Web3 Gaming in 2024: Sidelined in the Crypto Boom?

Web3 gaming painted a complex picture in 2024, facing both significant achievements and notable challenges. While daily active users surged over 300% to reach 6.58 million and traditional gaming companies made concrete moves into the space, the sector underperformed in market performance, increasing its market cap by 60.54% and significantly trailing behind memecoins and AI projects. As Bitcoin approached new highs and various crypto sectors flourished, a crucial question emerged: Has Web3 gaming lost its position as a key driver of crypto adoption?

Yet beneath these surface metrics, 2024 marked a crucial transition year. The industry evolved beyond pure speculation. This report analyzes how Web3 gaming matured through market cycles in 2024, examining the sector's key metrics, technological advancements, and strategic shifts. From infrastructure development to user engagement patterns, we explore how the industry is building toward sustainable growth while navigating the challenges of mainstream adoption.

Note: Unless otherwise specified, all data in this report reflects market activity through December 15, 2024. Data was sourced from Footprint Analytics and CoinMarketCap.

I. Key Metrics Snapshot

Market Cap: Reached $31.8 billion, up 60.5% YoY.
Trading Volume: $5.2 billion total, up 18.5% YoY.
Transactions: 5.3 billion total, down 30.3% YoY.
Daily Active Users: 6.6M by year-end, up 308.6% over the year.
Active Games: 1,361 active out of 3,602 total (37.8%).
Annual Funding: $909.4M across 220 funding events.
Chain Leadership:

Trading Volume: BNB Chain (23.1%), Ethereum (17.6%), Blast (9.2%);
Transactions: WAX (33.6%), Aptos (11.6%), Ronin (6.1%);
DAU: opBNB (2.2M), Ronin (1.1M), Nebula (458K) in December.

II. Market Performance Analysis

Market Cap

The Web3 gaming sector showed strong growth in 2024 but underperformed compared to other crypto sectors. According to Footprint Analytics, the market cap of gaming tokens reached $31.8 billion by year-end, representing a 60.5% annual increase. While the sector achieved its yearly peak of $47.4 billion in March, this remained significantly below the previous cycle's high of $114.1 billion set in November 2021.

Despite the broader crypto market's strong performance in the latter half of 2024, particularly during the Bitcoin-led rally in the final two months, gaming tokens lagged behind other sectors. CoinMarketCap data shows Web3 gaming ranked 8th among the Top 10 Sectors in market cap growth, significantly trailing behind the leading sectors: Memes (421.1%), AI & Big Data (168.0%), and Solana Ecosystem (124.1%).

This underperformance extended to community interest as well. In CoinMarketCap's most viewed sectors, Web3 gaming captured just 6.7% of views, ranking 9th among Top 10 sectors, as attention focused primarily on memecoin and AI-related projects throughout the year.

Trading Volume & Transaction Patterns

The Web3 gaming sector showed mixed performance across key metrics in 2024, with significant growth in trading volume but continued decline in transaction counts.

Trading Volume Trend

The total trading volume of Web3 gaming in 2024 reached $5.2 billion, representing an 18.5% increase from 2023's figure. While this reversed the downward trend since 2021, volume remained significantly below previous cycle highs. The 2024 figure represented only 6.2% of 2021's peak ($84.1 billion) and 15.1% of 2022's volume ($34.5 billion).

Transactions Trend

Total transactions in 2024 reached 5.3 billion, marking a 30.3% decrease from the previous year. This level was comparable to 2021's 5.1 billion transactions, but continued the declining trend that began in 2022.

User Engagement

Daily active users (DAU) grew substantially throughout 2024, from 1.6 million in January to 6.6 million in December, representing a 308.6% increase over the year. This growth surpassed the previous cycle's peak of 1.8 million DAU in November 2021. While these figures likely include some bot activities, the significant increase still demonstrates a remarkable recovery from the post-2021 decline.

III. Ecosystem Development

A. Chain Competition and Evolution

Leading Chains Performance Analysis

The Web3 gaming landscape saw significant shifts in chain dominance across different metrics in 2024, with distinct leaders emerging in trading volume, transactions, and user engagement.

Trading Volume by Chain

BNB Chain maintained its dominance in trading volume, securing $1.2 billion (23.1% market share), followed by Ethereum with $915.4 million (17.6%). Notably, Blast and Ronin captured significant market share at 9.2% and 9.0% respectively.

Transactions by Chain

Despite the industry's 30.3% decrease in overall transactions, certain chains demonstrated strong performance. WAX led with 1.8 billion transactions (33.6% of total). Aptos emerged as a significant player with 616.2 million transactions (11.6%), notably driven by its "tap-to-earn" Telegram game Tapos, which generated 540.3 million transactions in August alone. Ronin and opBNB maintained steady transaction volumes with 321.2 million and 317.9 million transactions respectively.

