Key Takeaways
Web3 Daily Active Users: Remained at 24 million in Q2 2025, but the composition across sectors is shifting.
DeFi: Leads with 240 million weekly transactions, but Ethereum gas consumption is now dominated by RWA, DePIN, and AI.
Top Performing Assets: Smart contract platform tokens, yield-generating DeFi, and RWA tokens outperformed; AI and DePIN lagged despite strong narratives.
Altcoins are more than just speculative assets beyond Bitcoin. In most cases, they represent, or attempt to represent, specific areas of activity within the Web3 ecosystem, seen as a decentralized alternative to the traditional internet and its services.
Assessing the state and potential of the altcoin market requires looking beyond price. Metrics like gas consumption, transaction volume, and Unique Active Wallets (UAW) measure activity and adoption, while token price performance reveals whether the market is following on-chain trends.
AI and Social DApps Are Gaining Traction
UAW counts unique addresses interacting with a DApp, offering a measure of user adoption breadth (though it can be inflated by multiple wallets or automated activities).
DappRadar's Q2 2025 report shows daily wallet activity stabilized around 24 million. However, sector dominance is changing. Crypto gaming remains the largest category with 20%+ market share but declined from Q1. DeFi also slipped, falling from over 26% to under 19%.
In contrast, social and AI-related DApps are growing. Farcaster leads in social with around 40k daily active UAW. In AI, agent-based protocols like Virtuals Protocol (VIRTUAL $1.18) stand out, attracting around 1.9k UAW weekly.
DeFi Attracts "Big Players"
Transaction count shows how often smart contracts are triggered but is susceptible to bots and automation.
DeFi's transaction footprint is paradoxical. While its user base has declined, it still generates over 240 million transactions weekly—more than any other Web3 category. Exchange-related activity (which may overlap with DeFi) further solidifies DeFi's lead, with crypto gaming at 100 million weekly transactions and the "Other" category (excluding social but including AI) at 57 million.
Total Value Locked (TVL) is more robust. According to DefiLlama, DeFi TVL has reached $137 billion, up 150% since January 2024, though still below the peak of $177 billion in late 2021.
The divergence between rising TVL and falling UAW reflects a key theme of this crypto cycle: institutionalization. Capital is concentrating in fewer, larger wallets, now including funds. This trend is still nascent as DeFi faces regulatory uncertainty in many jurisdictions.
Nonetheless, institutions are dipping their toes by providing liquidity to permissioned pools, lending against tokenized treasuries via platforms like Ondo Finance and Maple (SYROP)—the latter also known for its partnership with investment bank Cantor Fitzgerald.
Meanwhile, protocol-level automation from DeFi services like Lido (LIDO) or EigenLayer further depresses wallet activity as DeFi evolves into a capital-efficient layer for large-scale yield generation rather than retail participation.
Other Use Cases Dominate Ethereum Gas Consumption
Transaction data alone doesn't tell the whole Web3 story, while Ethereum's gas usage reveals the true distribution of economic and computational load.
Data from Glassnode shows that while DeFi has been a core sector for Ethereum, its gas consumption now accounts for just 11%; NFTs, which held a significant share in 2022, have fallen to 4%.
In contrast, the "Other" category has surged from around 25% in 2022 to over 58% today. This category encompasses areas like Real World Asset tokenization (RWA), Decentralized Physical Infrastructure (DePIN), AI-powered DApps, and other more or less novel services that could define Web3's next growth phase.
RWA, in particular, is often cited as one of crypto's most promising areas. Excluding stablecoins, its total size has jumped from $15.8 billion in early 2024 to $25.4 billion today, involving approximately 346,000 token holders.
Does Price Follow the Web3 Narrative?
Asset prices rarely move in lockstep with on-chain activity. Short-term hype can drive prices up, but sustained growth often aligns with sectors demonstrating real utility and adoption. Over the past year, infrastructure and yield-oriented projects have significantly outperformed those driven primarily by narrative.
Smart contract platform tokens saw the strongest gains, with the top ten averaging a 142% increase, led by HBAR's 360% surge and XLM's 334% rise. As the foundational layer of Web3, their price growth shows investor confidence in the sector's long-term development. DeFi tokens also performed well, averaging a 77% year-over-year increase, with Curve DAO (CRV) up 308% and Pendle (PENDLE) up 110%.
The top ten RWA tokens averaged a 65% gain, primarily driven by XDC (+237%) and OUSG (+137%). Despite highlights like JasmyCoin (+72%) and Aethir (+39%) in the DePIN sector, the overall average increase hovered around just 10%.
AI tokens clearly lagged: the top ten pure AI projects were down 25% year-over-year, with only Bittensor (TAO) posting a gain (+34%). Gaming tokens mostly saw declines, with only SuperVerse (SUPER) skyrocketing 750% over the past 12 months. As for social tokens, they remain largely absent from the crypto landscape, with major protocols still lacking native assets.
Overall, Web3 investment remains concentrated in established areas, boosting the native currencies of major smart contract platforms. Yield-oriented DeFi and RWA tokens also delivered solid returns. In contrast, the most hyped narrative sectors—AI, DePIN, and Social—have yet to translate buzz into substantial token gains.
As adoption deepens and more sectors mature, the gap between narrative and performance may narrow. But for now, investor confidence remains firmly rooted in the building blocks of the decentralized economy.
