In October 2025, the Web3 ecosystem exhibited an interesting dynamic: while overall daily active wallets fell modestly by 3 % to about 16 million, two segments clearly distinguished themselves — blockchain gaming and decentralized finance (DeFi).
A Strong Month for Gaming & DeFi
Data from DappRadar show that blockchain games accounted for 27.9 % of all decentralized application (dApp) activity for the month — the highest share recorded so far this year. Meanwhile, DeFi applications held steady at 18.4 % of overall activity — a respectable showing considering headwinds from market volatility and regulatory uncertainty.
DeFi: Resilient but Under Pressure
Even though DeFi’s share of activity remained stable, the sector faced meaningful pressure in October. The total value locked (TVL) in DeFi dropped by 6.3 % during the month, down to US $221 billion — and in early November had fallen further to roughly US $193 billion.
Key stresses included:
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A sharp market downturn on October 11 that triggered around US $20 billion in liquidations across leveraged positions, lending platforms and exchanges.
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A major incident at Stream Finance, which lost roughly US $93 million, sparking concerns about hidden systemic credit risk in stablecoins and lending protocols (with an additional estimated US $284 million in latent losses)
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Regulatory tailwinds such as a U.S. senatorial proposal to extend KYC requirements to non-custodial wallets — a move that many analysts believe may push DeFi activity offshore.
In response, major Ethereum-ecosystem DeFi participants formed the Ethereum Protocol Advocacy Alliance (EPAA), including names like Aave, Uniswap, Lido, Curve and The Graph, to coordinate policy advocacy and defend decentralized infrastructure.
Additionally, the oracle-platform RedStone launched “Credora,” a risk-rating protocol for DeFi credit, aimed at improving transparency and reducing hidden risks in lending platforms.
NFT & Transactional Uptick
Interestingly, despite the overall user-wallet drop, the non-fungible token (NFT) segment saw strong momentum in October: transaction volume rose roughly 30 % compared to the prior month, reaching around US $546 million across more than 10.1 million individual transactions — marking the highest monthly volume of the year for that category.
This suggests that even as certain segments cooled, user engagement remains vibrant in experiential or game-adjacent on-chain activity.
What It Means for Web3 and Looking Ahead
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Gaming leads the charge. The fact that blockchain games are capturing the largest slice of dApp-activity share signals that user engagement is shifting toward fun, interactive experiences — not just financial protocols.
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DeFi’s foundation is stable, but conditions are tough. While DeFi kept its share of activity, the decline in TVL and external pressures mean the sector must continue to innovate and strengthen risk-governance.
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Regulation looms large. The push for KYC in non-custodial contexts and other oversight measures could reshape where Web3 activity occurs geographically and legally. Coordination among DeFi protocols may become increasingly important.
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NFTs and game-economy models matter. The rise in transactions suggests that on-chain utility beyond pure financial yield is gaining weight. That’s encouraging for projects building immersive experiences or token-driven economies.
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Watch wallet counts, but focus more on quality. While the total daily wallets dipped ~3 %, engagement depth — measured by transaction quality, frequency or cross-app activity — may be a more meaningful indicator than raw user numbers.
Final Thoughts
October 2025 presents a nuanced picture of Web3: growth isn’t uniform, but rather concentrated in specific segments that emphasize user-interaction (games) or inherently programmable finance (DeFi). While headwinds remain — especially for DeFi — the broader ecosystem appears to be evolving. Projects that align with user-centric experiences, transparent risk frameworks and regulatory awareness will likely be the ones that thrive heading into late 2025 and beyond.
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