NFTs Explained Simply — What’s Actually Happening in 2025?

Welcome back to the 60-Day Web3 Journey. This is Day 11.

So far, you’ve gone from “What is blockchain?” and “Why was Bitcoin a big deal?” to understanding Ethereum as a programmable blockchain, wallets and gas, smart contracts, and finally DeFi — where code replaces banks for trading, lending, and earning. Yesterday’s DeFi article showed how smart contracts can move billions of dollars without a traditional bank in sight.

Today, we’re staying with the same building block (smart contracts) but switching the use case: ownership, not just money. That’s where NFTs come in.

A lot of people say “NFTs are dead.” The truth in 2025 is more nuanced: the speculation bubble around cartoon JPEGs popped, but some very specific NFT use cases quietly kept going and even grew. This article will stay neutral: no hype, no funeral — just what NFTs are and where they actually make sense now.

What Is an NFT, Really?

NFT stands for non-fungible token. In normal language:

• Token: A record on a blockchain that says “this wallet owns X”.
• Non-fungible: Each token is unique, not interchangeable 1:1 like money.
• Smart contract: The piece of code that defines the rules for those tokens — who owns what, how transfers work, what metadata is attached.

If a fungible token (like ETH or USDC) is like a dollar bill — every unit is the same — then an NFT is like a concert ticket with your seat printed on it. Both are pieces of paper, but one is interchangeable and one isn’t.

Technically, an NFT is:

• A smart contract (for example, ERC-721 or ERC-1155 on Ethereum) deployed to a blockchain.
• A token ID inside that contract that maps to:
• an owner address, and
• metadata (image, traits, ticket info, etc.).

The important part: the NFT itself is the on-chain entry in the contract that points to some data. The picture or asset can be on IPFS, Arweave, or even a centralized server. The contract + token ID is what you truly “own.”

What Actually Happened to NFTs After the Hype?

The 2021–2022 cycle was dominated by:

• Profile picture (PFP) collections.
• Massive trading volumes.
• Floor prices driven more by speculation than by actual utility.

Then the market corrected hard. Global monthly NFT trading volume fell from tens of billions in 2021 to well under a billion in some months of 2023–2024. Many collections went to near-zero and mainstream interest moved on.

By 2025, the picture is more mixed:

• Overall trading volumes are far below the peak, but no longer in freefall.
• A few blue-chip collections still have active communities and liquidity.
• The “mint anything and flip it tomorrow” meta is mostly dead.
• Utility-focused NFTs — gaming items, tickets, loyalty passes — are growing as separate, quieter categories.

So if by “NFTs” you mean the speculative PFP casino, then yes, a lot of it is dead. If you look at NFTs as a tool for digital ownership and access, the story is different.

Real NFT Use Cases in 2025 (Beyond JPEGs)

Here are the areas where NFTs actually make sense today.

1. Gaming Items and In-Game Assets

In Web3 games, NFTs represent:

• Characters, skins, weapons, land, or in-game items.
• Assets that can be traded on open marketplaces instead of being locked inside one company’s database.

Why this matters:

• If designed well, your items can be sold or transferred even if the original game shuts down.
• Some ecosystems experiment with interoperability: using the same NFT across multiple games or experiences.

Gaming already had digital items with real emotional and monetary value; NFTs mostly change how they’re owned and traded.

2. Tickets and Access Passes

NFTs are increasingly used as:

• Event tickets for concerts, sports, conferences.
• Membership and access passes for DAOs, online communities, and clubs.

Why organizers care:

• Harder to forge than PDFs or screenshots.
• Easy to verify at the door with a wallet scan.
• Secondary markets can be tracked, and in some ecosystems, creators can enforce royalties on resales (depending on marketplace and chain support).

By 2025, there are live pilots and products using NFT ticketing for festivals, sports events, and Web3 conferences, with some platforms reporting reduced fraud and better tracking of resales.

3. Loyalty, Rewards, and Token-Gated Commerce

Brands are using NFTs as:

• Loyalty passes that unlock discounts, perks, or early access.
• Token-gated commerce, where only NFT holders can buy certain products or access private storefronts.

Examples:

• A coffee chain issues NFT loyalty cards that upgrade as you hit spending milestones.
• A fashion brand drops limited-edition items only accessible if your wallet holds a specific NFT.

Here, the NFT isn’t about “collectible art”; it’s a programmable access key sitting in your wallet.

