Overview of Web3 Industry Development in July

In July, the Web3 industry showed an overall volatile trend. Although the number of daily active wallet users decreased by 8% to 22 million, NFT trading volume surged by 96%, surpassing DeFi activity for the first time in recent months. Meanwhile, the total value locked in DeFi reached a historical high of $270 billion, and the market capitalization of tokenized stocks increased by 220%.

However, the industry development also faces risks. Hacker attacks resulted in losses of $132 million, and the usage of most AI dapps has seen a double-digit decline. On the regulatory front, the United States has passed multiple cryptocurrency bills, and the global regulatory framework is gradually becoming clearer.

From strong performance of blue-chip NFTs to record flows of funds in DeFi, July proved that the Web3 industry is still thriving, just with a shift in direction.

Main Observations

• The average daily active wallet count in July was 22 million, a decrease of 8% month-on-month.
• Gaming applications account for the highest proportion at 22.4%, followed by AI at 18.7% and NFT at 17.5%.
• NFT trading volume increased by 96% to $530 million, with an average price doubling to $105.
• The total locked value in DeFi reached a new high of $270 billion on July 28, increasing by 30% month-over-month.
• Most AI DApp activity has declined, but Dmail, XPIN, and ChainGPT are steadily growing.
• In July, a loss of $132 million due to vulnerabilities, an increase of 16% compared to June.

Dapp Activity Cooling Down

In July, a typical summer growth slowdown occurred, with the number of daily active wallets decreasing by 8% to 22 million. The social sector experienced the largest decline, down 27% to 2.8 million. The AI sector fell by 14% to 4.1 million, while DeFi shrank by 6%. The gaming sector grew by 2%, and NFTs remained stable.

Gaming continues to lead the Dapp ecosystem, accounting for 22.4%, followed by AI(18.7%) and NFT(17.5%). DeFi has fallen behind NFTs from its dominant position two months ago, reflecting a shift in user behavior.

Most Popular Web3 Dapps

The Solana-based DEX continues to dominate the leaderboard. The memecoin craze is still ongoing, and these exchanges are important venues for retail activity. The game "World of Dypians" maintains a stable user base, driving a steady increase in activity. Two AI DApps have made it to the forefront, demonstrating that users' interest in AI-driven Web3 experiences has penetrated daily life.

Although DeFi has seen a decline in overall share, it still dominates the rankings. DeFi Dapps find it difficult to acquire users, but once successful, they often demonstrate higher activity and loyalty. In contrast, Dapps in areas such as gaming, social, or NFTs are more diverse, and user attention is more fragmented.

AI Dapp: Development, Challenges, and Prospects

In July, the activity of most AI DApps declined, but Dmail Network, XPIN Network, and ChainGPT steadily grew. Notable projects include:

• Dmail Network: Blockchain-based encrypted email service
• Exorde: Using AI to gather global news insights
• ChainGPT: AI-based crypto toolkit

Lightchain AI has launched a mainnet specifically designed for on-chain machine learning, showcasing the future direction of decentralized AI infrastructure. Theta Network integrates Amazon's Trainium and Inferentia chips, supporting use cases like "Quakebot." Aethir and Render Network are driving the implementation of decentralized computing.

The ASI Alliance has officially merged into the $ASI token, dedicated to creating a fully decentralized AGI stack. In the gaming sector, Elympics has launched the $ELP token to realize AI-driven "Agentic Gaming".

AI tokens such as TAO, RNDR, and AGIX are gaining much attention, with TAO receiving a $10 million investment. Researchers have released A1, an AI agent capable of autonomously exploiting smart contract vulnerabilities, demonstrating that AI is rapidly evolving as both a tool and a risk.

In terms of regulation, the United States has passed multiple bills to provide guidance for the AI and cryptocurrency sectors, and appointed an AI and cryptocurrency czar, marking an enhanced role of AI in the blockchain field.

DeFi TVL Hits New Highs

In July, DeFi performed strongly, with TVL increasing by over 30%, reaching $259 billion by the end of the month. On July 28, it hit a historical high of $270 billion, reflecting increased market confidence, enhanced liquidity, and growing user demand.

Tokenized stocks have become a highlight. Related wallets surged from 1,600 to 90,000, with a total market cap increase of 220%, indicating that RWA has reached a critical scale.

Ethereum's dominant position in the DeFi sector remains unchanged, with a TVL of $166 billion, far exceeding Solana's $23 billion. The price of ETH has surged nearly 60%, and the annualized yield for staking has risen to 29.4%, reflecting increased market confidence and participation.

On the Solana side, Hyperliquid has performed remarkably, generating 35% of the chain's revenue in July and handling over 60% of the 24-hour perpetual contract trading volume.

In terms of policy, the United States has established a stablecoin framework through the "Genius Act" and clarified the classification of digital assets with the "Clarity Act." The SEC Chairman announced "Project Crypto," outlining a roadmap for the integration of DeFi and traditional finance.

NFT Activity Beyond DeFi

The NFT market was vibrant in July, surpassing DeFi in activity. Trading volume increased by 96% to $530 million, but sales decreased by 4% to $5 million. The average price rose from $52 to $105, an increase of 103%. Blue-chip collections once again became the focus, with whales leading the trend.

Blur dominates Ethereum NFT trading volume, OpenSea leads in user numbers, and Zora gains attention with its creator-focused L2 network and token.

Traditional brands continue to engage in NFTs: Starbucks ends loyalty pilot, Nike advances digital products, and Louis Vuitton initiates identity verification pilots. NFTs are evolving from speculation into practical tools, shifting from collectibles to identity, ticketing, gaming, and tokenization of physical assets.

Vulnerability Causes $132 Million Loss

In July, losses due to vulnerabilities exceeded $132 million, an increase of 16% compared to June. Major events include:

• CoinDCX lost $44 million, internal accounts of the exchange were breached.
• GMX v1 lost $42 million, a contract vulnerability on Arbitrum was exploited.
• BigONE lost 28 million dollars due to unauthorized access to its hot wallet.

These events serve as a warning that Web3 security work still needs to be advanced. When participating in DeFi, NFTs, or AI DApps, be sure to check the permissions of smart contracts, avoid suspicious links, and use hardware wallets whenever possible.