Author: DappRadar

Compiled by: Felix, PANews

May 2025 marks a turning point for the Dapp (decentralized application) industry. With rising user activity, DeFi’s strong return, and AI’s position in Web3 being consolidated, the ecosystem is showing signs of stability and maturity. From market recovery to infrastructure upgrades and shifting user preferences, May highlights how Dapps are evolving in terms of long-term utility, not just hype cycles.

Key points:

• The number of daily active unique wallets (dUAW) reached 25 million in May, an increase of 8%, indicating the healthy development of the entire ecosystem.
• DeFi total value locked (TVL) grew 25% to $200 billion, driven by a 40% increase in Ethereum prices and Hyperliquid’s $244 billion in trading volume.
• NFT trading volume increased 40% to $280 million, and the number of transactions increased 35%, mainly driven by Ethereum, Abstract, and Telegram-related domains.
• AI dapps saw 4.8 million daily active user wallets (dUAW), up 23%, putting them on par with DeFi and gaming in terms of user engagement.
• $275 million lost to Web3 vulnerabilities — the third-most expensive month of the year, exceeding November to March combined.

1. 25 million dUAW marks healthy growth of dapps

In May, dapps showed clear signs of recovery, with dUAW growing 8% to 25 million. This growth is in line with overall market sentiment and is supported by the recovery of DeFi and NFT activity, which will be discussed in the following sections.

Three sectors stood out this month, with continued and significant growth:

• AI DApps grew 23%, dUAW reached 4.8 million
• Social DApps grew by 21%, and dUAW reached 4.3 million
• NFT DApps grew 9%, dUAW reached 3.9 million

These increases not only indicate that the appeal of various fields is increasing, but also promote the development of a more balanced ecosystem. We are currently witnessing the gradual dominance of AI, DeFi, and gaming DApps, with their respective shares in user activity being relatively close.

In addition to rising user activity in AI, DeFi, and gaming, another emerging trend worth watching 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 of the decentralized stack. This trend enables users, protocols, and AI agents to buy, sell, stake, lend or borrow data, insights, and models, often leveraging blockchain technology for traceability, transparency, and monetization. Just as SocialFi is redefining user engagement, InfoFi is building the infrastructure for data to become an active financial asset.

The diversification of user participation marks an important milestone. A healthy and mature dapp ecosystem means that multiple verticals can thrive simultaneously, which is reflected not only in hype cycles, but also in continued utility, community adoption, and platform evolution.

While AI has long been a mainstream topic across industries, on-chain data now confirms the hype. With AI dapps on par with DeFi and games in terms of daily active wallets, AI is being integrated into blockchain experiences, from productivity tools and agents to social and marketing tools.

On-chain activity in May shows that the DApp ecosystem is stronger and more diversified. With user attention being more evenly distributed across fields and the further integration of emerging technologies such as AI, the Web3 landscape is evolving towards a stronger and more sustainable infrastructure.

2. Top DApps by UAW : From meme craze to utility-driven growth

User engagement patterns in May show a gradual shift away from speculative enthusiasm toward more utility-focused DApps. While the memecoin craze led by platforms like Pump.fun attracted a lot of attention in April, the momentum appears to be cooling. As of May, Pump.fun has declined from its peak activity, suggesting that memecoin trading may have reached a saturation point, at least for now.

In contrast, DeFi DApps saw a significant increase in independent active wallets (UAW), especially on Uniswap V2, which continued to benefit from strong activity on Base. On May 4, Uniswap announced its integration with Soneium, a major development. This move not only enriched Uniswap's L2 presence, but also opened a new chapter in integrating DeFi with entertainment and consumer technology.

In the gaming space, World of Dypians continues to dominate, consistently ranking among the top in terms of monthly active users. Its immersive world-building and loyal community are becoming key factors in attracting players in the long term, a category that often faces problems with sustained player interest.

Meanwhile, in the AI & Social space, SubHub is gaining momentum by combining personalized Web3 communications with AI-enhanced delivery infrastructure. Positioned at the intersection of messaging, wallets, and smart location, SubHub is emblematic of how AI dapps are beginning to build a loyal user base, rather than just chasing hype cycles.

The performance of the top DApps in May reflects a broader trend: while speculative hype can quickly drive a surge in users, long-term retention increasingly relies on practicality and platform innovation. Whether it is AI-based communication, underlying game interaction, or L2-based DeFi expansion, the DApps that are rising in the rankings today provide users not only speculation, but also ease of use and functionality.

3. The rise of DeFi: TVL climbs 25%

DeFi continued its upward trend in May, with TVL increasing by 25%, bringing the total size of the industry to approximately $200 billion. This recovery is closely related to the overall market gains, especially Bitcoin hitting a record high and Ethereum's price surge of 40%, both of which significantly increased the valuation and liquidity depth of DeFi assets.

