Author: DappRadar
Translation: Felix, PANews
May 2025 marks a turning point for the Dapp (decentralized application) industry. With rising user activity, a strong return of DeFi, and the consolidation of AI's role in Web3, the ecosystem shows signs of stability and maturity. From market recovery to infrastructure upgrades and shifts in user preferences, May highlights how Dapps are continually evolving in terms of long-term utility, not just reflecting hype cycles.
Highlights:
Daily active independent wallets (dUAW) in May reached 25 million, an 8% increase, indicating a healthy development trend for the entire ecosystem.
Total locked value (TVL) in DeFi increased by 25%, reaching $200 billion, thanks to a 40% rise in Ethereum prices and Hyperliquid's $244 billion trading volume.
NFT trading volume grew by 40%, reaching $280 million, with transaction counts increasing by 35%, mainly driven by Ethereum, Abstract, and domain names related to Telegram.
Daily active wallet count (dUAW) for AI dapps reached 4.8 million, growing by 23%, matching DeFi and gaming in user engagement.
Losses due to Web3 vulnerabilities amounted to $275 million — making it the third highest loss month in a year, exceeding the total from November to March.
1. 25 million dUAW marks healthy growth for dapps
In May, dapps clearly showed signs of optimistic recovery, with dUAW growing by 8% to reach 25 million. This growth aligns with overall market sentiment and benefits from the recovery of DeFi and NFT activities, which will be explored in the following chapters.
This month, three sectors stood out with sustained and significant growth:
AI DApp growth of 23%, dUAW reaches 4.8 million
Social DApp growth of 21%, dUAW reaches 4.3 million
NFT DApp growth of 9%, dUAW reaches 3.9 million
These growths not only indicate an increase in appeal across various domains but also foster a more balanced ecosystem development. We are currently witnessing AI, DeFi, and gaming DApps gradually taking dominance, with their respective shares in user activity being relatively close.
In addition to rising user engagement in AI, DeFi, and gaming sectors, another emerging trend worth noting is 'InfoFi' — the financialization of data and information in the Web3 space. While AI continues to attract mainstream attention, InfoFi is quietly building a new layer in the decentralized stack. This trend enables users, protocols, and AI agents to buy, stake, lend, or borrow data, insights, and models, often utilizing blockchain technology for provenance, transparency, and monetization. Just as SocialFi redefined user engagement, InfoFi is laying the groundwork for data to become an active financial asset.
The diversification of user engagement marks a significant milestone. A healthy and mature dapp ecosystem means multiple verticals can thrive simultaneously, reflected not only in hype cycles but also in sustained utility, community adoption, and platform evolution.
Although AI has been a mainstream topic across industries, on-chain data now confirms this trend. As AI dapps match DeFi and gaming in daily active wallets, from productivity tools and agents to social and marketing tools, AI is integrating into blockchain experiences.
May's on-chain activity indicates that the DApp ecosystem is becoming stronger and more diverse. As user attention becomes more evenly distributed across various domains, and with further integration of emerging technologies like AI, the landscape of Web3 is evolving towards a more robust and sustainable infrastructure.
2. Popular DApps ranked by UAW: From meme craze to utility-driven growth
User engagement patterns in May indicate a gradual shift from speculative hype towards more utility-focused DApps. Although April's meme coin boom, led by platforms like Pump.fun, attracted significant attention, this momentum seems to be cooling. As of May, Pump.fun has declined from its activity peak, suggesting that meme coin trading may have reached saturation point for now.
In contrast, the number of independent active wallets (UAW) for DeFi DApps has increased significantly, especially on Uniswap V2, which continues to benefit from strong activity on Base. On May 4, Uniswap announced its integration with Soneium, marking a significant advancement. This move not only enhances Uniswap's L2 presence but also opens a new chapter in integrating DeFi with entertainment and consumer technology.
In the gaming sector, World of Dypians continues to dominate, consistently ranking among the top in monthly active users. Its immersive world-building and loyal player community are becoming key factors in attracting players long-term, a category that typically faces challenges in sustaining player interest.
Meanwhile, in the AI and social sector, SubHub has gained momentum by combining personalized Web3 communication with AI-enhanced delivery infrastructure. Positioned at the intersection of messaging, wallets, and smart location, SubHub symbolizes the beginning of AI dapps building loyal user bases rather than merely chasing hype cycles.
The performance of popular DApps in May reflects a broader trend: while speculative hype can quickly drive user surges, long-term retention increasingly relies on utility and platform innovation. Whether based on AI-driven communication, underlying game interactions, or L2-based DeFi expansions, today's rising DApps provide users not only with speculative opportunities but also with usability and functionality.
3. Rise of DeFi: TVL increases by 25%
DeFi continued its upward trend in May, with TVL growing by 25%, bringing the total scale of the industry to approximately $200 billion. This recovery is closely related to the overall market rise, especially with Bitcoin reaching an all-time high and Ethereum prices surging by 40%, both significantly boosting the valuations and liquidity depth of DeFi assets.
