Web3 activity is shifting as DeFi consolidates into fewer hands and emerging sectors like RWA and DePIN drive broader user adoption and diversify use cases.
With the altcoin market cap now hovering around $1.5 trillion, Web3 has become essential to watch for understanding crypto’s broader dynamics, especially as the 2022–2026 cycle unfolds differently from previous ones. Unlike past cycles where DeFi and NFTs monopolized attention, today’s Web3 ecosystem is far more diversified. Transaction patterns are shifting, capital is flowing through new channels, and emerging use cases are reshaping what meaningful Web3 activity looks like.
Web3 usage picks up
Since the beginning of 2024, decentralized applications (DApps) have seen a sharp rise in user engagement, closely mirroring market sentiment. According to DappRadar, the number of weekly Unique Active Wallets (UAW) in crypto games surged by 325%, reaching nearly 35 million. Collectibles (NFT-related DApps) followed with an even steeper rise of 420%, now engaging around 28 million weekly users.
DeFi and exchange-related activity also increased, though less dramatically. These sectors peaked in UAW between November 2024 and January 2025, during the last major altcoin rally. Since then, their active user count has declined but remains well above 2023 levels. DeFi UAW grew 140% since early 2024, reaching 13 million, while exchange DApps rose 150% over the same period.
The most intriguing growth, however, comes from the “Other” category. This segment has been steadily rising since early 2024, now becoming the second largest in Web3 by UAW. “Other” includes quickly growing sectors like interoperability (bridges between blockchains), RWA (real-world asset tokenization), DePIN (decentralized physical infrastructure), AI-related Dapps, and other emerging services.
DeFi TVL surges, but user participation shrinks
The DeFi sector presents a paradox. On the one hand, DeFi now represents less than 10% of Web3’s unique active users, a sharp decline from 19% in Q2 2025 and 26% in Q1 2025. On the other hand, DeFi still generates the lion’s share of Web3 transactions—over 240 million per week.
Even more telling is the state of DeFi Total Value Locked (TVL). According to DefiLlama, DeFi TVL now stands at $137 billion, a 150% increase since January 2024, though still below its $177 billion all-time high from late 2021.
This divergence between TVL growth and UAW decline reveals a shift in how DeFi operates, and this shift is in line with this cycle’s main narrative — growing institutionalization of crypto. Capital is consolidating into fewer, larger wallets, which now also include funds. This trend is still young, as DeFi faces regulatory uncertainty in many jurisdictions. Still, institutions start participating in DeFi by providing liquidity in permissioned pools, lending against tokenized treasuries from platforms like Ondo Finance and Maple, known for its partnership with the investment bank Cantor Fitzgerald, or using DeFi protocols as backend settlement rails, a concept that is being explored in Singapore’s Project Guardian initiative.
Meanwhile, protocol-level automation offered by DeFi services like Lido or EigenLayer further reduces wallet activity, as DeFi is evolving into a capital-efficient layer where institutional players seek yield, while direct retail engagement diminishes.
Emerging Web3 sectors expand the user base
While DeFi continues to dominate transaction volume, the “Other” category currently generates around 57 million weekly transactions, marking a rather mediocre performance.
This shows that “Other” services are characterized by low-frequency, high-impact transactions. Activities like DAO voting, RWA minting, or cross-chain bridging don’t require constant interaction. As a result, these sectors engage large user bases but contribute fewer transactions per wallet compared to DeFi’s high-frequency, bot-driven activity.
The growth of “Other” reflects Web3’s maturing landscape, as use cases diversify from pure financial speculation to infrastructure and utility services. It also shows adoption expanding horizontally, attracting users interested in practical applications rather than chasing speculative DeFi returns.
Overall, the on-chain data paints a clear picture. DeFi is consolidating as the capital-intensive engine of Web3, while emerging sectors with occasional but meaningful user interactions are expanding Web3’s reach. This isn’t a decline. It’s a reconfiguration. Web3 seems to be evolving beyond its speculative past, towards a broader, multi-sector ecosystem where diverse forms of activity coexist, each with its own rhythm of capital and user engagement.
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