TVL grew across all major DeFi ecosystems, indicating renewed investor confidence and more active on-chain activity. One project in particular stood out.

The standout performer this month is the decentralized exchange Hyperliquid, which has a trading volume of $244 billion and accounts for about 10% of Binance’s market share. With this performance, Hyperliquid ranks as follows:

• The top five centralized and decentralized exchanges by trading volume
• The top ten blockchain networks by total locked value
• This marks a significant shift in the way on-chain derivatives protocols are competing directly with major centralized finance (CeFi) players, indicating that decentralized perpetual contracts and derivatives are maturing.

In addition to the various indicators, there were several important updates and policy initiatives in May that affected the development of DeFi:

Ethereum’s Pectra Upgrade

This much-anticipated hard fork brings two key improvements:

• EIP-7702: Introduces account abstraction to provide smart contract-like functionality to ordinary wallets, including batch transactions and gas fee sponsorship.
• EIP-7251: Increases the validator reward cap from 32 ETH to 2048 ETH, allowing institutional stakers to receive compound staking rewards and improving funding efficiency.

XRP Ledger Launches EURØP Stablecoin

Ripple has launched EURØP, a stablecoin pegged to the euro that is 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.

US GENIUS Act makes progress

The U.S. Senate voted 66-32 to end debate on the bipartisan GENIUS Act, a bill that seeks to advance federal regulation of stablecoin issuers. The bill’s progress ended a long and drawn-out debate and suggests that regulatory momentum is growing in Washington.

South Korea Considers Approving Cryptocurrency ETF

South Korea’s ruling party has pledged to approve cryptocurrency spot ETFs and ease bank restrictions on exchanges, a move that could significantly increase the accessibility of cryptocurrencies in Asia’s highly active retail market.

As DeFi’s foundations are rebuilt, protocol-level upgrades, regulatory clarity, and market growth indicate a more mature and resilient future for DeFi. While risks remain, the performance in May 2025 proves that DeFi is growing in both infrastructure and institutional relevance.

4. AI ’s momentum in Web3 continues to grow, and the public calls for decentralized intelligence

AI continues to dominate the world, and its impact on Web3 is becoming more and more obvious. As industries compete to incorporate AI into them, AI-powered dapps are steadily developing in the decentralized ecosystem. Therefore, this is not just hype, but a trend that reflects society's shift towards open, user-autonomous technology.

The top performing AI dapps this month have generally remained stable, highlighting the strong staying power 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 way projects interact with their audiences, enabling personalized messaging through wallet addresses and decentralized identifiers (DIDs). SubHub is positioned at the intersection of AI, communication, and social DApps, reflecting the growing demand for autonomous, targeted, and decentralized promotion methods as users grow tired of traditional centralized marketing models.

SubHub’s combination of smart messaging and wallet-based targeting capabilities also reinforces the idea of the growing convergence of social and AI DApps, enabling user-centric experiences at multiple levels of Web3 infrastructure.

In addition to DApps, the AI x blockchain space has also made significant progress this month:

• ThinkAgents.ai has released the open source “Think Agent Standard,” a protocol for deploying autonomous agents in decentralized networks, taking a step towards interoperable on-chain AI.
• Tether announced its entry into the AI field, planning to launch a decentralized AI platform that combines peer-to-peer communication with crypto-native integration.
• Assisterr (Solana) raised $2.8M at a $75M valuation to enable code-free deployment of small language models (SLMs) — providing composable AI tooling without the onerous development costs.
• Donut Labs has raised $7 million in seed funding to build the first “proxy” Web3 browser, combining AI capabilities with a crypto wallet and DEX.
• Global exchange BingX has pledged $300 million over three years in its “AI Evolution” roadmap – integrating AI into its trading engine and ecosystem.

Perhaps most telling, however, is the growing public support for decentralized AI. A Harris Poll (May 29) commissioned by Digital Currency Group found that:

• 77% of Americans believe decentralized AI is more beneficial to society than centralized models.
• 56% prefer AI development through decentralized systems.
• These data highlight a cultural shift that aligns with Web3’s values of transparency, user ownership, and antitrust.

5. NFTs grow 40% : a real recovery or a short-term surge?

In May, the NFT market showed signs of recovery, with transaction volume climbing to $280 million, a 40% increase from the previous month. Similarly, the number of NFT transactions increased by 35% to 2.7 million. Although this growth brings a glimmer of optimism, it is far from a full recovery. It will take several months of growth to form a sustainable trend, but small victories are still victories.

Ethereum’s NFT trading volume increased by 30%, regaining its dominance and accounting for 53% of the total NFT market. It was followed by Immutable zkEVM with 13% and Abstract with 10%. Notably, Abstract’s trading volume surged by 1,200%, mainly due to speculation related to mining and expected airdrops, indicating that incentive mechanisms are still influencing the NFT market. This can be seen from the fact that the most popular NFT series has a daily trading volume of more than 1 million transactions, but the floor price is still around $300.