Total locked value (TVL) across all major DeFi ecosystems has increased, indicating a revival of investor confidence and more active on-chain activities. Among them, one project stands out.
This month, decentralized exchange Hyperliquid stood out, with a trading volume reaching $244 billion, capturing about 10% of Binance's market share. With this performance, Hyperliquid ranks as follows:
Trading volume rankings for centralized and decentralized exchanges in the top five
Total locked volume rankings for all blockchain networks in the top ten
This marks a significant shift in how on-chain derivatives protocols compete directly with major centralized finance (CeFi) participants, indicating that decentralized perpetual contracts and derivatives are maturing.
In addition to various metrics, several important updates and policy initiatives in May impacted the development of DeFi:
Ethereum's Pectra upgrade
The highly anticipated hard fork brings two key improvements:
EIP-7702: Introduces account abstraction, providing ordinary wallets with smart contract-like functionalities, including batch transactions and gas fee sponsorship.
EIP-7251: Increases the validator reward cap from 32 ETH to 2048 ETH, allowing institutional stakers to earn compounded staking rewards and improving capital efficiency.
XRP Ledger launches EURØP stablecoin
Ripple launched EURØP, a stablecoin pegged to the euro, fully compliant with the EU's (Markets in Crypto-Assets Regulation) (MiCA). This makes it the first major stablecoin to comply with MiCA regulations, marking a new phase in DeFi regulatory compliance.
Progress on the U.S. GENIUS Act
The U.S. Senate passed a bipartisan motion to terminate debate on the GENIUS Act with a vote of 66 in favor and 32 against. This act aims to push for federal regulation of stablecoin issuers. The progress of this act marks the end of a long and drawn-out debate, indicating a growing regulatory momentum in Washington.
South Korea considers approving cryptocurrency ETFs
South Korea's ruling party pledged to approve cryptocurrency spot ETFs and ease banking restrictions on exchanges, a move that could significantly enhance cryptocurrency accessibility in Asia's highly active retail market.
With the rebuilding of DeFi fundamentals, upgrades at the protocol level, regulatory clarity, and market growth, a more mature and resilient future for DeFi is anticipated. Although risks remain, the performance in May 2025 demonstrates the ongoing evolution of DeFi in infrastructure and institutional relevance.
4. The momentum of AI's development in Web3 continues to strengthen, with public calls for decentralized intelligence.
AI continues to dominate globally, with its impact on Web3 becoming increasingly significant. As various industries compete to integrate AI, AI-driven dapps are steadily developing within the decentralized ecosystem. Therefore, this is not merely hype but a trend reflecting society's shift towards open, user-driven technologies.
The best-performing AI dapps this month generally remain stable, highlighting the strong durability of early market leaders.
The most notable newcomer on the list is SubHub, an AI-enhanced Web3 notification and marketing platform developed by Dmail. It aims to optimize the interaction between projects and audiences through wallet addresses and decentralized identifiers (DIDs), reflecting the growing demand for autonomous, targeted, and decentralized promotional methods as users grow weary of traditional centralized marketing models.
SubHub combines smart messaging with wallet-based targeting features, reinforcing the idea of growing integration between social and AI DApps, thus achieving user-centered experiences across multiple layers of Web3 infrastructure.
In addition to DApps, significant progress was also made in the AI x blockchain space this month:
ThinkAgents.ai has released the open-source 'Think Agent Standard', a protocol for deploying autonomous agents in decentralized networks, marking a step towards interoperable on-chain AI.
Tether announces its entry into the AI sector, planning to launch a decentralized AI platform that combines peer-to-peer communication with crypto-native integration.
Assisterr (Solana) raised $2.8 million at a $75 million valuation to support no-code deployment of small language models (SLM) — providing composable AI tools without heavy development costs.
Donut Labs secured $7 million in seed funding to build the first 'agent' Web3 browser that combines AI functionality with crypto wallets and DEX.
Global exchange BingX has committed to investing $300 million over three years in its 'AI Evolution' roadmap — integrating AI into its trading engine and ecosystem.
However, perhaps the most telling sign is the growing public support for decentralized AI. A poll commissioned by the Digital Currency Group and conducted by Harris Poll (May 29) shows:
77% of Americans believe decentralized AI is more beneficial to society than centralized models.
56% of people prefer to develop AI through decentralized systems.
These data highlight a cultural shift that aligns with the transparency, user ownership, and anti-monopoly values of Web3.
5. NFT growth of 40%: true recovery or short-term surge?
In May, the NFT market showed signs of recovery, with trading volume climbing to $280 million, a month-on-month increase of 40%. Similarly, the number of NFT transactions rose by 35%, reaching 2.7 million. While this growth brings a glimmer of optimism, it is far from a full recovery. To establish a sustainable trend, growth must be maintained over several months, but small victories count as victories.
