State of Flow Q2 2025

Key Insights

• Flow's DeFi TVL grew 46.3% QoQ to $68.0 million, driven by native DeFi protocols such as KittyPunch and MORE Markets.
• Smart contract deployments surged 473% QoQ to 45,239 in April, marking Flow’s most active month for contract deployments.
• PayPal’s stablecoin PYUSD supply on Flow jumped 211.9% QoQ to $26.2 million, becoming the chain’s top stablecoin by supply.
• The Disney Pinnacle partnership with Disney+ offered digital collectibles to 50 million subscribers, representing one of the largest Web3 onboarding opportunities to date and highlighting Flow's continued dominance in large-scale consumer applications.
• Average daily transactions on Flow EVM rose 602% to 40.1k following LayerZero’s integration, up from just 5.7k pre-integration.

Primer

Flow (FLOW) is a Layer-1 network founded in 2018 by Dapper Labs and its co-founders, Roham Gharegozlu, Dieter Shirley, and Mikhael Naayem. Flow launched in May 2020 and was designed for “a new generation of games, apps, and the digital assets that power them.” Flow was one of the first networks to implement account abstractions and user experience enhancements, making it easier for developers to onboard consumers. Today, Flow’s top applications include those based on world-class brands, such as NBA Top Shot, NFL All Day, and Disney Pinnacle.

On Flow, developers use “Cadence,” Flow’s novel resource-oriented programming language designed for smart contracts. It enforces ownership and type safety at the language level, helping prevent common vulnerabilities in contract logic. Flow’s most recent development occurred in March when Flow activated a rolling protocol upgrade system on mainnet. This mechanism coordinates behaviour changes at predetermined block heights, so nodes can verify compatibility and upgrade without interrupting block production. By eliminating most downtime, rolling upgrades strengthen network resilience, streamline future releases, and let developers ship improvements faster. The new system builds on earlier Height-Coordinated Upgrades and marks Flow’s first significant step beyond the Crescendo release. In September 2024, Flow introduced the Crescendo upgrade, launching EVM equivalence on Flow via Flow EVM, and bringing Cadence to maturity with the Cadence 1.0 release. Now, developers can use Solidity to build on Flow EVM with block times of 800 milliseconds. Furthermore, developers can tap into existing tools and liquidity across the EVM, while users experience sub-cent transaction fees.

Flow has played a significant role in onboarding consumers into crypto by pioneering the ERC-721 token standard via CryptoKitties in 2017 and putting NFT collectibles into the mainstream via NBA Top Shot in 2021. In 2023, Disney and Dapper Labs launched Disney Pinnacle on Flow, a digital pin marketplace featuring Disney, Pixar, and Star Wars IP that furthered Flow’s consumer reach. Today, Flow continues to innovate and be a foundational part of the industry’s effort to bring new users into the space. For a full primer on Flow, refer to our Initiation of Coverage.

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Key Metrics

Financial Analysis

FLOW is the native token of Flow that is used (i) as the primary medium of exchange on Flow and (ii) for staking to facilitate various staking-related functions. In Q2 2025, FLOW's price fell 13.9% QoQ to $0.33, its lowest close since Q2 2024. This drop cut the circulating market capitalization by 12.9% to about $522.3 million, while circulating supply rose 1.2% to 1.59 billion FLOW in line with the protocol's weekly inflation schedule. FLOW's circulating market cap ranking fell from 92nd to 105th. The total FLOW staked on the network has increased by 9.9% from 602.4 million at the end of Q1, suggesting increased confidence in the network.

FLOW is used to settle network transaction fees on Flow. The total transaction fee for any transaction on Flow comprises a variable “execution fee” plus a fixed “inclusion fee,” which is then multiplied by a “surge factor”. Total quarterly fees in USD dropped 59.5% to $515, and fees in FLOW slipped 24.9% to 1,407. Despite the absolute decrease, the median daily fee in USD climbed 35.7% to $4.6, and the median daily fee in FLOW increased by 46.5% QoQ to 11.9 FLOW.

FLOW’s initial token supply was 1.25 billion upon Flow’s “Mainnet V1” launch in October 2020. However, the total token supply experiences inflation once per epoch (approximately once a week) due to inflationary staking rewards distributed to Flow’s validator nodes and delegators. Inflation over an annual period equals 5% of FLOW’s total token supply.

As explained in our Initiation of Coverage, combined weekly staking rewards comprise all network transaction fees, with any remaining amount being minted as inflationary staking rewards.

• Stakers, including validator nodes that have self-staked, receive 92% of weekly staking rewards proportional to their stake.
• Validator nodes also receive 8% of weekly staking rewards as commission.

As of June 30, 2025, FLOW’s total token supply has increased to 1.59 billion, and weekly inflation equates to approximately 1.47 million FLOW per week.