4. Certificates, Identity, and Collectibles

Other emerging uses include:

• Certificates for course completions and on-chain credentials.
• Proof-of-attendance tokens (POAPs) for events and conferences.
• Digital collectibles tied to physical products (for example, buying a physical sneaker and getting a matching NFT to prove authenticity).

These aren’t trying to be speculative investments. They’re just new formats for receipts, badges, and mementos.

Are NFTs Dead or Just Different?

To stay neutral, separate the hype era from the infrastructure.

Where NFTs clearly failed:

• As a guaranteed investment class that “always goes up”.
• As a universal tool for speculation across any random picture collection.
• As a shortcut for projects with weak fundamentals to raise large amounts of money.

Most 2021–2022 PFP collections are illiquid or near worthless. Many promised metaverses, airdrops, and lifetime perks that never materialized.

Where NFTs are quietly working:

• In gaming ecosystems where digital items already had meaning and NFTs simply give them tradability and ownership outside a single platform.
• In ticketing and access, where NFT-based passes help with verification and resale tracking.
• In loyalty and memberships, where NFTs act as programmable keys and dynamic membership cards.
• In enterprise and infrastructure contexts, where companies treat NFTs as a generic standard for unique digital assets rather than speculative products.

Market data in 2025 supports this split:

• Overall NFT market cap and volume are much lower than 2021 highs, but not zero, with signs of stabilization and modest recovery in some segments.
• Gaming, utility, and ticketing NFTs show more consistent growth compared to pure art/PFP collections.
• Institutional focus has shifted more toward DeFi and real-world assets, but NFTs remain a part of the broader Web3 stack, especially where unique digital objects are needed.

Connecting Back to Your Journey

For your 60-day series, you can frame NFTs like this:

• Day 8–9: You deployed a simple smart contract and saw that it can store and update data on-chain.
• Day 10: DeFi showed how smart contracts manage money — balances, trades, loans, interest.
• Day 11 (today): NFTs show how smart contracts manage unique things and access — tickets, in-game items, loyalty passes.

A simple mental model for your readers:

• DeFi = smart contracts that manage numbers (who has how much).
• NFTs = smart contracts that manage identities of things (which token ID belongs to whom, and what it represents).

Both use the same underlying technology. The difference is in what the contract is tracking.

Key Takeaways

• An NFT is a non-fungible token: a unique entry in a smart contract that maps a token ID to an owner and metadata.
• The 2021–2022 hype around PFP collections largely collapsed, and many speculative projects died or lost most of their value.
• In 2025, the healthier parts of the NFT space are:

1. Gaming items and in-game assets.
2. Ticketing and access passes.
3. Loyalty, memberships, and token-gated commerce.
4. Certificates, collectibles, and identity-like use cases.

• Market data shows a smaller, more utility-focused NFT market, not a booming casino but not a graveyard either.
• For your Web3 journey, NFTs are best understood as an ownership layer on top of the same smart contract foundations you already used, not as magic internet lottery tickets.

NFTs Explained Simply — What’s Actually Happening in 2025? was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.

Welcome back to the 60-Day Web3 Journey.

If you’ve been following along, you know what we’ve covered so far. Day 1, I introduced why I’m learning Web3 in public — to transition into Developer Relations and help non-technical people understand blockchain. Days 2–4, we broke down the fundamentals: what blockchain is, why Bitcoin was revolutionary, and how it challenged traditional money. Days 5–7, we went deeper into Ethereum — the programmable blockchain — and learned about wallets, gas fees, and why Layer 2 solutions exist to solve Ethereum’s scaling problems. Day 8, we understood smart contracts and dApps (decentralized applications) — the actual code that powers everything. And Day 9? We got our hands dirty. We deployed our first real smart contract on Sepolia testnet, felt the transaction cost, and saw how code lives permanently on a blockchain.

Now comes the moment where it all clicks.

You just deployed a smart contract on Ethereum and saw how code can live on a blockchain. Now comes the real question: what are people actually doing with these contracts?

The answer: they’re building an entirely new financial system. It’s called DeFi — Decentralized Finance — and it’s where smart contracts stop being abstract and become the backbone of how people trade, lend, borrow, and earn money without banks.

This is Day 10 of your 60-day Web3 journey. Let’s see what you’re about to enter.

What Is DeFi, Really?

DeFi is finance without a middleman. Instead of a bank holding your money, a smart contract does. Instead of a broker matching your trade, an algorithm does. Instead of a lender deciding if you qualify, code does.