Ethereum's NFT trading volume increased by 30%, regaining dominance with 53% of the total NFT market. Following closely are Immutable zkEVM with 13% and Abstract with 10%. Notably, Abstract's trading volume surged by 1200%, primarily due to speculative activities related to mining and anticipated airdrops, indicating that incentive mechanisms still influence the NFT market. This can be seen from the daily transaction volume of the most popular NFT series exceeding 1 million, while the floor price remains around $300.
By sector, the strongest growth is seen in art-based NFTs, with series like Good Vibes Club driving significant increases in trading volume. Following closely is the revival of domain NFTs, particularly those related to TON and Telegram, as Telegram-based dapps continue to gain popularity. Their appeal lies in ease of access, gamified experiences, and low entry barriers, indicating that the combination of messaging platforms and NFTs may become a long-term trend.
Several developments in May are expected to reshape the NFT landscape:
Apple cancels 30% NFT tax on iOS
Under legal pressure, Apple made a landmark move by eliminating the 30% fee on NFT transactions within iOS apps, reducing barriers for NFT markets integrated into iOS applications and opening the door for broader adoption of NFT platforms on mobile.
OpenSea launches OS 2.0 version
OpenSea launched OS2, a comprehensively improved multichain marketplace that expands its business scope from NFTs to fungible tokens and meme coins, supporting 19 blockchains and integrating minting, swapping, and trading into a unified experience.
FIFA migrates its NFT platform to EVM
FIFA announced that it would migrate its NFT platform from Algorand to a custom Ethereum-compatible chain, known as the FIFA Blockchain, enhancing the scalability and wallet compatibility of fan collectibles, supporting operations via MetaMask and other EVM tools.
Tokenization of physical assets is gaining popularity
Courtyard is a platform that tokenizes physical assets and has become one of the highest trading NFT collectible platforms, with trading volumes exceeding $55 million, indicating a growing demand for RWA-based NFTs.
Despite the gradually recovering enthusiasm for the NFT sector, most trading volume is still influenced by airdrops, mining incentives, and speculative behavior. If this momentum is maintained in the coming months, it may signal a new phase for NFTs — one that combines utility, accessibility, and real-world applications.
6. Losses in the Web3 sector this month reached $275 million
Despite the lower number of individual incidents in May compared to April, the losses from hacks and exploits remain concerning. According to the REKT database, just 7 incidents caused losses of over $275 million, making it the third highest loss month in the past year, surpassing the total of November, December, January, and March.
Although this figure represents a significant 95% decrease from April's record losses, largely due to the Mantra DAO incident, viewing this as a sign of recovery would be misleading. The severity of single attacks in May highlights the ongoing systemic vulnerabilities present in the dapp ecosystem.
Highlighted vulnerabilities this month:
Cetus protocol vulnerability: $260 million
On May 22, the decentralized exchange Cetus Protocol on the Sui network suffered a massive attack, resulting in a loss of $260 million. The token prices on the platform plummeted, with some tokens seeing declines of over 90%, prompting the team to suspend smart contract operations to control losses and initiate an investigation.
Cork protocol vulnerability: approximately $12 million
On May 28, the Cork protocol encountered a smart contract vulnerability, resulting in the theft of approximately 3760 wstETH valued at $12 million. This attack revealed critical flaws in the contract logic and immediately triggered community alarms.
Mobius Token (MBU) incident: approximately $2.16 million
On May 11, a suspicious interaction with an unverified contract on the Binance Smart Chain led to a loss of $2.16 million. Although this incident appears to be a typical exploit, various indicators suggest it may have been a 'rug pull', further blurring the lines between technical vulnerabilities and malicious behavior.
Data from May clearly indicates that despite improvements in tools and awareness, the Web3 space remains highly vulnerable. Ongoing multimillion-dollar attack incidents underscore the urgent need for stricter auditing standards, real-time risk monitoring, and better education for developers and users.
7. Conclusion
May was a pivotal month for the dapp ecosystem, marking a comprehensive recovery and maturation of industry dynamics. The number of daily active wallets reached 25 million, with user engagement on the rise, driven by growth in key verticals such as DeFi, NFTs, AI, and social.
The shift from hype-driven activity to utility-focused engagement is becoming increasingly clear. While meme coins may have cooled down, decentralized finance protocols like Hyperliquid and AI dapps like SubHub are becoming increasingly important, indicating that users are leaning towards platforms that offer functionality, innovation, and real value.
DeFi TVL grew by 25%, reflecting the restoration of market confidence, aided by infrastructure upgrades and policy advancements. Meanwhile, NFT trading volume surged by 40%, with Ethereum regaining dominance and RWA also receiving attention. The momentum of AI continues to strengthen, not only in public sentiment (77% of Americans prefer decentralized AI) but also in usage, matching the user activity of gaming and DeFi.
In short, the DApp industry is transitioning from a turbulent experimental phase to a solid developmental stage. As user activities diversify and technologies like AI see practical applications, the ecosystem is entering a new phase — one defined not just by trends but by infrastructure, balance, and long-term resilience.
Related reading: A panoramic interpretation of the current state of DeFi development: Aave and Lido become the highest TVL protocols, Solana ranks as the second largest public chain
