Web3 Games Monthly Report: Insights, Challenges, and Potential  

Author: [email protected]

Crypto markets rallied in June 2023, with Bitcoin surpassing $30,000 for the first time in 12 months. However, the web3 gaming sector told a different story, despite more than 1,000 blockchain games on the market.

The market capitalization of gaming tokens fell from $6.38 billion to $5.50 billion, with a mid-month low of $4.70 billion. This decline indicates a potential imbalance between the supply of gaming tokens and player demand, and only 19 games have managed to attract more than 10,000 daily active users, indicating the difficulty in attracting and retaining users in the gaming industry.

In addition, major players such as Yuga Labs are now entering the web3 gaming space, bringing promising intellectual property and creativity. Although web3 gaming is still in its early stages, there is hope that improvements in infrastructure and gameplay innovation could drive the next phase of growth. The main challenge, however, is to maintain user engagement and merge the momentum of cryptocurrencies with the mainstream appeal of gaming.

Data of this report was obtained from Footprint’s GameFi research page. An easy-to-use dashboard containing the most vital stats and metrics to understand the Web3 Game industry, updated in real-time, you can find all the latest about prices, projects, funding rounds, and more by clicking here.

Key Points

Crypto Macro Overview

• In June 2023, the Bitcoin market (BTC/USD) experienced a significant development, reaching a 12-month high of $31.2k on June 22nd.
• On June 22, Bitcoin experienced a notable turnaround, surging past the $30k mark, and closing at $30.4k by the end of June, establishing the $30k level as a strong support.

Overall Web3 Game Market

• Game tokens saw their market capitalization decline from $6.38 billion to $5.50 billion, including a dip to $4.70 billion mid-month.
• In June, despite having approximately 1,021 active games in the market, the data shows that only 19 games surpassed 10,000 daily active users.

Web3 Game Chains

• Binance’s launch of its Layer 2 solution, opBNB, on June 19, 2023, is a strategic move.
• Gaming-focused blockchain networks, such as WAX and Hive, have an advantage in providing a better experience for gamers and fostering vibrant communities.

GameFi Projects Overview

• In June, STEPN saw the largest increase in token price with a rise of 377.43%.
• Yuga Labs, creator of the Bored Ape Yacht Club universe, is venturing into the web3 gaming space with the launch of its 1st season of HV-MTL Forge game.

GameFi Investment and Funding

• Total funding for the month was $29 million, spread across 6 funding rounds.

Crypto Macro Overview

In June 2023, the Bitcoin market (BTC/USD) experienced a significant development, reaching a 12-month high of $31.2k on June 22nd. This milestone indicated a sustained upward trend in the volatile cryptocurrency landscape.

On June 5, the U.S. Securities and Exchange Commission (SEC) increased its scrutiny of leading cryptocurrency exchanges such as Binance and Coinbase. As a result of these regulatory actions, bitcoin experienced a downturn, with its value dropping to $24.7k.

However, a significant shift occurred on June 22, when Bitcoin defied expectations and surged past the $30k milestone. By the end of June, Bitcoin closed at $30.4k, demonstrating that the $30k level is now serving as a solid support. This remarkable performance may have been influenced by positive news in the crypto space, such as Blackrock’s filing of a spot bitcoin ETF, which likely boosted market optimism.

This consistent performance suggests a period of consolidation within the market, highlighting bitcoin’s resilience in the face of regulatory turbulence and a cascade of market news.

Overall Web3 Game Market

In June, Bitcoin’s market performance diverged from that of gaming tokens. While Bitcoin surged to a 12-month high of $31.2k, game tokens saw their market capitalization decline from $6.38 billion to $5.50 billion, including a dip to $4.70 billion mid-month.

Interestingly, Bitcoin was resilient during this period, suggesting that it may be viewed as a more stable asset, often referred to as “digital gold”. This contrast in performance suggests that game tokens may be more sensitive to market dynamics and changes in sentiment.

The decline in the market capitalization of game tokens may also indicate a shift in investor preferences. In times of market uncertainty, investors may prefer assets that are perceived as more stable.

In June, despite having approximately 1,021 active games(A game that involves user interaction with the game contract within the current month) in the market, the data shows that only 19 games surpassed 10,000 daily active users. Notably, even a prominent game like Axie Infinity fell short, registering only 8,569 daily active users as of June 30.

This data suggests that the majority of blockchain games are struggling with low user engagement. Even established games like Axie Infinity are not immune to this trend, indicating a struggle to maintain player interest. We can also see the high concentration of active users in a handful of games, suggesting that players may be gravitating towards certain genres or established names.

Additionally, the saturation of games relative to active players could indicate an overemphasis on blockchain as a selling point without delivering an engaging gaming experience.

The crypto gaming sector experiences fluctuations in daily active users, typically ranging from 700k to 1 million. On June 23rd, there was a notable spike of 166k active users, with Walken contributing significantly to this increase by adding 47,459 users. This spike highlights the relative smallness and volatility of the crypto gaming user base.

Crypto games face the challenge of consistently attracting and retaining players. The crux of the matter is that the industry needs innovation. By combining blockchain technology with compelling gameplay, engaging storylines, and unique in-game elements, the industry could differentiate itself. The focus should be on building sustainable gaming economies and communities through innovation, rather than relying solely on blockchain and token incentives for adoption.

Web3 Game Chains

The distribution of games across different blockchain networks remains relatively stable, with no particular chain dominating. BNB chain hosts the most gaming projects, followed by Ethereum and Polygon, which together account for 71% of the market.

