q3, serving as a bridge between traditional and crypto finance.

Moreover, platforms dedicated to stablecoins, such as Plasma, a layer-1 blockchain designed specifically for stablecoin transactions, debuted with over $8 billion in TVL within its first month. These developments highlight the importance of stablecoins in driving DeFi’s growth and linking crypto markets with traditional finance sectors.

*DeFi’s total value locked in the third quarter of 2025. Source: DappRadar*

Ethereum Tops DeFi Networks, BNB Chain Gains Traction

Ethereum maintained its position as the dominant DeFi network, with a TVL of $119 billion, reflecting a modest 4% decrease from Q2. Solana experienced a 33% decline, with TVL falling to $13.8 billion. Meanwhile, BNB Chain showcased a positive trend with a 15% increase in locked assets, reaching new heights amid the launch of the Aster perpetual DEX.

However, concerns arose over the integrity of Aster’s data, as noted by data aggregator DefiLlama. The platform’s co-founder highlighted similarities between Aster’s trading volumes and Binance Perp, leading to the delisting of Aster’s data from DefiLlama due to suspicious activity. The episode underscores ongoing scrutiny within the DeFi space regarding platform transparency and data reliability.