Web3 gaming, DeFi maintain lead amid digital asset decline

As the market capitalization of digital currencies declined, a recent report highlighted the rise of Web3 gaming and decentralized finance (DeFi) projects in October. According to the report by DappRadar, these sectors exhibited notable resilience and growth, contrasting the broader downward trends in the cryptocurrency market.

Web3 gaming accounted for 27.9% of all unique active wallets in the decentralized application (DApp) ecosystem. On-chain activity showed that Web3 gaming attracted over 4.5 million daily active wallets, marking a 1% increase from September. Analysts attributed this growth to continuous innovation and improved customer experiences. Additionally, the sector witnessed the growth of NFTs, with a trading volume of $546 million in October. "Blockchain gaming continues to thrive through fresh experiences and consistent innovation," the report emphasized.

DeFi dApps represented 18.4% of the ecosystem, with projects like Pump.fun and Jupiter Exchange amassing 4.29 million and 1.93 million unique active wallets (UAW), respectively. Despite successes, the DeFi sector faced challenges, including nearly a dozen hacks and rising regulatory pressures. The total value locked (TVL) declined from $235 billion in September to $221 billion in October, triggered by the October 10 market crash, which wiped out over $20 billion in leverage positions. However, optimism remains as DeFi user activity began to rebound in early November.

Beyond gaming and DeFi, AI DApps accounted for 14.2% of activity, while social protocols represented 4.8%. Emerging sectors such as exchanges, gambling, and governance collectively contributed 14.5% of total user activity. Notably, AI startups captured nearly 46% of global venture capital investments in Q3 2025, a significant 38% increase year-over-year. This trend reflects growing exploration of AI-driven innovations by governments and enterprises, ranging from green transformation in Vietnam to advancing AI-powered infrastructure in Asia-Pacific.

Forecasts from Allied Market Research project that the metaverse market will reach a valuation of $1.2 trillion by 2030, up from $41.9 billion in 2020. This meteoric growth is driven by advancements in virtual reality (VR), augmented reality (AR), and blockchain technology. Innovations in AI, haptic technology, and spatial computing since 2023 have significantly enhanced the realism and scalability of the metaverse, enabling features such as digital ownership via NFTs and secure transactions.

Gaming remains the most significant use case for metaverse technologies, while sectors like content creation and social media are expected to record the highest compound annual growth rate (CAGR) over the next five years. Other key applications include virtual training, digital commerce, entertainment, healthcare, and manufacturing. Regionally, North America and Europe are poised to dominate the market, while the Asia-Pacific region is set to experience the fastest growth, driven by high smartphone penetration and a strong gaming culture.

Despite the rapid progress, there are concerns over data privacy, health implications, interoperability, and pricing models. Leading companies, including Alibaba, ByteDance, Meta, and Huawei, continue to spearhead innovation in the space, but experts warn that addressing these challenges will be crucial for maintaining sustainable growth in the metaverse ecosystem.