Web3 Gaming: A February 2024 Snapshot of Growth and Challenges

*March 2024, *stella@footprint.network

*Data Source: *GameFi Research — Footprint Analytics

In February 2024, the blockchain gaming sector experienced notable expansion, driven by rising cryptocurrency prices and a surge in active users. Despite these advances, the industry faces ongoing challenges in maintaining user engagement and retention, with trading volume and transaction metrics lagging behind expectations.

Blockchain platforms actively pursue growth opportunities through partnerships with content creators like Web2 gaming studios. Focusing on mutual development between games and platforms, alongside expanding gaming IPs, is central to broadening player engagement and enriching the ecosystem.

Data for this report was obtained from Footprint’s GameFi research page. This easy-to-use dashboard, updated in real-time, contains the most vital stats and metrics to understand the Web3 Game industry. Click here to find all the latest about prices, projects, funding rounds, and more.

Monthly Market Review
In February 2024, Bitcoin and Ether both showcased impressive growth, with Bitcoin surging 46.5% to close at $62,404, crossing $60,000 for the first time since Q4 2021, and nearing its all-time high by just 9%. Ether slightly outpaced Bitcoin, climbing 48.1% to end the month at $3,383.

Source: BTC Price & ETH Price — Footprint Analytics

February’s significant uptick in the cryptocurrency market was influenced by multiple factors. The introduction of new spot Bitcoin ETFs in the U.S. attracted massive inflows, totaling $6 billion in February alone, signaling strong investor confidence and a shift toward cryptocurrency as a viable store of value. Additionally, anticipation of Ethereum’s network upgrade in March and Bitcoin’s halving event in April contributed to the price gains.

However, broader market dynamics, such as inflation concerns and Federal Reserve policies, could pose challenges to continued growth. The uptick in inflation in February signals a risk that anticipated interest rate cuts in the U.S. may be delayed until later this year or beyond.

Overall Web3 Game Market
Riding the wave of the cryptocurrency surge, the market cap of blockchain game tokens increased by 54.0% throughout the month, to reach a noteworthy $18.5 billion.

February continued the upward trend in daily active users (wallets), reaching 2.3 million — a 28.9% increase from January. The endeavors of blockchain game developers and builders have successfully drawn more Web2 studios and gamers into the Web3 gaming era.

Source: Blockchain Game Daily Active Users — Footprint Analytics

However, the picture isn’t as rosy for user engagement and retention as it is for acquisition. These areas remain significant challenges for most Web3 game developers, with trading volume and transaction performance lagging, as indicated by data from Footprint Analytics.

Source: Blockchain Game Monthly Volume & Transactions- Footprint Analytics

In the broader context of the Web3 game market, its growing impact on other blockchain sectors, notably in-game NFTs, has become increasingly apparent.

An illustrative case is Gas Hero, developed by StepN’s Find Satoshi Lab. Announced on February 28, the game faced major difficulties, prompting a return to closed beta. Following a successful launch in January, its NFT trading volume suffered an 87.2% downturn to $12.3 million. This steep decline played a pivotal role in dampening NFT trading activity across the Polygon and Mooar, an NFT marketplace, where NFT trading volumes decreased by 80.8% and 87.2%, respectively.

Web3 Game Chains
February’s gamer rankings showed Ronin, BNB Chain, and Polygon leading in user activity, with shares of 29.1%, 13.4%, and 13.1%, respectively. Ethereum, BNB Chain, and Ronin topped the charts in trading volume.

Source: Active Gamers Shared by Chain- Footprint Analytics

Blockchain platforms are seizing opportunities for growth through collaboration with content creators. In response to local regulatory challenges, South Korean Web3 game developers actively pursue global markets for their blockchain-based games. A notable development in this context is Oasys, offering both Layer-1 and Ethereum-based Layer-2 networks for game developers. Oasys recently announced strategic partnerships with South Korean game developer Com2uS, and shortly thereafter with South Korean internet giant Kakao’s Web3 gaming division Metabora SG.

Expanding the ecosystem through mutual growth between games and blockchain platforms is another strategic approach. Pixels, a Web3 farming game, shifted from Polygon to Ronin in late October 2023, leveraging Ronin’s superior interoperability and marketing support. This move propelled the game’s visibility and on-chain activity, with Pixels registering over 1.5 million on-chain interactions in February, nearing the 1 million user milestone. This growth benefits Ronin, highlighting the mutual advantages of such partnerships.

Furthermore, Pixels launched its PIXEL token in February, complemented by play-to-airdrop campaigns and a Binance Launchpool rewards program. Pixels announced a 20 million PIXEL airdrop for those staking Ronin’s RON token, rewarding Ronin’s supporters.

Web3 Games Overview
February saw the number of active blockchain games hold steady at 2,880, with the share of games having over 1,000 users declining from 8.3% to 7.9%. Despite a 28.9% rise in active users, the expansion of active games did not mirror this optimism, even amid early signs of a bull market. It seems only a small portion of blockchain games is successfully attracting an expanding player base.

Source: Monthly Active Blockchain Games — Footprint Analytics

Some games are expanding their gaming intellectual property (IP). Bali Games, a South Korea-based mobile game developer, successfully launched Axie Champions, a match-3 RPG on the Ronin blockchain. The game utilizes the popular Axie Infinity IP through a collaboration with Sky Mavis, the developers behind Axie Infinity. Players engaging in the game will be rewarded with the $AXS token.

Meanwhile, the introduction of new games continues to energize the market. MATR1X FIRE, a first-person shooter game, launched in February and soon attracted over 400K daily active users. As a platform, MATR1X combines artificial intelligence (AI), Web3, and eSports to create innovative gaming products.

Game Investment and Funding
In February, the Web3 gaming sector sustained momentum, securing $83.6 million across 19 funding rounds. This activity underscores the industry’s ongoing allure and the continued confidence of investors in the blockchain gaming arena.

Web3 Gaming Industry Funding Rounds In February 2024

However, of the 19 funding rounds observed, a notable 89.5% were for amounts under $10 million, indicating a more measured investment strategy.

Highlighting the sector’s dynamism, several gaming studios and games such as Brawl Studios (BitBrawl), Matr1x FIRE, and Pixels successfully secured new funding. Additionally, gaming platforms remain a sector of interest, with entities like Crystal Fun, Ultiverse, and OVERWORLD making strides. Notably, OVERWORLD, incubated within the Xterio ecosystem, garnered $10 million in seed funding to pioneer cross-platform multiplayer RPGs.

The spotlight also fell on gaming infrastructure, with Ready Games Network (READYgg) and Helika, a Web3 gaming analytics platform, closing their latest rounds of funding.

The gambling platform Monkey Tilt secured the largest funding in February, with $21 million from Polychain and others. This aligns with our Blockchain Gaming 2023 report forecast, suggesting potential growth in GambleFi despite looming regulatory challenges.

What’s New?
Crypto Gaming Firm Gala launches GalaSwap Exchange with token rewards.

LBank, a leading global digital asset trading platform, announces the integration of Oasys into its diverse trading portfolio.

Bitcoin Cats Leaps into blockchain gaming with 1CAT Chain testnet.

Crypto gaming platform PlayDapp loses $290 million worth of tokens in two exploits.

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