DeFi TVL Hits $237B on Institutional Inflows, Retail Wallets Drop 22% – A Divided Sector

DeFi total value locked (TVL) surged to a record $237 billion in Q3 2025, according to DappRadar, while daily unique active wallets across decentralized applications (DApps) declined 22.4% compared to the prior quarter. The divergence between institutional liquidity inflows and retail user engagement highlighted a key trend in the sector, with stablecoins and regulatory clarity driving TVL growth despite weaker on-chain activity.

The increase in DeFi TVL was attributed to several factors, including growing institutional exposure to Bitcoin and stablecoins, the enactment of the U.S. GENIUS Act, and infrastructure supporting real-world asset (RWA) tokenization. Stablecoin inflows alone reached $46 billion in Q3, led by Tether's USDT and Circle's USDC. New layer-1 chains, such as Plasma, which launched with $8 billion in TVL in its first month, further accelerated liquidity aggregation by specializing in stablecoin use cases.

Ethereum retained its position as the leading DeFi network with $119 billion in locked assets, though it experienced a 4% quarterly decline. BNB Chain, the third-largest DeFi network, saw a 15% TVL increase, driven by the launch of the perpetual decentralized exchange (DEX) Aster. However, data aggregator DefiLlama raised concerns about Aster's trading volumes, which closely mirrored Binance Perp volumes, prompting its delisting from the platform. Solana, meanwhile, faced a 33% drop in DeFi TVL to $13.8 billion, reflecting broader challenges in sustaining momentum.

The decline in DApp activity was most pronounced in AI and SocialFi categories. AI-focused DApps lost 1.7 million daily users, falling from 4.8 million in Q2 to 3.1 million in Q3. SocialFi DApps also saw a sharp drop, with daily wallets plummeting from 3.8 million to 1.5 million. DappRadar noted that the attrition in these categories underscored a broader shift away from user-centric DApps toward institutional-grade infrastructure.

Stablecoins continued to bridge traditional finance and crypto, with their total market cap approaching $300 billion. USDT and USDC maintained dominance at 58.7% and 24.7% market shares, respectively, while Ethena's USDe emerged as a significant player, growing from $5.3 billion to $14.7 billion in Q3. Plasma, a high-performance layer-1 chain for stablecoins, added $13.6 billion in DeFi TVL by Q3's end.

The U.S. legislative landscape also played a pivotal role. The GENIUS Act established a clear regulatory framework for stablecoins, mandating reserves in cash or Treasuries and annual audits for large issuers. The CLARITY Act, awaiting Senate approval, aimed to clarify jurisdictional disputes by assigning oversight of Bitcoin and Ethereum to the CFTC. These developments, alongside the Anti-CBDC Act, which blocked a Fed-issued digital dollar, reinforced private stablecoins as the backbone of the digital dollar ecosystem.

DappRadar emphasized that the Q3 data reflected a growing disconnect between institutional capital flows and retail participation. While DeFi TVL reached an all-time high, the drop in active wallets suggested that user adoption had not kept pace with liquidity growth. This trend raises questions about the sustainability of TVL increases and the need for projects to balance institutional appeal with retail engagement.

Source: [1] Cointelegraph (https://cointelegraph.com/news/defi-tvl-record-237b-dapp-wallets-drop-22-q3-2025)