DAU by Chain

User activity showed remarkable growth, particularly in the latter half of 2024. opBNB emerged as the leader in user engagement, reaching 2.2 million average DAU in December and overtaking the long-standing leader Ronin, which maintained 1.1 million average DAU. Nebula, a SKALE Layer 2, established itself as a strong contender with 458K average DAU. The rise of chains like NEAR, Sui, and Sei into the top 10 by DAU demonstrates the ecosystem's expanding competitive landscape and users' willingness to engage with newer platforms.

This diversification of chain usage suggests a maturing ecosystem where different chains are finding their niches in supporting various types of gaming experiences and user preferences. Major networks now act as hubs for game developers that go far beyond basic blockchain infrastructure.

The Arbitrum Foundation's $200 million ARB Gaming Catalyst Program, Starknet Foundation's 50 million STRK token distribution initiative, and significant grant programs from Sui and Xai demonstrate how chains are competing to attract and retain quality gaming projects through strategic incentives.

Technical Infrastructure Improvements

Growing Capacity

Blockchain capacity is growing significantly, with networks processing more than 50 times as many transactions per second 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 running on top of Avalanche, Oasys, SKALE, Arbitrum Orbit, and other high-throughput blockchains including Solana, Sui, and Aptos.

Gaming-focused infrastructure saw major developments. Ronin announced its Layer 2 plan Ronin zkEVM in June 2024, which will enable Ronin builders to create their own zkEVM Layer 2s on Ronin. Immutable zkEVM made a strategic move toward greater accessibility by removing its Deployer Allowlist and enabling Permissionless Deployment. Additionally, Avalanche completed its Avalanche9000 upgrade, addressing the platform's most significant limitations since its 2020 mainnet launch. This upgrade focused on reducing barriers to building customizable L1s and improving interoperability.

Lowering Gas Fees

A major milestone was Ethereum's "Dencun" upgrade (also called "Proto-Danksharding" or “EIP-4844”) in March 2024, which significantly reduced fees for L2 networks. The impact was substantial, with gas fees dropping from several dollars to several cents or even less than one cent. This reduction eliminated one of the biggest friction points facing blockchain gaming developers and players.

Increasing Cross-chain Interoperability

Chainlink Cross-Chain Interoperability Protocol (CCIP) gained significant traction in 2024, enabling developers to create games that can interact with assets from multiple chains. This enhancement significantly improved the interoperability of in-game items.

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

2024 also saw the notable rise of decentralized platforms supporting cross-chain gaming. Platforms like Portal, Fractal ID, and Web3Games provide the essential infrastructure for seamless asset transfers and interactions between different blockchain ecosystems.

B. Project Development

2024 marked a significant year for Web3 game launches and developments. Beyond traditional gaming companies' entry, the ecosystem saw several notable releases. Highly anticipated titles like Off The Grid and MapleStory Universe launched in early access, while Illuvium finally released its full version. Proof of Play's Pirate Nation successfully executed its Token Generation Event (TGE) and play-to-airdrop campaign.

Active Games Analysis

By November 30, 2024, the total number of blockchain games reached 3,602, showing growth from January's 2,997. However, active game metrics revealed challenging trends. Of the total games, only 1,361 (37.8%) maintained active on-chain users, while 2,241 (62.2%) remained inactive. On top of this, the number of active games decreased from January's 1,387, despite the growth in total games.

A deeper analysis of user engagement metrics shows further concentration in the market. Games with over 100 monthly active users (MAU) decreased from 586 in June 2022 to 522 by 2024 year-end. In November 2024, 161 games (4.5% of total) achieved over 10,000 MAU, with 96 games (2.7% of total) surpassing 100,000 MAU.

This concentration of users suggests a maturing market where successful games are capturing larger audiences, influenced by factors including intense competition, rapid iteration strategies, and the emergence of dominant titles creating a "head effect" in the ecosystem.

C. Innovation Landscape

Cross-Platform Gaming Trends

Mobile gaming established itself as the primary platform for Web3 gaming in 2024, emphasizing accessibility and seamless user experiences. The mobile-first approach has shaped how developers design blockchain games, focusing on intuitive interfaces and simplified onboarding processes, accounting for 29.4% of new launches in 2024.

Social platforms, particularly Telegram, emerged as powerful catalysts for Web3 gaming adoption, comprising 20.9% of new Web3 game launches. Telegram's success stems from its massive user base, simplified in-app experience, and ability to bypass traditional app store restrictions. The platform's impact peaked in Q3 2024, with 11 games surpassing 10 million monthly active users (MAU). Notably, TON successfully converted this massive user base into on-chain participants, creating a spillover effect across Web3 gaming, memecoins, and DeFi sectors. The success prompted multiple blockchain networks beyond TON to compete for Telegram's traffic, with Aptos, Sui, Core, and others launching their own Telegram-based initiatives.

