In 2024, the Web3 gaming industry presents a complex landscape, experiencing significant progress while also facing many challenges. Although daily active users surged by over 300%, and traditional gaming companies began making concrete moves in this field, market performance indicates that the sector’s market cap grew by only 60.5%, lagging significantly behind the Meme coin and AI sectors. As Bitcoin reached new all-time highs, various crypto sectors flourished, raising a key question: “Has Web3 gaming missed its best development opportunity in this bull market?”

However, behind these surface-level statistics, 2024 marks a critical transformation period for the industry. The sector has moved from a purely speculative phase to a more mature stage. This report will analyze how Web3 gaming has evolved in the 2024 market cycle, exploring key indicators, technological advancements, and strategic shifts within the sector. From infrastructure development to user engagement models, we will examine how the industry is navigating the challenges of mainstream adoption while building for sustainable growth.

Note: Unless otherwise specified, all data in this report is as of December 15, 2024. Data sources are Footprint Analytics and CoinMarketCap.

Annual Key Indicators Overview

• Market Cap: $31.8 billion, up 60.5%;
• Trading Volume: $5.2 billion, up 18.5%;
• Number of Transactions: 5.3 billion, down 30.3%;
• Daily Active Users: 6.6 million at year-end, up 308.6% compared to the beginning of the year;
• Active Games: 1,361 out of 3,602 games remain active (37.8%);
• Annual Financing: 220 financing events, totaling $910 million;
• Leading Public Blockchains:
  • Trading Volume Share: BNB Chain (23.1%), Ethereum (17.6%), Blast (9.2%);
  • Transaction Count Share: WAX (33.6%), Aptos (11.6%), Ronin (6.1%);
  • Daily Active Users: opBNB (2.2 million), Ronin (1.1 million), Nebula (458,000) (December daily average).

Market Performance Analysis

Market Cap Performance

The Web3 gaming sector achieved strong growth in 2024 but lagged behind other crypto sectors. According to Footprint Analytics, the market cap of gaming tokens reached $31.8 billion by the end of the year, a 60.5% increase from the previous year. Although the sector hit an annual high of $47.4 billion in March, it still remains significantly below the historical peak of $114.1 billion reached in November 2021.

Despite a strong performance across the broader crypto market in the second half of 2024, particularly driven by Bitcoin during the final two months, gaming tokens underperformed compared to other sectors. CoinMarketCap data shows that Web3 gaming ranked eighth in market cap growth among the top ten sectors, significantly trailing the leading sectors: Meme coins (421.1%), AI and Big Data (168.0%), and the Solana ecosystem (124.1%).

This underperformance extended to community interest as well. Among the most viewed sectors on CoinMarketCap, Web3 gaming only accounted for 6.7% of the top ten sectors’ page views, ranking ninth, as the focus for the year primarily centered around Meme coin-related projects.

Transaction Volume Analysis

The Web3 gaming sector’s key metrics in 2024 showed mixed results: while transaction volume increased, the number of transactions continued to decline.

Transaction Volume Trends In 2024, the total transaction volume of Web3 gaming reached $5.2 billion, up 18.5% compared to 2023. While it reversed the declining trend since 2021, the transaction volume remained significantly lower than the previous cycle’s peak. The 2024 figure was only 6.2% of the $84.1 billion peak in 2021 and 15.1% of the $34.5 billion in 2022.

Transaction Count Trends

In 2024, the total number of transactions reached 5.3 billion, a decrease of 30.3% compared to the previous year. While this figure was comparable to the 5.1 billion transactions in 2021, it failed to reverse the declining trend that started in 2022.

User Engagement

Daily Active Users (DAU) saw significant growth throughout 2024, rising from 1.6 million daily users in January to 6.6 million in December, representing a 308.6% increase over the year. This growth surpassed the previous peak of 1.8 million DAU in November 2021. Although this data may include some bot activity, the increase still demonstrates the substantial user engagement within the industry.

Ecosystem Development

Public Blockchain Competition and Evolution

Analysis of Leading Public Blockchains \ In 2024, the dominance of different public blockchains in Web3 gaming experienced significant changes, with each chain showing distinct strengths in transaction volume, transaction count, and user engagement.

Transaction Volume Distribution Across Chains \ BNB Chain maintained its dominance in transaction volume, achieving $1.2 billion in trading volume, accounting for 23.1% of the market share. Ethereum followed with $920 million (17.6%), while Blast and Ronin secured 9.2% and 9.0% of the market share, respectively.