Network Analysis

Average daily transactions remained flat QoQ at 277,314 (-0.2%), while average daily active addresses decreased 57.1% to 28,610. This divergence caused the average transactions-per-address ratio to increase 35.6% QoQ from 9.2 in Q1 to 12.5 in Q2, indicating higher engagement from a smaller user base of power users.

Q2 saw several spikes in activity driven by strategic initiatives spanning bounties, hackathons, and NFT drops. A notable surge began in late May, coinciding with the Disney Pinnacle mystery capsule collaboration for Disney+ subscribers on May 29. It was further compounded by the Modular Worlds Hackathon (June 2), a month-long virtual event, and the ETHGlobal Cannes event (June 3-5). This combination of developer and consumer-facing events created a sustained period of high engagement, with daily active addresses averaging 317.8% of the quarterly average during this window.

In Q2 2025, the Flow EVM witnessed a staggering 473% QoQ increase in new smart contract deployments, driven by a historic spike in April. This activity underscores a significant expansion of the developer base. 45,239 contracts were deployed in April alone, making up 70% of all smart contracts deployed in Q2. This is the highest number of deployments on the network since October 2024.

Protocol Upgrades

Rolling Upgrades

Flow moved to a rolling upgrade process that lets the protocol change behavior at a scheduled block height without taking the chain offline. This design improves liveness and safety. Upgrades proceed while blocks keep finalizing. When a height-coordinated upgrade touches execution or verification nodes, transaction execution may pause for a few minutes while nodes restart, but the network does not go down. Versioning is tied to block height, and noncompliant nodes exit cleanly, which limits the blast radius of misconfigurations.

The first use was a protocol state upgrade with zero downtime in the first week of April, enabling apps to operate seamlessly and 24/7 without interruption.

Pectra Upgrade

Flow executed a height-coordinated upgrade on May 15, 2025, to prepare Flow EVM for Ethereum’s Pectra upgrade.

Anything that runs on Ethereum after Pectra will run on Flow EVM, ensuring the network maintains consistent EVM equivalence. Teams can port contracts and infra with minimal changes and keep a single codebase across environments.

PebbleDB Migration

Flow's infrastructure is being updated with the network moving from BadgerDB to PebbleDB, which rectifies several operational issues. The previous database, BadgerDB, was a source of instability for node operators. It caused unpredictable memory spikes, which could lead to nodes running out of memory and crashing. BadgerDB did not support automatic data pruning, which meant the database size grew continuously, forcing operators to perform manual interventions to clear storage and manage disk space.

PebbleDB directly counters these problems. It incorporates automatic data pruning, which allows node software to be configured to retain a specific amount of data and remove older, unnecessary files. This feature removes the need for manual operator intervention to manage storage. PebbleDB also reduces overall memory consumption, improving network stability by lowering the risk of nodes going offline. The automated data management means nodes will require smaller disks, lowering hardware costs for participants.

The chart above shows data disk usage on a Flow testnet execution node before and after migrating to Pebble DB. Before February 22, disk usage steadily increased, requiring manual cleanup to free space. After the migration, automated pruning with Pebble DB kicks in, visibly resetting usage without manual intervention.

Flow is upgrading how core nodes store and manage data by introducing PebbleDB in two phases. Phase 1 is live today on mainnet and testnet across all execution nodes and enables automatic data pruning on the execution node. This reduces memory and disk pressure, lowers operational costs, and improves the predictability of execution-node performance. During Phase 2, all node types switch to PebbleDB. Until then, PebbleDB is in production only on execution nodes. A full rollout is targeted for Q3 as part of the upcoming Forte network upgrade

Cross-VM Support for NFTs

Flow updated its infrastructure to control how NFTs are represented when moving between Cadence and EVM environments. The change allows developers to define a specific contract for their asset in the destination VM, avoiding the previous method where bridged assets became generic, standardized tokens with limited utility.

This feature means a developer can specify the metadata schema and support additional standards for the bridged version of their asset. For instance, a Cadence NFT can be configured to adopt the ERC721c standard when it moves to the EVM, a feature that enables onchain, enforceable royalties. This capability was instrumental in enabling collections like NBA Top Shot to list on marketplaces like OpenSea while guaranteeing creator revenue, directly addressing a concern for legacy brands. Developers with previously bridged assets can also register new associations. The bridge will then convert the older, generic versions to the project-defined ones the next time those assets are moved between VMs. This allows developers to maintain an asset's branding and utility across both environments, which is helpful for complex applications like gaming or ticketing platforms.

Ecosystem Analysis

Consumer

Flow leans heavily into consumer-facing applications, especially sports, gaming, and collectibles. The chain sustains momentum through partnerships with major entertainment and sports brands. NBA Top Shot, NFL All Day, and Disney Pinnacle were dominant collections in Q2. Integrating Top Shot packs into the NBA mobile app is a smart move to reduce friction and introduce Web3 to a mainstream audience.