Here’s the core idea: take every financial service you know — trading, lending, borrowing, investing — and rebuild it as code that anyone can use, anytime, from anywhere.

That’s DeFi.

The key difference from traditional finance:

Traditional Finance:

• A bank holds your money.
• Bank decides lending terms.
• You need approval to borrow.
• Trades happen during market hours.
• You trust the bank won’t fail.

DeFi:

• A smart contract holds it
• Algorithms and math decide lending terms.
• You need collateral (held by code)
• Trades happen 24/7/365
• You verify the code is secure.

How DeFi Actually Works

Let me walk you through the three biggest types of DeFi protocols right now:

1. Decentralized Exchanges (DEXes) — Swap Tokens Instantly

A DEX is like a vending machine for crypto. You put in one token, you get another token out. No human operator. No waiting. No fees to a company.

The most famous is Uniswap. As of December 2025, Uniswap has over $5.7 billion locked in it — that means people have deposited $5.7B in tokens across thousands of trading pairs. Here’s how it works:

1. Someone (a “liquidity provider”) deposits two tokens into a smart contract — say, $1 million in ETH and $1 million in USDC.
2. The contract now has a “pool” of both.
3. You come along and want to swap 10 ETH for USDC.
4. You send your 10 ETH to the contract.
5. The contract automatically calculates the price and sends you USDC back.
6. The liquidity provider earns a tiny percentage of every swap — their reward for putting in capital.

No middleman. No trading desk. No commission. Just code.

Uniswap v4 (their newest version, launched mid-2025) hit $1 billion in TVL in just 177 days and has processed over $1 trillion in annual trading volume. That’s real money moving through smart contracts.

2. Lending Protocols — Earn Interest, Take Loans

What if you could deposit your crypto and earn interest — without a bank? That’s Aave.

Aave is the biggest lending protocol in DeFi. As of mid-2025, it has over $60 billion in deposits and $29 billion in outstanding loans. It controls roughly 60% of the entire DeFi lending market.

Here’s the flow:

1. You deposit 100 USDC into Aave.
2. Aave lends it out to someone who needs to borrow.
3. That borrower pays interest (let’s say 5% APY).
4. You earn that interest minus a small cut for the protocol.
5. You can withdraw your money + interest anytime.

If you want to borrow, you do the reverse:

1. You deposit collateral (say, 1 ETH worth $2,500).
2. Aave lets you borrow up to 70% of that ($1,750 in USDC).
3. You pay interest on your loan.
4. When you repay + interest, you get your collateral back.

No credit check. No bank manager. No waiting for approval. Just math: if you have collateral, you can borrow.

In August 2025 alone, Aave saw its TVL grow by 55%. In Q2 2025, the protocol generated $122 million in fees. Real money. Real usage.

3. Yield Farming — Stake Tokens, Earn Rewards

This is the newcomer to the DeFi toolkit, and it’s wild.

Yield farming is when you lock up tokens in a protocol and earn rewards in return. Sometimes the rewards come from protocol fees. Sometimes they come from newly minted tokens the protocol gives you as an incentive to provide liquidity.

Example: You deposit ETH and USDC into Uniswap’s liquidity pool (the vending machine from section 1). For providing that liquidity, you earn a share of trading fees plus UNI tokens as a bonus. That’s yield farming.

It sounds simple, but it’s powerful: DeFi protocols can incentivize behavior they want (liquidity provision, borrowing) by paying users with newly minted tokens.

Why Does This Matter? (2025 Context)

DeFi isn’t theoretical anymore. Here’s what’s actually happening:

Scale:

• Over 14.2 million wallets have used DeFi protocols by mid-2025 (Source: CoinLaw DeFi Statistics 2025).
• DeFi TVL across all protocols is $123.6 billion, a 41% increase year-over-year (Source: NASSCOM Blockchain Community).
• Weekly transaction volume exceeds $48 billion (Source: TradeSanta DeFi Trends 2025).
• The average DeFi user conducts 11.6 transactions monthly — it’s becoming routine (Source: CoinLaw DeFi Statistics 2025).

