The NFT market has experienced a significant downturn since December, while artificial intelligence-powered dApps have emerged as the fastest-growing sector in Web3, according to DappRadar’s latest Industry Report published on March 6.
NFT Trading Volume Plunges by 63%
The report reveals that NFT trading volume has dropped sharply by 63% over two months, from $1.36 billion in December to $997 million in January, followed by a further decline to $498 million in February. Alongside this, NFT sales also fell by 16% in February, highlighting a cooling market.
Despite the overall decline, some collections have remained resilient. Pudgy Penguins sales rose by 25%, even as its prices adjusted downward. Similarly, Doodles made headlines by announcing its upcoming Solana-based DOOD cryptocurrency, sparking renewed interest in the collection.
Meanwhile, AI-integrated NFTs, such as Kaito Genesis, have gained traction. After partnering with Azuki, Kaito Genesis saw its floor price climb to 7.65 ETH, signaling that AI-enhanced digital assets are attracting a growing audience.
AI dApps: The Fastest Growing Web3 Sector
While the NFT market faces a downturn, the AI sector within Web3 has flourished. According to the report, AI-based decentralized applications (dApps) have registered the highest growth in the ecosystem.
- LOL, an AI-powered platform, saw its user base expand by 40%, reaching 5.1 million active wallets in February.
- Evermoon experienced an astounding 988% growth in adoption.
- AI-generated content dApps like Fractal Visions saw a 721% increase in user activity, underscoring the demand for AI-driven applications.
DeFi Market Also Takes a Hit
Alongside NFTs, the decentralized finance (DeFi) sector has seen a significant decline in total value locked (TVL), which dropped from $217 billion in January to $168 billion in February.
- Ethereum’s TVL fell by 27% to $97 billion, driven by a drop in liquid staking activity.
- Solana took the biggest hit, with its TVL shrinking by 33% to $15.4 billion, largely due to reduced activity on Raydium and Jupiter exchanges.
- Berachain, however, defied the trend, reaching $5.05 billion in TVL despite the overall market downturn.
- Aptos, one of the few blockchains to register growth, recorded a 6% increase in TVL to $1.83 billion.
Market Outlook
While NFTs and DeFi continue to experience headwinds, the rise of AI-based dApps signals a shifting trend in Web3 innovation. As AI-driven applications increase user engagement and adoption, they may represent the next wave of blockchain growth, even as traditional sectors such as NFTs and DeFi navigate a more challenging landscape.
The coming months will determine whether NFTs and DeFi can rebound or whether AI will continue dominating as the most rapidly expanding segment in Web3.
