August DApp Report: On-chain activity has cooled down, while NFTs continue to warm up

2025-09-07 23:05:18

Collection

On-chain innovation has not slowed down.

Original author: Dappradar

Original compilation: Felix, PANews

Summer has passed, and September often marks a new beginning, not only in daily life but also in the market. A mid-summer bull market emerged this year, and the industry has clearly entered a new growth phase.

On-chain activity in August may have slightly cooled down, but the situation beneath the surface is quite different. DeFi TVL reached an all-time high, institutions entered the market in large numbers, NFT activity heated up again, and AI dapps developed rapidly, even as the hype cycle changed. Meanwhile, security incidents serve as a reminder that the industry is still evolving.

Data clearly indicates one thing: Web3 has not stagnated. As we enter autumn, the trend of this bull market is becoming increasingly evident. This is reflected not only in speculative behavior but also in adoption rates, innovation, and real capital flowing onto the chain.

Key Points

The number of daily active unique wallets (dUAW) in August decreased by 18%, falling to 17 million, indicating a cooling of on-chain activity during the summer.
Although activity in gaming DApps slightly declined by 4%, it still dominated, while NFT activity rose by 7%, and social DApps fell by 63%.
Driven by Ethereum's strong performance, DeFi TVL reached an all-time high of $292 billion in August, a 13% increase from July.
Cryptocurrency market capitalization hit new highs: total market cap reached $3.82 trillion, with non-BTC assets at $1.59 trillion, surpassing the peak in 2021.
Ethena's USDe supply grew by 42% to $12.4 billion, with revenue reaching $61 million, solidifying its position as the most profitable stablecoin in DeFi.
NFT trading volume increased by 9%, with Courtyard surpassing Ethereum blue-chip projects to lead all collections.
August saw losses of $159 million due to vulnerabilities, a 20% increase from July, with one phishing attack causing a loss of $91 million.

August Dapp Cooling Down

In August, on-chain activity clearly cooled down. The daily active unique wallets (dUAW) in the Dapp industry decreased by 18%, falling to 17 million.

Two sectors were hit the hardest: social applications fell by 63%, and AI applications dropped by 49%. While this decline was unexpected, it aligns with natural cycles. Both sectors experienced months of rapid growth and heavy promotion, but maintaining that momentum and participation is a significant challenge. The vision for these two product categories remains exciting. In the long run, they may reshape the entire industry, but for now, this decline indicates that their development is still in the early stages.

On the other hand, other categories saw growth. NFT activity increased by 7%, reclaiming the second position in industry dominance. Given the market slowdown earlier this year, this rebound is surprising. Although gaming DApps saw a slight decline in activity (4%), they re-emerged as the most active sector, demonstrating the strong resilience of this category as a pillar of on-chain participation.

Looking at the most active Dapps in August, they spanned DeFi, gaming, social, and AI sectors, but no single category dominated completely. This highlights the current state of the industry: a diverse yet balanced ecosystem, with each sector exploring its unique advantages.

DeFi TVL Hits New High, Institutions Entering the Market

In August, DeFi's performance confirmed many previous speculations. TVL reached $292 billion, a 13% increase from July, primarily driven by Ethereum's strong performance. Both DeFi TVL and ETH prices hit all-time highs in August, highlighting the strong growth momentum in the industry.

Across the entire cryptocurrency market, the overall market also showed strong momentum:

The total market capitalization of cryptocurrencies, including BTC, rose by 4% in 30 days, reaching $3.82 trillion, setting a new all-time high.
The total market capitalization of cryptocurrencies excluding BTC increased by 15%, reaching $1.59 trillion, slightly above the peak set in November 2021.
The total market capitalization of cryptocurrencies excluding BTC and ETH rose by 9.41%, reaching $1.05 trillion, also a new high.

What’s the conclusion? Ethereum continues to maintain super-fast growth, while altcoins remain largely subdued. However, since the beginning of this year, the market cap of altcoins has only increased by 12%, suggesting that we may be in the mid-bull market, just before altcoins typically start to accelerate.