Transaction Count Distribution Across Chains

Despite an overall 30.3% decrease in total transaction count across the industry, some public chains demonstrated strong performance. WAX led with 1.8 billion transactions, capturing 33.6% of the total. Aptos, with its “tap-to-earn” model via the Telegram game Tapos, surged to 620 million transactions (11.6%), with 540 million transactions occurring just in August. Ronin and opBNB maintained 321 million and 318 million transactions, respectively.

User Numbers Across Chains

User engagement saw significant growth, particularly in the second half of 2024. opBNB emerged as a leader in user participation, with an average of 2.2 million daily active users (DAU) in December, surpassing long-time leader Ronin (1.1 million). Nebula, as a SKALE Layer 2, ranked third with an average of 458,000 DAU. Public blockchains like NEAR, Sui, and Sei also made their way into the DAU top ten, demonstrating the expanding competition within the ecosystem and users’ willingness to try new platforms.

The diverse usage trends across chains suggest that the ecosystem is maturing. Different public blockchains are finding their niches based on various gaming experiences and user preferences. Leading networks are no longer just providing foundational blockchain infrastructure; they are evolving into comprehensive platforms for game developers. Notable initiatives, such as the $2 billion ARB Game Catalyst program by the Arbitrum Foundation, the 50 million STRK token distribution plan by the Starknet Foundation, and important grant programs from Sui and Xai, showcase how chains are using strategic incentives to attract and retain high-quality gaming projects.

Technological Infrastructure Improvements

Capacity Enhancement Blockchain processing capacity has seen a significant improvement, with current network transaction throughput increasing more than 50 times compared to four years ago. This growth is driven by the rise of Ethereum Layer 2 and Layer 3 networks, including Immutable zkEVM, gaming chains based on Avalanche L1, Oasys, SKALE, and Arbitrum Orbit, as well as other high-throughput blockchains like Solana, Sui, and Aptos.

Specialized gaming chains have also made significant progress. In June 2024, Ronin announced its Layer 2 initiative, Ronin zkEVM, which enables Ronin developers to create their own zkEVM Layer 2. Immutable zkEVM has taken a strategic step toward greater accessibility by removing deployment whitelists and enabling permissionless deployment. Additionally, Avalanche completed its most important upgrade, “Avalanche9000,” since the mainnet launch in 2020, which focused on overcoming the barriers of custom L1 builds and improving interoperability.

Gas Fee Reduction The Ethereum “Cancun” upgrade in March 2024 (also known as “Proto-Danksharding” or “EIP-4844”) marked an important milestone, significantly reducing fees on Layer 2 networks. The impact was profound, with gas fees dropping from several dollars to just a few cents or even lower, addressing one of the biggest friction points faced by blockchain game developers and players.

Cross-Chain Interoperability Enhancement The Chainlink Cross-Chain Interoperability Protocol (CCIP) saw significant development in 2024, enabling developers to create games that interact with multi-chain assets. This improvement has greatly enhanced the interoperability of in-game items.

The adoption of standardized digital asset formats, particularly ERC-721 and ERC-1155, has become more widespread. These standards ensure that in-game NFTs can be recognized and used across various games and platforms, simplifying asset transfers and interactions.

2024 also witnessed the significant rise of decentralized platforms supporting cross-chain gaming. Platforms like Portal, Fractal ID, and Web3Games provided the necessary infrastructure for seamless asset transfers and interactions between different blockchain ecosystems.

Project Development

2024 was a pivotal year for the development of Web3 gaming. In addition to traditional gaming companies entering the space, the ecosystem witnessed the launch of several major games. Highly anticipated titles such as Off The Grid and MapleStory Universe entered early access, while Illuvium was officially launched. Pirate Nation successfully completed its Token Generation Event (TGE) and launched a successful “play-to-airdrop” campaign.

Active Game Analysis

As of November 30, 2024, the total number of blockchain games reached 3,602, marking a rise from 2,997 in January. However, the active game metrics reveal some challenging trends. Among the total games, only 1,361 (37.8%) remained active on-chain, meaning that 2,241 (62.2%) games were inactive. Additionally, while the total number of games increased, the number of active games actually decreased compared to 1,387 games in January.

A deeper dive into user engagement metrics shows further market concentration. The number of games with over 100 monthly active users (MAU) decreased from 586 in June 2022 to 522 by the end of 2024. As of November 2024, 161 games (4.5% of the total) had more than 10,000 MAU, with 96 games (2.7% of the total) surpassing 100,000 MAU.