In this context, Binance’s launch of its Layer 2 solution, opBNB, on June 19, 2023, is a strategic move. opBNB, based on Optimism, aims to address scalability issues and is compatible with the Ethereum Virtual Machine (EVM), facilitating easy migration of existing Ethereum smart contracts. This makes it an attractive option for game developers. This could potentially lead to an influx of high-quality blockchain games on the BNB chain, leveraging its performance and compatibility with Ethereum to drive innovation and growth in the blockchain gaming space.

Most new crypto games choose to launch on the three primary chains: BNB chain, Ethereum and Polygon. However, when it comes to active users and transactions, WAX takes the lead with about 85% of transactions and about 35% of active users. However, despite this significant user base and transaction number, WAX accounts for small portion of total volume. This observation suggests the different technical design the WAX network.

The revelation that the top game on Ethereum has only 147 active players is surprisingly low, especially considering Ethereum’s prominence in the blockchain space. This data point highlights a potential misalignment between the Ethereum network and the needs and preferences of the gaming community.

Flow, another blockchain network, saw a significant increase in transactions and users towards the end of the month, largely driven by Carrom Blitz, a game created by Joyride Games.

GameFi Projects Overview

In fact, as highlighted earlier, blockchain networks specifically tailored to gaming, such as WAX and Ronin, are proving to be more adept at meeting the needs of the gaming community. The fact that Alien Worlds on WAX leads in terms of active users and Axie Infinity on Ronin dominates in terms of volume reinforces this point.

In June, STEPN saw the largest increase in token price with a rise of 377.43%. It was closely followed by Zodium and Nakamoto Games, which are also saw significant increases in their token prices.

It is worth noting that the projects that are currently leading the way in terms of token price increases are predominantly established projects that have been deeply involved in the gaming sector for some time. This suggests that success in the blockchain gaming space is often the result of sustained efforts over time to develop a robust ecosystem and build a strong community.

Even though the market cap has decreased and users are mainly focused on a few top games, there are still some promising indicators this month.

Yuga Labs, creator of the Bored Ape Yacht Club universe, is venturing into the web3 gaming space with the launch of its 1st season of HV-MTL Forge game. Yuga Labs launches the meta layer of the game where players can customize their forge and compete for social kudos. This game, exclusive to HV-MTL NFT holders, is a creative, social and competitive crafting game where players can design their own spaces and participate in social voting contests.

The game, which is part of Yuga Labs’ ambitious plan to launch four or five games this year, is expected to have high participation rates among NFT holders, similar to their previous game, Dookey Dash, which had approximately 97% participation.

In addition to famous NFT IP making their foray into the gaming sector, AAA games are also showing promising developments. Another notable game in this month is Gods Unchained, a blockchain-based card trading game developed by Immutable Studio, was recently released on the Epic Games Store (EGS). As a result of this release, the value of the game’s native token, GODS, has increased by 50% since its low point in June 2023.

In addition, Ubisoft, a prominent game developer, officially launched its first blockchain-based game, Champions Tactics. Despite the ongoing debate surrounding the use of blockchain and NFTs in gaming, Ubisoft is one of the first AAA studios to fully embrace the space. This move is indicative of the game industry’s gradual adoption of the Web3 trend, with other major companies such as Square Enix and Sega also incorporating Web3 into their future projects.The launch of Champions Tactics has set a benchmark for the future integration of blockchain in the gaming industry. It is clear that while industry giants are cautious about blockchain gaming, they continue to persevere and explore its possibilities.

GameFi Investment and Funding

In terms of GameFi investment and funding, the month again saw a significant drop from the previous month. Total funding for the month was $29 million, spread across 6 funding rounds. This is in stark contrast to the previous month, which saw a more robust funding scenario with $79.1 million raised across eight rounds.

HyperPlay, a game launcher developed by MetaMask and Game7 DAO, recently secured $12 million in Series A funding. This round is the largest of its kind this month.

Founded in November 2022, HyperPlay aims to address the challenge of interoperability in Web3 gaming. It provides a solution by allowing developers to work without being restricted by centralized entities such as Apple, Google, and Steam. The platform enables interoperability across all Web3 games through a wallet overlay that allows players to carry their MetaMask wallet within native or browser-based games. Currently, HyperPlay’s game store offers a selection of over 33 Web3 titles.

In a separate development, Argus, a Web3 game studio, has raised $10 million in a seed funding round led by Haun Ventures, a crypto investment firm. The funding will be used by Argus to expand its team and improve its studio and tooling infrastructure. This investment comes at a time when funding rounds for blockchain-based games are regaining momentum after a period of reduced investment activity in the broader Web3 industry.

What’s new in this month?

• Mythical Games Secures $37 Million to Launch In-Game Marketplace and Pursue Revenue Initiatives
• Immutable’s Gods Unchained Launches on Epic Games Store
• Nike NFTs to Make Their Way into EA Sports Games and Its Millions of Fans
• Animoca Brands’ Anichess Secures $1.5M for Decentralized Chess Game
• Massive Blockchain Game Illuvium Raises Another $10M From Framework Ventures

This piece is contributed by the Footprint Analytics community.

The Footprint Community is a place where data and crypto enthusiasts worldwide help each other understand and gain insights about Web3, the metaverse, DeFi, GameFi, or any other area of the fledgling world of blockchain. Here you’ll find active, diverse voices supporting each other and driving the community forward.

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