In addition to market data, August also saw a series of product and institutional milestones:

Protocol Innovations: Uniswap's Unichain enabled Flashblocks, achieving a block confirmation time of 200 milliseconds, comparable to CEX speeds, and has MEV resistance. Base and other OP Stack chains have also adopted this upgrade through Flashbots. Additionally, Pendle Finance launched Boros on Arbitrum, allowing users to trade perpetual funding rates directly on-chain. Finally, Synthetix announced its return to the Ethereum mainnet and launched a new perpetual contract exchange, indicating that the L1-L2 hybrid experiment is far from over.
Institutional Adoption: Aave Labs launched Horizon, an institutional lending platform that provides institutions access to tokenized government bonds and RWA. Aave Horizon has attracted institutions such as VanEck, WisdomTree, Hamilton Lane, Circle, and Ethena. Moreover, Ripple's RLUSD stablecoin has also joined Horizon's risk asset market, expanding the range of collateral options. Meanwhile, Chainlink further solidified its position as the core data layer for cryptocurrencies by integrating foreign exchange and precious metals data from the Intercontinental Exchange (ICE), connecting TradFi-level data with DeFi infrastructure.
Stablecoins and Yield: Ethena's USDe supply surged by 42% to $12.4 billion, with protocol revenue hitting a new high of $61 million in August. Its rapid growth solidifies USDe's position as one of the most profitable and controversial stablecoin models in DeFi, sparking ongoing discussions about sustainability and fee acquisition.

This bull market feels different. Unlike past cycles, institutions are now shaping market narratives and infrastructure. Market growth is no longer dominated by retail investors but led by innovative financial products, investment funds, and governments embracing the technology.

AI DApp Heat Cools in August

AI has become one of the most transformative forces today, reshaping not only technology but also daily life. However, in the blockchain space, August saw a slowdown in development. As mentioned in the industry overview, the activity of AI DApps decreased by 49%, indicating that even the hottest sectors are not immune to cycles. Nevertheless, top AI projects still rank highly, and new entrants continue to push the boundaries of possibility.

New AI protocols introduced this month include:

Vibely: An AI companion designed to alleviate loneliness and anxiety.

Calories Cash: A Telegram-based AI agent that estimates calories based on photos of food taken by users, allowing them to earn token rewards.

However, the headline news this month comes from Numerai, a decentralized hedge fund built entirely on machine learning models contributed by thousands of data scientists. Numerai secured $500 million from JPMorgan Asset Management, nearly doubling its assets under management and causing its NMR token to soar over 100% within days. The fund's performance is driven by AI models staked with NMR, meaning JPMorgan's support is not just a capital influx but also a validation of AI-driven asset management coordinated through blockchain incentives.

On the infrastructure side, Render Network is entering the AI space by introducing high-end GPUs to support decentralized machine learning through trials of computing services in the U.S. This expansion from graphic rendering to other fields positions Render as a strong competitor to cloud giants, with node operators earning RNDR rewards. Similarly, Bittensor launched a new governance module (dTAO), giving token holders more control over upgrades and strengthening TAO's coordinating role in the decentralized AI ecosystem.

The Artificial Superintelligence (ASI) alliance, composed of Fetch.ai, SingularityNET, and Ocean Protocol, focuses on developer engagement. August's hackathon showcased AI agent use cases ranging from DeFi automation to decentralized data sharing. While the FET token remained stable, the ecosystem's $50 million buyback plan and collaborative governance framework lay a solid foundation for long-term growth.

In summary: even as the heat cools, AI in the crypto space is rapidly evolving. Institutional capital, decentralized infrastructure, and an active community are now driving the evolution of this field, indicating that this is not just hype but a sustained phase of building decentralized AI.

NFT Momentum Strong, Courtyard Makes History

In August, the NFT market continued to gain momentum. Trading volume increased by 9%, despite a 4% decline in NFT sales, indicating that while the number of assets traded decreased, collectors are paying higher prices per transaction.

This made July and August the strongest two months for NFT trading volume and sales since February 2025. Various signs indicate that people are returning to the NFT space. This revival is partly driven by mainstream adoption. In Ibiza, the world-renowned nightclub Hi partnered with The Night League and London's W1 Curates to open the first permanent NFT art gallery within the club. Featuring immersive digital installations showcasing works by renowned crypto artists such as Beeple, Mad Dog Jones, WhIsBe, and KidEight, this marks a breakthrough for NFTs beyond the Web3 circle.