This concentration of users indicates that the market is maturing, with successful games attracting larger audiences. This phenomenon is influenced by multiple factors, including intense competition, rapid iteration strategies, and the “winner-takes-all” effect created by leading games in the ecosystem.

Innovation Landscape

Cross-Platform Gaming Trend

Mobile gaming has solidified its position as the primary platform for Web3 games in 2024, emphasizing accessibility and a seamless user experience. The mobile-first approach has significantly influenced how developers design blockchain games, focusing on intuitive interfaces and simplified onboarding processes. In 2024, mobile games accounted for 29.4% of newly released Web3 games.

Social platforms, especially Telegram, have become a powerful catalyst for Web3 game adoption, contributing 20.9% of new Web3 game releases. Telegram’s success stems from its large user base, simplified in-app experience, and ability to bypass traditional app store restrictions. The platform’s influence peaked in Q3 of 2024, with 11 games surpassing 10 million monthly active users (MAU). Notably, TON successfully converted this vast user base into on-chain participants, creating spillover effects in the Web3 gaming, Meme coin, and DeFi sectors. This success has prompted multiple blockchain networks outside of TON to compete for Telegram traffic, with Aptos, Sui, and Core launching or supporting Telegram-based games.

Similarly, in December 2024, Line announced plans to launch 20 mini dApps, marking the increasing interest of mainstream messaging platforms in integrating blockchain games.

The console gaming sector in Web3 remains relatively undeveloped, with major manufacturers like Microsoft and Sony maintaining a cautious stance. However, new approaches are emerging to bridge this gap. Some developers, such as Gunzilla Games with Off The Grid, have chosen to separate core gameplay from blockchain features to meet the expectations of traditional console gamers. At the same time, blockchain platforms have started developing their own Web3 gaming handhelds, such as Sui’s SuiPlay0X1 and Solana’s Play Solana Gen1 (PSG1), potentially creating a new category of dedicated Web3 gaming devices.

Entry of Traditional Gaming Companies

2024 marked a significant shift in the attitude of traditional gaming companies toward blockchain games, as major game studios moved from experimental actions to strategic development.

Ubisoft released Champions Tactics: Grimoria Chronicles on the Oasys Layer 2 HOME Verse in October. This tactical RPG maintains traditional gaming elements while integrating a range of NFT-based features.

Square Enix strengthened its blockchain portfolio through strategic investments and partnerships. In addition to investing in gaming platforms like Elixir Games and HyperPlay, the company also announced the launch of its Symbiogenesis game on HyperPlay.

Sony Group’s involvement signified a major push into blockchain gaming, both through investments and infrastructure development. While supporting the $10 million Series D funding round of double jump.tokyo Inc., Sony also announced the launch of Soneium, a Layer 2 network aimed at connecting Web3 innovations with consumer applications in gaming and entertainment.

AI Integration into Game Development

As artificial intelligence (AI) revolutionized various industries in 2024, the Web3 gaming sector became a significant beneficiary of AI innovations, opening up new opportunities for game development and player experiences.

AI has transformed in-game interactions and content generation. Game studios are using AI to create more complex non-playable characters (NPCs) that can adapt to player behavior and generate personalized quests based on individual gameplay history and preferences. This personalization enhances player engagement by making the gaming experience more relevant and unique.

In development, AI has greatly simplified the creation process. Developers are leveraging AI tools to automatically generate game environments and assets, significantly reducing production time and costs. This has allowed small teams to create high-quality games that can compete with those developed by larger studios.

AI has also enhanced the operational side of Web3 gaming. The technology is being used to automate game testing processes and monitor on-chain transactions to guard against potential fraud or cheating, particularly in games with complex economic systems. Additionally, AI algorithms are helping to optimize in-game economies and token models, addressing one of the major challenges in Web3 game design.

Investment Landscape

Annual Financing Overview

In 2024, Web3 gaming raised $910 million through 220 financing events. While the amount raised declined by 7.3% compared to 2023 and was significantly lower than the boom years of 2021 and 2022 ($3.2 billion and $2.7 billion, respectively), the number of financing events increased by 48.7% compared to 2023, indicating sustained investor interest despite the smaller size of individual deals.

This year showed a clear trend towards early-stage investments, with 76 early-stage deals (accounting for 34.6% of total events) compared to just 20 Series A or later financing rounds (accounting for 9.1%). This trend suggests that while new projects continue to attract initial funding, many of the projects from the 2021-2022 boom period are facing challenges in securing subsequent rounds of financing.

