February dApps Decline: What’s Happening in the Industry?

Amid economic and political instability, the crypto sector has seen an 8% decline in daily unique active wallets (dUAW), now numbering 24 million.

But not all segments are struggling—AI and social dApps are bucking the trend with remarkable growth. 

The AI sector has witnessed an astonishing 700% increase in user engagement on certain platforms, with an average industry-wide growth of 16%. These innovations are reshaping finance, entertainment, and social applications, enhancing user experience and expanding monetization models. Gaming and creative dApps, powered by machine learning, are emerging as dominant forces.

DeFi

The DeFi sector is in decline, with total value locked (TVL) falling from $217 billion to $168 billion. Liquidity concerns and capital outflows are hitting Ethereum and Solana, limiting growth prospects.

However, Berachain’s ecosystem has emerged as a bright spot, growing its TVL to $5.05 billion. Its Proof-of-Liquidity model has attracted users by offering liquid staking incentives that provide higher returns.

NFT

The NFT boom of late 2024, which pushed trading volumes to $1.36 billion, has lost momentum. By February, volumes had plunged over 50% to $498 million, a downturn driven by broader market instability, macroeconomic uncertainty, and shifting investor sentiment.

However, innovation still thrives. AI-powered and sports-centric NFT projects continue attracting users, with Kaito Genesis leading the charge. This AI-generated collection has rapidly gained traction, increasing both its market cap and sales volume.

Crypto Security Under Threat

The dark side of the crypto world reared its head in February 2025, marking the worst month on record for digital asset theft. In total, $1.5 billion was stolen, with Bybit suffering the largest breach, losing the full amount.

Cybersecurity analysts argue that the primary weak points weren’t smart contracts, but rather off-chain vulnerabilities—flawed interfaces, inadequate multi-signature security, and susceptibility to social engineering tactics.

Recent hacks targeting crypto platforms, including zkLend, have made it clear that modern security risks extend beyond technical flaws. Attackers are exploiting weaknesses in access controls, authentication systems, and operational transparency.

Cybersecurity experts stress the need for an industry-wide shift, advocating for stronger private key management, stricter authentication protocols, and enhanced transaction oversight to prevent future breaches.

Check this out: Bybit: A Full Review of Its Features and Benefits

Web3’s Next Chapter

February painted a complex picture for Web3—while DeFi and NFT trading saw declines, AI solutions and social dApps are thriving, proving that innovation never stops.

The real challenge now? Security. Developers must tighten protocol verification, enhance cybersecurity measures, and build a more trustworthy decentralized ecosystem if Web3 is to keep evolving.

Read on: DappRadar: 2024 Industry Report