Another driving factor is Base, whose low minting costs and speculation around upcoming airdrops have spurred NFT activity. Base has now risen to become the third-largest chain by trading volume, highlighting how scaling solutions impact NFT adoption.

Ethereum remains strong, holding a 61% dominance in the NFT industry. In August, developers launched the ERC-8004 "trustless agent," a proposed standard that uses NFTs as the unique on-chain identifier for autonomous programs. This will allow AI systems and dApps to securely recognize and interact with each other using NFT-based IDs and reputation layers.

In other developments, Solana made progress in scalability, successfully conducting stress tests with over 100,000 transactions per second, ten times the previous average. This initiative positions Solana as a strong competitor for hosting large-scale NFT and gaming markets. On the product front, Solana wallet Phantom acquired the NFT analytics platform Solsniper, planning to integrate its wallet tracking and sniping tools into the Phantom app.

In market developments, Blur surpassed OpenSea, capturing 22% of total NFT trading volume, thanks to its aggressive rollout of new features and liquidity incentives. Meanwhile, OpenSea launched a beta version of its Model Context Protocol (MCP) server, an open standard that provides real-time NFT and wallet data to AI applications across more than 20 chains, placing it at the intersection of NFTs and AI.

In collectibles, the biggest surprise came from Courtyard, which became the highest trading volume NFT collection, even surpassing Ethereum's blue-chip projects. Courtyard's momentum was boosted by a $30 million Series A funding round at the end of July, aimed at expanding its model of bringing real-world collectibles on-chain and providing instant liquidity and verifiable provenance. The rise of Courtyard and platforms like Phygitals on Solana indicates that RWAs will become a dominant trend in NFTs in the second half of 2025.

Collaborations among blue-chip projects also made headlines. Azuki partnered with Swiss watchmaker H. Moser & Cie to launch "Elements of Time," a series of luxury watches connected to Ethereum. Each watch is equipped with an NFT-based physical-backed token (PBT) to verify its authenticity and ownership.

Generative art also reached a milestone. Art Blocks announced the upcoming launch of its 500th project, celebrating its fifth anniversary. The "Art Blocks 500" series, set to launch in November, will cover all six of its categories and mark the end of its Curated series, signaling the conclusion of the first era of on-chain generative art.

What’s the conclusion? The NFT market is heating up again.

August Sees 20% Increase in Web3 Attack Incidents

August was another tough month for Web3 security. According to the REKT database, losses from hacks and exploits reached $159 million, a 20% increase from July. However, compared to previous months, August's data is not particularly striking.

The most notable incident in August was a large-scale phishing attack, accounting for 57% of total losses. Victims lost 783 bitcoins (approximately $91 million) in a complex social engineering scam, with attackers impersonating customer service representatives from exchanges and hardware wallets. This theft occurred a year after the Genesis creditor exploit, which resulted in a $243 million loss, and the stolen funds were laundered through privacy-focused mixers like Wasabi Wallet.

The second major incident occurred at the Turkish exchange BtcTurk, which reportedly suffered a hack, resulting in losses of approximately $48 million to $50 million. The stolen assets came from the platform's hot wallet. During the investigation, while deposits and withdrawals were suspended, local fiat operations and trading services remained normal.

Another notable attack targeted Odin.fun, a meme coin issuance and trading platform based on Bitcoin. Attackers manipulated liquidity in its automated market-making tool, stealing 58.2 bitcoins (approximately $700,000).

This month again highlighted the importance of security awareness in Web3. From phishing to hot wallet thefts, attackers are continuously improving their tactics. It is essential to protect assets, carefully verify communication sources, and use secure storage methods.

Conclusion

August highlighted that the DApp industry remains vibrant. Although overall activity has cooled down, DeFi TVL soared to an all-time high, NFTs regained growth momentum, and despite a decline in usage, AI dapps continue to attract institutional attention. Meanwhile, security incidents serve as a reminder that vigilance is more important than ever.

However, it is worth noting that this cycle is "different." Institutions are no longer sitting on the sidelines but are actively shaping the market through capital, partnerships, and infrastructure. As we enter the final quarter of 2025, the interplay between retail trends, institutional adoption, and technological breakthroughs will determine the future direction of the industry.

One thing is clear: on-chain innovation has not slowed down.

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