The DeFi vs NFT Battle Takes an Unexpected Turn

They were thought fit for the digital museum, stored away in the drawers of the 2021 bull market. Yet, NFTs haven’t said their last word. After months of lethargy, the market is regaining color and even surprising crypto players. Better still, they have just overtaken DeFi in number of active users, reversing a well-established trend. Behind this rebound are diverse uses and a strategy that appeals as much to brands as to seasoned investors.

In Brief

• NFTs recorded $530M in July, with an average price doubled to $105.
• DeFi reached a record $270B in total value locked, despite fewer users.
• Brands like Nike and Rolex explore NFTs for authentication and marketing.
• Hacks cost $132M in July, highlighting the ongoing fragility of the Web3 ecosystem.

NFTs Lead the Dance, DeFi Holds the Cash

In July, DeFi achieved a feat: $270 billion in total value locked (TVL), a historic record. But this financial triumph masks an unexpected reality: in terms of users, NFTs have taken the lead. 3.85 million daily active wallets interacted with NFT dapps, slightly more than DeFi, out of a total 22 million. The explanation partly lies in the hegemony of Blur, capturing up to 80% of ETH volume, attracting professional traders and loan enthusiasts through its Blend protocol. OpenSea, on the other hand, remains the leader in daily active users (27,000 traders) thanks to a multichain and diversified offering. Zora attracts creators with a low-cost mint via its Layer 2 solution and its $ZORA token. As DappRadar notes:

NFT trading volumes surged by 96%, propelling the sector ahead of DeFi in user numbers.

NFT: From Speculative Boom to the Era of Utility

July figures speak: +96% trading volume ($530 million) compared to June, but -4% in transactions. Result: an average price doubled, rising from $52 to $105. Blue-chip collections, like CryptoPunks (+25% in one month), drive this rebound: 9 of the 10 biggest NFT sales in 24 hours were Punks. Brands are not staying behind. Nike teams with EA Sports to launch virtual sneakers, Louis Vuitton and Rolex explore blockchain authentication, while Coca-Cola China tests digital collectibles. Use cases are expanding: digital identity, event ticketing, gaming, tokenization of real assets. According to DappRadar:

NFTs are evolving from a simple trend to utility, shifting from collectibles and culture to identity, ticketing, gaming, and tokenization of real assets.

This shift towards utility marks a strategic change: fewer impulse buys, more integration into digital services.

A Web3 in Permanent Recomposition

In the crypto ecosystem, the sector hierarchy changes fast. In July, gaming represented 22.4% of dapp activity, ahead of AI (18.7%) and NFTs (17.5%). DeFi, although declining in users, remains essential for capital: ETH surged 60% in a month – Ethereum’s crypto recently crossed the $4,000 mark –, and staking rewards reached 29.4% APY. On Solana, Hyperliquid generated 35% of blockchain revenues, managing 60% of daily perpetual volume and $5.1 billion bridged in USDC. But not everything is rosy: exploits and hacks cost $132 million in July, a +16% increase from June. Key figures that redraw the Web3 ecosystem:
• $270B: DeFi TVL record as of July 28;
• $530M: NFT volume in July, +96% month-over-month;
• 3.85M: daily active wallets on NFT dapps;
• $132M: losses due to exploits in July.
Facing this picture, regulation advances: in the United States, the GENIUS Act and the CLARITY Act pave the way for smoother integration between decentralized and traditional finance. “Project Crypto”, presented by the SEC, even plans specific standards for DeFi. NFTs are no longer just a trend: they are establishing themselves as a lever for transformation in the crypto universe. By diversifying their uses, they are creating new bridges between digital assets and traditional markets. A dynamic that could, in the long term, profoundly change how exchanges and trading are organized in Web3.

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Frequently Asked Questions (FAQ)

NFT vs. DeFi User Activity

Q: Which sector had more active users in July, NFTs or DeFi? A: NFTs surpassed DeFi in the number of active users in July, with 3.85 million daily active wallets interacting with NFT dapps compared to DeFi's user base. Q: What contributed to the increase in NFT active users? A: The rise in NFT users is partly attributed to platforms like Blur, which captured a significant portion of ETH volume, and Zora, which attracts creators with low-cost minting options. OpenSea also remains a strong contributor due to its multichain and diversified offerings.

NFT Market Performance

Q: How did NFT trading volumes perform in July? A: NFT trading volumes surged by 96% in July compared to June, reaching $530 million. Q: What was the average price of an NFT in July? A: The average price of an NFT doubled in July, rising to $105 from $52 in the previous month. Q: Which NFT collections are driving the current market rebound? A: Blue-chip collections, such as CryptoPunks, are leading the rebound, with 9 out of the 10 biggest NFT sales in a 24-hour period being CryptoPunks.

Brand Adoption of NFTs

Q: How are brands utilizing NFTs? A: Brands are exploring NFTs for various use cases, including authentication (e.g., Louis Vuitton, Rolex), marketing campaigns (e.g., Nike with EA Sports for virtual sneakers), and digital collectibles (e.g., Coca-Cola China). Q: What are some of the emerging use cases for NFTs beyond collectibles? A: NFTs are expanding beyond collectibles to include applications like digital identity, event ticketing, gaming, and the tokenization of real-world assets, indicating a shift towards utility.

DeFi Market Status

Q: What was the Total Value Locked (TVL) in DeFi in July? A: DeFi reached a historic record of $270 billion in Total Value Locked (TVL) in July. Q: Despite its record TVL, how did DeFi perform in terms of user numbers? A: Despite the high TVL, DeFi saw fewer active users compared to NFTs in July.

Web3 Ecosystem Trends

Q: What was the dominant dapp activity sector in July? A: In July, gaming represented the largest share of dapp activity at 22.4%, followed by AI (18.7%) and NFTs (17.5%). Q: What were the total losses due to exploits and hacks in July? A: Exploits and hacks resulted in losses of $132 million in July, an increase of 16% from June. Q: What regulatory developments are impacting the crypto space? A: In the US, the GENIUS Act and CLARITY Act are paving the way for better integration between decentralized and traditional finance, while the SEC is planning specific standards for DeFi.

Crypto Market AI's Take

The evolving landscape where NFTs are gaining more active users than DeFi highlights a significant shift in the crypto market. This trend underscores the growing demand for utility-driven digital assets beyond pure speculation. As brands increasingly integrate NFTs into their marketing and authentication strategies, the perceived value and real-world application of these digital assets are expanding. This aligns with our vision at Crypto Market AI to leverage artificial intelligence for insightful market analysis and to identify emerging trends. Our platform provides tools and data to help navigate these shifts, offering insights into how AI can be applied to understand and capitalize on the growing utility of NFTs and the broader digital asset space.

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• The DeFi vs NFT Battle Takes an Unexpected Turn

Source: The DeFi vs NFT Battle Takes an Unexpected Turn by Mikaia ANDRIAMAHAZOARIMANANA