AI vies for DApp dominance; Meta outlines new VR approach

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A new report by DappRadar has confirmed the rise of artificial intelligence (AI)-based decentralized applications (DApps) in recent months, racking up 2.2 million active users in 2025.

In its latest report, analysts at DappRadar said AI-themed DApps have increased their market share to 8.5%, with the biggest leap in the last quarter of 2024. They identified the emerging vertical as a potential game-changer for the broader DApp ecosystem, capable of sparking the next bull market.

DappRadar analytics point to the LOL project as the leading AI-themed DApp with an impressive 28.6 million unique active wallets (UAW). Dmail Network, Meet48, and Balance occupy second, third, and fourth place, respectively, with a combined UAW of around eight million.

“Even though the impact and importance of AI in the DApp space has yet to be crystalized, we believe this category is poised to grow further,” read the report.

Several factors are behind the steady rise of AI-based DApps, including the mainstream adoption of the emerging technology, the tokenization of AI services, and rising interoperability levels between Web3 and AI.

DappRadar’s report placed decentralized finance (DeFi) as the biggest category for DApps, with its 28.1% market share over the ecosystem. However, gaming applications have recently threatened DeFi’s leadership as both sectors compete for dominance.

Currently, gaming DApps control 27.8% of the market, less than a 2% difference from DeFi, and enthusiasts project a flippening in the coming months.

As games and DeFi compete for prominence, the report pointed out the growing influence of non-fungible token (NFT)-themed DApps after a prolonged, challenging period. Digital collectibles control an impressive 16.1% of active wallets, with SocialFi applications controlling 6.3%, leaving 13.1% for other DApp use cases.

A broader perspective shows that the DApp market declined, highlighting the decrease in total value locked (TVL) of DeFi protocols at the beginning of 2022. The report noted a 463% spike in security breaches in the ecosystem, with nearly $65 million lost in high-profile incidents involving BNB Chain Fortune Wheel and Phemex.

Meanwhile, AI applications in Web3 have become more commonplace recently, with Tether CEO Paolo Ardoino confirming plans to develop an AI-based Bitcoin wallet assistant and a translator.

In DeFi circles, AI appears through predictive analysis, trading bots, and risk management functionalities. Others are exploring applications in decentralized autonomous organizations (DAOs), metaverse development, and NFT creations to improve productivity and efficiency.

On job boards, AI job postings now surpass Web3 as traditional firms expand their search for AI talent and invest in upskilling their existing staff.

Meta prepares for next metaverse push

In other news, Meta (NASDAQ: META) has announced new enhancements for developers creating offerings in the metaverse ecosystem amid the remarkable adoption rates for its virtual reality (VR) hardware. However, critics have highlighted flaws in the latest development.

According to a statement by Meta’s VP of Metaverse Content, Samantha Ryan, the VR landscape is changing at a frenetic pace, forcing the company to rethink its strategy for developers. Ryan notes that the number of first-time Quest users has risen significantly over the last year while existing users are splurging on device upgrades.

The new demographic appears to be younger users with social and multiplayer experiences, triggering a shift in strategy. In the future, Meta projects younger users will drive the growth of the free-to-play (F2P) model for developers, effectively phasing out premium app designs.

While the executive says both models can exist in the space, critics argue that it could be the death of the premium business model.

New users, particularly those focused on media and entertainment, are powering the resurgence of 2D apps on Meta platforms with Amazon’s (NASDAQ: AMZN) Prime Video ranking as part of the top 10 most used applications.

The company says developers can use the Meta Spatial SDK to build apps around Quest devices to streamline development. Released in 2024, the SDK has shown significant promise in designing panel-style applications and interoperability between mobile experiences and VR.

“We need to make it easier to create MR [mixed reality] experiences, and our platform must be more accessible to a larger and more diverse set of developers,” said Ryan.

The company says it is expanding the functionalities of Horizon OS, the operating system for Quest devices, to improve developer productivity. Meta also confirmed the overhauling of its store interface, rolling out new categorization to ensure specific application tagging.

Ryan disclosed a move to improve app visibility on the Horizon mobile app while noting an improvement in search speed and payment functionalities. The rollout of the Quest Cash program and wallet support is considered a step in the right direction, giving developers improved control over their app pricing.

Not entirely happy

While Meta has announced sweeping changes, developers are not entirely pleased with the company’s direction. A younger demographic and the push to design applications for the new cohort will require developers to make “clone-style” applications with social applications, potentially limiting the reach of offerings in the short term.

Meta is gradually advancing with a 10-year plan, and optimists are eagerly watching in hopes that significant investments in AI and the metaverse will yield positive results. The company’s previous foray into digital assets did not go according to plan, forcing the company to ditch its stablecoin offering for innovation around new emerging technologies.

Watch: Reggie Middleton on DeFi, booms/busts & crypto regulation