By sector, the strongest growth was in art-based NFTs, with series like Good Vibes Club driving a significant increase in trading volume. This was followed by a resurgence in domain name NFTs, especially those related to TON and Telegram, as Telegram-based dapps continued to gain popularity. Their appeal lies in easy access, gamified experience, and low entry barriers, suggesting 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 took a landmark move by eliminating the 30% transaction fee for NFT transactions within iOS apps, which reduced barriers to NFT markets integrated into iOS apps and opened the door to wider use of NFT platforms on mobile devices.

OpenSea launches OS 2.0

OpenSea launched OS2, an overhauled multi-chain marketplace that expands beyond NFTs to fungible tokens and memecoins, supports 19 blockchains, and integrates minting, redemption, and trading into a unified experience.

FIFA Migrates NFT Platform to EVM

FIFA announced that it will migrate its NFT platform from Algorand to a custom Ethereum-compatible chain, the so-called FIFA Blockchain. This move will improve the scalability and wallet compatibility of fan collectibles and support operations through MetaMask and other EVM tools.

Tokenization of physical assets is gaining popularity

Courtyard, a platform for tokenizing physical assets, has become one of the largest NFT collection platforms by trading volume, with over $55 million in trading volume, indicating a growing demand for RWA-based NFTs.

Although enthusiasm for the NFT space is gradually returning, most of the trading volume is still driven by airdrops, mining incentives, and speculation. If this momentum continues in the coming months, it may herald a new phase for NFTs—one that combines practicality, accessibility, and real-world applications.

6. Web3 losses reached $ 275 million this month

Although the number of individual incidents in May was lower than in April, the losses from hacker attacks and vulnerability exploits are still deeply worrying. According to the REKT database, just seven incidents resulted in losses of more than $275 million, making it the third most expensive month in the past year, exceeding the combined total of November, December, January and March.

While this is a massive 95% drop from April’s record losses, largely due to the Mantra DAO incident, it would be misleading to view this as a sign of recovery. The magnitude of the single attack in May highlights the ongoing systemic vulnerabilities in the dapp ecosystem.

This month’s notable vulnerabilities include:

Cetus protocol vulnerability: $260 million

On May 22, Cetus Protocol, a decentralized exchange on the Sui network, suffered a massive attack that resulted in a loss of $260 million. The price of tokens on the platform plummeted, with some tokens losing more than 90% of their value, and the team immediately suspended smart contract operations to control losses and launch an investigation.

Cork Protocol Vulnerability: ~$12 million

On May 28, the Cork protocol suffered a smart contract vulnerability, resulting in the theft of 3,760 wstETH worth approximately $12 million. The attack exposed critical flaws in the contract logic and immediately raised community alarm.

Mobius Token (MBU) event: approximately $2.16 million

On May 11, a suspicious interaction with an unverified contract on Binance Smart Chain resulted in a loss of $2.16 million. Although the incident looked like a typical vulnerability exploit, there were signs that it might have been a “rug pull,” further blurring the line between technical vulnerabilities and malicious behavior.

Data from May clearly demonstrates that despite improvements in tooling and awareness, the Web3 space remains highly vulnerable. Multi-million dollar attacks continue to occur, creating an urgent need for stricter auditing standards, real-time risk monitoring, and better education for developers and users.

7. Conclusion

May was a critical month for the dapp ecosystem, marking a full recovery and maturing of industry dynamics. Daily active wallets reached 25 million, and user engagement was on an upward trend, driven by growth in key verticals such as DeFi, NFT, AI, and social.

The shift from hype-driven activity to utility-focused engagement is becoming clearer. While memecoins may have cooled, decentralized finance protocols like Hyperliquid and AI dapps like SubHub are becoming increasingly relevant, showing that users are gravitating toward platforms that offer functionality, innovation, and real value.

DeFi TVL grew 25%, reflecting a return of confidence, thanks to infrastructure upgrades and policy advancement. Meanwhile, NFT trading volume soared 40%, Ethereum regained dominance, and RWA also received attention. AI continues to gain momentum, not only in terms of public sentiment (77% of Americans prefer decentralized AI), but also in terms of usage, which is comparable to the user activity of games and DeFi.

In short, the DApp industry is moving from a turbulent experimental phase to a solid foundation for development. With the diversification of user activities and the practical application of technologies such as AI, the ecosystem is entering a new phase - a phase defined not only by trends, but also by infrastructure, balance, and long-term resilience.

Related reading: A panoramic interpretation of the current status of DeFi development: Aave and Lido become the highest TVL protocols, and Solana ranks second among the public chains