The NFT ecosystem on Flow is the most active sector on the network. An interesting trend worth noting in Q2 was the divergence between volume metrics. While USD-denominated volume was nearly flat, declining 1.9% to $108,930, volume measured in the native FLOW token surged by nearly 35%. This indicates a significant increase in onchain activity, heavily influenced by targeted events. For example, the Disney Pinnacle marketplace event from June 27 to June 30 spurred a flurry of secondary market activity as collectors traded to complete sets. Concurrently, the number of unique sellers dropped by over 18%. This points to a potential shift in market behavior from short-term trading to long-term collecting, a trend likely influenced by platform initiatives like NBA Top Shot’s Expert Challenge Rewards, which incentivized locking certain NFT sets. This suggests the market is maturing, with more activity driven by dedicated communities built around high-quality IP and practical utility, rather than broad speculative interest. Average daily NFT sales on Flow decreased 3.0% QoQ to 10,223 in Q2 2025.

DeFi

Flow's DeFi TVL grew 46.3% QoQ to $68.0 million. This growth was driven by emerging native protocols such as KittyPunch and MORE Markets. In Q2, more DeFi protocols began launching on Flow, fortifying the trend seen in Q1 with token launchpads rolling out. This growth in the DeFi ecosystem is a positive sign for Flow, as it shows that the platform is diversifying beyond its core strengths in NFTs and gaming. A robust DeFi ecosystem can create a more vibrant and self-sustaining economy on Flow, with opportunities for users to earn yield, trade assets, and access financial services.

• KittyPunch: A full-suite DeFi protocol that launched on Flow EVM on Sept. 8, 2024. KittyPunch offers (i) a spot DEX (PunchSwap), (ii) a stableswap DEX (StableKitty), (iii) a spot DEX aggregator (AggroKitty), (iv) a token launchpad (Trenches), (v) an NFT marketplace (Hoard), (vi) a bridge powered by deBridge, and (vii) a volatility protocol (PunchVIX).
  • KittyPunch solidified its position as the primary DeFi hub on Flow, ending Q2 with $33.0M. This represents a 72.0% increase from the previous quarter, capturing 48.6% of the network's market share.
  • The main development in Q2 was the launch of PunchVIX, a volatility farming mechanism that allows users to generate yield from market imbalances without the typical risks of impermanent loss.
  • The protocol upgraded its tokenomics for the $FROTH and $FVIX tokens, implementing a buyback-and-burn program for $FVIX funded directly by fees from its suite of products.
• MORE Markets: A borrowing and lending protocol on Flow EVM.
  • MORE Markets saw the most explosive growth of the quarter. Its TVL climbed from $3.9M to $16.6M, a 327.2% jump that lifted its share of Flow TVL to 24.5%.
  • The protocol spent much of the quarter setting the stage for its next major feature, MORE Vaults. Anticipation for this framework, designed to offer permissionless, customizable yield strategies in ERC-4626-compatible containers, helped drive new deposits into its existing markets.
• Increment Finance: Increment is a full-suite protocol allowing trading, lending/borrowing, liquid staking, farming, and a points program.
  • Increment closed Q2 with $15.6M in TVL, a (19.2%) change from Q1. Due to the rapid growth of its rivals, its market share fell from 41.6% to 23.0%. The data reflects a continued rotation of capital into newly launched protocols.
• Trado Finance: A spot and perpetual decentralized exchange (DEX) on Flow EVM.
  • Trado ended Q2 with $1.1M in TVL, a (52.0%) drop from the previous quarter. Its share of Flow liquidity slipped to just 1.6%. The pullback appears tied to the tapering of its token incentives and the draw of deeper liquidity on other protocols.

Emerging DeFi Protocols on Flow

In Q2, more DeFi protocols began launching on Flow, fortifying the trend we saw in Q1 with token launchpads rolling out. This new wave of development focused on sophisticated cross-chain solutions and creating deeper liquidity for existing NFT assets, signaling a new phase of DeFi experimentation on the network. Notable protocols include:

• HITDEX: A multichain, intent-based crypto trading platform that allows users to swap tokens on various blockchains, including Flow EVM, and trade across different chains. Unlike traditional exchanges, where users specify the exact path of a trade, intent-based systems allow users to declare their desired outcome (e.g., "swap 1 ETH on Arbitrum for wFLOW on Flow"). A network of competing "solvers" then finds the most efficient path to execute that trade, abstracting away the complexities of bridges and gas fees on different networks.
• Vaultopolis: A platform that tackles NFT liquidity by tokenizing NBA Top Shot Moments into a fungible token called TSHOT. Users can deposit their Common and Fandom tier Moments into a vault and receive TSHOT on a 1:1 basis. Making this one of the first tokens that is backed/underwritten by officially licensed digital collectibles from a major brand. This token can then be traded on decentralized exchanges to provide liquidity and earn yield or redeemed anytime for a randomly selected Moment from the vault. This creates instant liquidity for previously siloed assets that are difficult to trade in bulk, bridging the gap between Flow's dominant NFT collections and its growing DeFi ecosystem.