Among investors, Animoca Brands remained the leader, completing 38 investments, a 192.3% increase from 2023, and participating in 17.3% of all financing events in 2024. Spartan Group and Big Brain Holdings followed with 22 and 15 investments, respectively. The top ten investors together accounted for 152 investments.

Major Financing Events

Seven projects raised over $20 million in a single financing event in 2024. Azra Games led the pack with a $42.7 million Series A round, focusing on bringing console-quality gaming experiences to mobile platforms.

In terms of total funding raised, Monkey Tilt secured $51 million through two rounds, offering a platform with a “game-entertainment-gambling” hybrid model. Gunzilla Games, backed by well-known investors including VanEck, Coinbase Ventures, Delphi Ventures, and Avalanche’s Blizzard Fund, completed four rounds of funding, showcasing strong investor confidence.

Strategic Investment Trends

As the industry transitions from the 2021-2022 frenzy to a more mature phase, the focus has shifted toward fewer but higher-quality projects, with investors becoming more selective in their approach.

There has been an increasing focus on investing in game infrastructure and development tools, rather than just the games themselves. Notable examples include NPC Labs raising $18 million in a seed round to build Web3 games on Base, and Alliance Games raising $5 million in a Series A round for AI-driven decentralized infrastructure. This trend reflects growing investor interest in foundational technologies that can support multiple games and platforms.

Platforms and multi-chain development have attracted significant attention, particularly projects building cross-chain gaming ecosystems. Seeds Labs raised $12 million for its flagship product Bladerite on Solana, while B3 launched Open Gaming Layer, highlighting investor interest in expanding cross-chain gaming capabilities.

Additionally, new gaming categories have garnered notable investor attention in 2024, especially Telegram-based games and gambling projects, despite facing regulatory challenges.

Industry Evolution and Future Outlook

The Web3 gaming industry underwent significant evolution in 2024, with a shift away from the “play-to-earn” model that dominated previous cycles, towards more sustainable approaches. Telegram-based “tap-to-earn” games demonstrated unprecedented user acquisition capabilities, while strategies like “play-to-airdrop” from Pirate Nation and Pixels introduced new ways of attracting users. At the same time, mature projects shifted towards the “play-and-earn” model, prioritizing gameplay over financial incentives.

However, the sector still faces ongoing challenges. Technological obstacles remain significant, especially in achieving seamless blockchain integration without compromising the gaming experience. Regulatory uncertainty, particularly regarding gambling features and token classifications, continues to impact development decisions.

Most critically, maintaining on-chain engagement has become a fundamental issue. This was especially apparent in the performance of Telegram games: for instance, Hamster Kombat saw its monthly active users decline from over 100 million in September to 22.9 million by mid-December, with only 0.0004% of users engaging in on-chain game activities. While other Telegram games showed higher conversion rates, most still fell below 1%. Notably, these metrics specifically reflect on-chain gaming activity, as the core gameplay of most Telegram games remains off-chain, and users may be more active in other areas like Meme coins or DeFi. This highlights the ongoing challenge of converting platform users into active blockchain gamers.

2025 Outlook: Reshaping Relevance

As Web3 games seek to reestablish their position in the crypto landscape, several key trends emerge as potential catalysts for transformation:

• Social Platform Integration stands as the most promising pathway toward mainstream relevance. The remarkable success of Telegram games demonstrates the power of meeting users where they are, with platforms like Line and TikTok poised for similar influence. This approach may ultimately resolve the sector’s user acquisition challenge by leveraging existing social networks rather than building communities from scratch.
• AI Integration will evolve from a marketing feature to a fundamental driver of innovation. In addition to enhancing game development and NPC interactions, AI could solve core challenges in economic design and user retention—areas where Web3 games have traditionally struggled to compete with traditional gaming experiences.
• Achieving Sustainable Growth through Integration could ultimately determine the sector’s relevance. Success may not come from competing with traditional games or other crypto sectors, but from seamlessly integrating with them. This means focusing on how blockchain can enhance—not define—the gaming experience, developing more sophisticated tokenomics, and prioritizing user experience over crypto-native features.

In conclusion, the role of Web3 gaming in the crypto ecosystem may not be about dominance, but about integration. By cleverly bridging traditional gaming, social platforms, and blockchain technology, Web3 gaming has the potential to create truly innovative value. This evolution could not only help the industry break through the current limitations of being “just another crypto vertical” but may also become a key force in reshaping the future of the gaming industry.

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