Adoption:

• Gen Z (ages 18–25) now makes up 38% of first-time DeFi wallet users in 2025 (Source: Brave New Coin — Gen Z and DeFi).
• Mobile DeFi wallet usage grew by 45%, now accounting for 58% of all users (Source: CoinLaw DeFi Statistics 2025).
• DeFi search interest on Google Trends hit 92 out of 100 — its highest in 18 months (Source: CoinLaw DeFi Statistics 2025).
• Active DeFi users reached 20 million unique wallets globally — a 2,000% increase since 2021 (Source: CoinLaw Crypto Demographics 2025).

Institutional Money:

• Real-world assets (RWA) lending surged to $1.9 billion for commodity-backed tokens (Source: CoinGecko RWA 2025 Report).
• Tokenized private credit now exceeds $12 billion in TVL (March 2025), representing over 50% of the RWA market (Source: Antier Solutions — Top Performing Tokenized Assets 2025).
• Aave founder Stani Kulechov launched Horizon (RWA-backed lending platform) which surpassed $500 million in deposits as the fastest-growing platform for institutional RWA-backed loans (Source: Chainlink Today — Stani Kulechov).

This isn’t a niche anymore. This is infrastructure.

Deep Dive: Watch This

If you want a structured breakdown of everything DeFi, YouTuber faixal_abbaci released a comprehensive 32-minute DeFi Masterclass (December 2025) that covers:

• What DeFi is and why it matters
• How DEXes, lending protocols, and liquidity pools actually work
• Staking, yield farming, and real-world asset tokenization
• DeFi security risks and best practices
• Advanced strategies and the future of finance

The Connection to Your Deployed Contract

Remember your SimpleStorage contract from Day 9? It stored a number permanently on the blockchain.

That’s the mechanism behind DeFi. Aave, Uniswap, all of it — they’re just more sophisticated smart contracts doing exactly what yours did: storing data and executing rules when triggered.

The difference:

• Your contract stored one number.
• Aave stores thousands of lending positions, interest rates, and collateral amounts.
• Uniswap stores thousands of token pairs and liquidity pools.

But the principle is identical: code running on a blockchain, with no middleman, doing the job that bankers used to do.

What’s the Catch?

DeFi is powerful, but it’s not without risk:

1. Smart contract bugs — If the code has a flaw, money can get stuck or stolen. Aave has been audited hundreds of times, but risks remain.
2. No insurance — If Aave crashes tomorrow, your deposits are gone. Banks have FDIC insurance. DeFi doesn’t.
3. You need to understand what you’re doing — There’s no customer service to call if you send your tokens to the wrong address.
4. Gas fees — Every transaction costs money to execute on Ethereum.
5. Price risk — If you borrow against ETH and the price crashes, you might get liquidated (forced to pay back your loan).

These are real risks. But as of 2025, millions of people believe the upside (financial access, high returns, no middleman) outweighs the downside.

Hands-On: Try It Yourself

Want to see DeFi in action? Here’s the simplest starting point without spending money:

1. Go to Uniswap (https://uniswap.org) — don’t trade, just explore.
2. Look at the pools, the trading volume, the pairs being swapped every second.
3. Connect your MetaMask wallet (read-only is fine).
4. Pick a token pair — say ETH → USDC — and see the swap price.
5. Click on the “Pool” section and see where liquidity providers have deposited capital.

Notice that there’s no login page, no terms and conditions, no “sign up” button. It’s just code. Open to everyone. Available 24/7.

That’s the revolution.

What Happens Next?

You now understand:

• How smart contracts power a new financial system.
• Why DeFi is growing faster than traditional finance in adoption.
• How the biggest protocols (Uniswap, Aave) actually work.

Tomorrow (Day 11), we’ll talk about NFTs — which, like DeFi, are powered by smart contracts but solve a completely different problem.

But before you go, here’s a thought: if DeFi lets you trade, lend, and borrow without permission, then what’s stopping someone from doing the same thing with digital art, game items, or concert tickets?

That’s NFTs. That’s Day 11.

Key Takeaways

• DeFi = Finance without a middleman, powered by smart contracts.
• Three main types: DEXes (Uniswap for trading), Lending (Aave for earn/borrow), Yield Farming (staking for rewards).
• Real scale: $123.6 billion TVL, 14.2 million users, $48 billion weekly volume as of mid-2025.
• Real adoption: Gen Z makes up 38% of new DeFi users; mobile usage is 58% of total.
• Institutional growth: RWA sector at $12 billion TVL, Aave Horizon crossed $500M in deposits.
• Connection to your work: Everything you deployed in Day 9 is the foundation for DeFi protocols.

DeFi 101: Decentralized Finance was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.