Liquid Staking & Stablecoins

The total value of liquid staking tokens (LSTs) on Flow rebounded in Q2, growing 32.1% from $10.9 million to $14.4 million. The data shows a significant shift in market share dynamics as capital consolidated into the leading protocol.

The primary driver of this growth was Ankr’s ankrFLOW, which nearly doubled its TVL to $11.7 million. This growth increased its market share from 55.6% to 81.0%, solidifying its position as the dominant LST on the network. In contrast, Increment’s stFLOW decreased to $2.7 million, causing its market share to fall from 44.4% to 19.0% by the end of the quarter. On Ankr's multichain liquid staking platform, Flow is the 4th highest TVL asset with 39.8 million FLOW.

The circulating supply of stablecoins on Flow grew 29.5% QoQ, from $30.8 million at the end of Q1 to $39.9 million in Q2 2025. This growth was driven entirely by the aggressive adoption of PayPal's stablecoin, PYUSD, which is represented on Flow as USDF. This version of PYUSD is bridged from other chains using cross-chain bridges.

PYUSD’s circulating supply grew from zero to $26.3 million by the end of Q2, capturing 65.9% of the total stablecoin market share on Flow in a single quarter. Meanwhile, the supply of the long-standing stablecoin, USDC, fell by 56% to $13.6 million. This reduction, combined with PYUSD support, caused USDC's market share to drop from 100% to 34.1%. The shift reflects a new, more competitive environment for stablecoins on the network, with capital rotating to the newly available asset.

Cross-Chain Messaging & Bridges

Q2 marked the first quarter of real cross-chain activity on Flow. Following LayerZero’s integration, average daily transactions on Flow EVM jumped 602% to 40.1k, up from just 5.7k pre-launch. Inflows through LayerZero averaged $448.5k per day, a 5.6% QoQ increase from $424.7k.

Development, Growth, and Community

New AI Toolkit on Flow

Flow has rolled out a suite of initiatives under the "Use AI To Build On Flow" initiative, aimed at equipping developers with the tools to build AI-powered decentralized applications. This multi-layered strategy begins with Flow Data Sources, a repository that aggregates and formats all ecosystem documentation, code, and discussions into a centralized knowledge base optimized for AI ingestion. Building on this foundation, developers can use frameworks like AgentKit to rapidly deploy modular AI agents directly onto Flow's EVM-compatible environment or Eliza on Flow to create more sophisticated conversational agents. Tying everything together, the Flow Model Context Protocol (MCP) integrates these AI capabilities directly into the Cursor IDE, allowing developers to query onchain data and interact with smart contracts using natural language, thereby embedding AI assistance directly into their daily workflow.

Hackathons

Average monthly active developer count rose 9.3% to 381 since the end of Q1. Monthly active developers are the original code authors who make at least one non-merge commit to canonical repositories in a given month, excluding PR mergers, fork-origin commits, and bots. The troughs and subsequent recoveries line up with several hackathons in Q2. Across three ETHGlobal events in Q2, spanning Taipei, Prague, and Cannes, Flow attracted 138 of 777 total submissions (17.7%), including 25 projects at Taipei (11.1% of entrants), 59 at Prague (27.2%), and 54 at Cannes (16.2%).

Beyond ETHGlobal, other sponsored hackathons included Permissionless NYC (Jun 20 – 22), which drew 17 submissions (43.6%), and Protocol Labs’ Modular Worlds hackathon, which had 78 submissions (78%). Developers can also tap the community-run GrantsDAO for iterative funding, submit security fixes under a tiered bug bounty program, and explore open research bounties if they seek alternative ways to contribute to the Flow network.

Closing Summary

Flow’s DeFi ecosystem saw substantial growth in Q2 2025, with TVL reaching an all-time high of $68.0 million. This was driven by the strong performance of native protocols and a significant increase in the market cap of stablecoins. While the price of FLOW and the average number of daily active addresses decreased, network activity, spurred by the Disney+ partnership, significantly increased. Flow remains a top choice for developers, as shown by its dominance at major hackathons, active developer ecosystem, and growing DeFi sector. The platform's commitment to improving its infrastructure through user-centric protocol upgrades and enhanced cross-chain support positions it well for future growth. The opportunity for Flow will be to convert the influx of new users from its consumer partnerships into long-term, active participants in its growing DeFi and NFT ecosystems.