DeFi TVL Reaches Record $237B Amid Significant Decline in Daily Active Wallets – Is Retail Exiting the Market?

In the third quarter of 2025, Decentralized Finance (DeFi) achieved a record total value locked (TVL) of $237 billion. However, the number of daily active wallets has experienced a 22% decline, indicating a possible exit of retail investors from the market. The latest "State of the Dapp Industry Q3 2025" report from DappRadar highlights ongoing technological advancements in DeFi despite a decrease in user engagement.

Key Takeaways

DeFi total value locked (TVL) hits a new high at $237 billion in Q3 2025.
Daily active wallets fell by 22%, raising concerns about retail participation.
Ethereum leads the DeFi sector with 49% of the TVL but saw a 4% drop.
Solana’s TVL declined 33%, while emerging ecosystems like BNB Chain and Hyperliquid are gaining momentum.
NFTs surged 158% in sales volume amid declines in AI and social dapps.
Over $434 million in cryptocurrency was stolen due to security breaches in Q3.

DeFi TVL Reaches Record $237B Amid Significant Decline in Daily Active Wallets – Is Retail Exiting the Market?

TVL Milestone and User Engagement Concerns

The third quarter of 2025 marked a significant achievement for the DeFi space, with a total value locked of $237 billion. Despite this accomplishment, data shows a worrying trend—retail investor activity is dwindling, as evidenced by a 22% drop in daily active wallets during this period.

According to DappRadar's report, Robert Hoogendoorn noted that “the rise of stablecoins is really pushing DeFi into the spotlight of traditional finance,” emphasizing how stablecoins are enhancing the appeal of DeFi.

Ethereum Dominates, But Not Without Challenges

Ethereum continues to be a dominant force in DeFi, accounting for more than 49% of the entire sector’s TVL in Q3 2025, amounting to $119 billion. However, it experienced a slight decline of 4%.

DeFi TVL Reaches Record $237B Amid Significant Decline in Daily Active Wallets – Is Retail Exiting the Market? Source: DappRadar

Other chains, such as Solana, ranked second but faced significant setbacks, with its TVL plummeting 33% to $13.8 billion, primarily due to declining interest in projects like Pump.fun and memecoins.

DappRadar’s researchers, including Robert, also pointed out the rise of various ecosystems, such as BNB Chain, Plasma, and Arbitrum, as they expand their footprint in the DeFi landscape. Notably, BNB Chain captured attention with the launch of Aster, a new decentralized exchange (DEX).

Declining Active Wallets Show Retail Hesitance

The average number of daily active wallets in the DeFi sector during Q3 2025 was 18.7 million, a stark decline from the earlier levels in early 2025. This has raised alarms about a potential exit by retail investors.

Across numerous categories, all sectors recorded decreases in wallet activity, with Social and AI applications feeling the most notable impacts.

DeFi TVL Reaches Record $237B Amid Significant Decline in Daily Active Wallets – Is Retail Exiting the Market? Source: DappRadar

In the AI category, active wallets noticeably decreased from 4.8 million in Q2 to 3.1 million in Q3. Virtuals Protocol, an AI agent launchpad, exemplifies this concerning trend, dwindling from 10,000 active wallets in Q2 to just 1,000 to 1,500 currently, impacting its transaction volume.

The Social category also experienced a considerable drop, with daily active wallets decreasing from 3.8 million in Q2 to 1.57 million in Q3.

NFT Market Sees Growth Amidst Declines

Interestingly, while certain markets falter, NFTs have surged significantly, accounting for 18.5% of the DeFi landscape. The trading volume in this sector has escalated throughout 2025, with over 18.1 million NFTs sold in Q3 alone, generating $1.6 billion in trading volume.

DeFi TVL Reaches Record $237B Amid Significant Decline in Daily Active Wallets – Is Retail Exiting the Market? Source: DappRadar

The impressive 158% rise in NFT sales can be attributed to campaigns, including one by OpenSea aimed at rewarding active traders, alongside the growing popularity of profile picture (PFP) projects like CryptoPunks and BAYC, which saw increased adoption.

However, it's important to note that the increase in wallet participation was only 28.6%, suggesting that existing users are engaging more rather than new users entering the space.

Security Breaches Remain a Concern

In contrast to the thriving TVL, the DeFi sector is still grappling with significant security threats, illustrated by the theft of over $434 million in cryptocurrencies in Q3.

DeFi TVL Reaches Record $237B Amid Significant Decline in Daily Active Wallets – Is Retail Exiting the Market? Source: DappRadar

Notable incidents include a $42 million loss from a social engineering exploit on GMX V1 and a $44 million loss from a server breach at CoinDCX. More recently, UXLINK lost $21.7 million due to a multi-signature exploit, underscoring the ongoing vulnerabilities in the DeFi infrastructure.

In conclusion, while DeFi has reached remarkable new heights in terms of total value locked, concerns about declining user participation and persistent security threats highlight challenges that stakeholders in the blockchain and cryptocurrency space must address moving forward.