Similarly, Line's announcement to launch 20 mini dApps in December 2024 signals growing interest from mainstream messaging platforms in blockchain gaming integration.

The console gaming sector remained relatively unexplored in Web3 gaming, with major manufacturers Microsoft and Sony maintaining cautious positions. However, new approaches emerged to bridge this gap. Some developers, like Gunzilla Games with Off The Grid, chose to separate core gameplay from blockchain features to align with traditional console gaming expectations. Meanwhile, blockchain platforms began developing their own handheld Web3 gaming consoles, exemplified by Sui’s SuiPlay0X1 and Solana's Play Solana Gen1 (PSG1) announcements, potentially creating a new category of dedicated Web3 gaming devices.

Traditional Gaming Companies' Entry

2024 marked a significant shift in traditional gaming companies' approach to blockchain gaming, with major studios moving from experimental initiatives to concrete launches and strategic developments.

Ubisoft led this transition with the October launch of Champions Tactics: Grimoria Chronicles on Oasys Layer 2 HOME Verse, demonstrating a sophisticated approach to NFT integration in gaming. The tactical RPG implemented a range of NFT-based features while maintaining traditional gaming elements, representing a balanced approach to blockchain integration.

Square Enix strengthened its blockchain presence through strategic investments and partnerships. Beyond investing in gaming platforms Elixir Games and HyperPlay, the company announced plans to bring its Symbiogenesis game to HyperPlay, showing commitment to both development and infrastructure support in the blockchain gaming space.

The involvement of Sony Group signaled a major push into blockchain gaming, both through investment and infrastructure development. While supporting double jump.tokyo Inc.'s $10 million Series D round, Sony also announced Soneium, a Layer 2 network aimed at bridging Web3 innovation with consumer applications across gaming and entertainment sectors.

AI Integration in Game Development

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

AI has revolutionized in-game interactions and content generation. Game studios are leveraging AI to create more sophisticated non-playable characters (NPCs) that can adapt to player behavior and generate personalized quests based on individual player history and preferences. This personalization enhances player engagement by making gameplay experiences more relevant and individualized.

On the development side, AI has significantly streamlined the creation process. Developers are utilizing AI tools to auto-generate game environments and assets, substantially reducing production time and costs. This democratization of game development has enabled smaller teams to create high-quality games that can compete with larger studios.

AI has also enhanced the operational aspects of Web3 gaming. The technology is being employed to automate game testing processes and monitor on-chain transactions for potential fraud or cheating, particularly crucial in games with complex economic systems. Additionally, AI algorithms are helping optimize game economics and token models, addressing one of the fundamental challenges in sustainable Web3 game design.

IV. Investment Landscape

Annual Funding Overview

Web3 gaming secured $909.4 million across 220 funding events in 2024. While funding amount decreased 7.3% from 2023 and remained significantly below the 2021-2022 boom period ($3.2 billion and $2.7 billion, respectively), the number of funding events increased 48.7% from 2023, indicating continued investor interest. despite smaller deal sizes.

The year saw a marked shift toward early-stage investments, with 76 early-stage deals (34.6% of total events) compared to just 20 Series A or later rounds (9.1% of total). This trend suggests that while new projects continue to attract initial funding, many projects from the 2021-2022 boom period are finding it challenging to secure follow-on rounds.

Among investors, Animoca Brands maintained its leadership position with 38 investments, a 192.3% increase from 2023, participating in 17.3% of all 2024 funding events. The Spartan Group and Big Brain Holdings followed with 22 and 15 investments, respectively, with the top 10 investors collectively accounting for 152 investments.

Major Funding Events

The year saw selective but significant funding rounds, with seven projects raising over $20 million in single events. Azra Games led with a $42.7 million Series A round, focusing on bringing console-quality gameplay to mobile platforms.

Looking at cumulative funding, Monkey Tilt secured $51 million across two rounds, leveraging its gaming-entertainment-gambling hybrid model. Gunzilla Games demonstrated strong investor confidence by securing four funding rounds from prominent investors including VanEck, Coinbase Ventures, Delphi Ventures, and Avalanche's Blizzard Fund.

Strategic Investment Trends

As the industry matured beyond the exuberance of 2021-2022, the focus has pivoted toward fewer, higher-quality projects, with investors becoming increasingly selective in their approach.

Funding increasingly targeted gaming infrastructure and development tools rather than just games themselves. Notable examples included NPC Labs' $18 million seed round for building Web3 games on Base, and Alliance Games' $5 million Series A for AI-powered decentralized infrastructure. This trend reflects investors' growing interest in foundational technologies that can support multiple games and platforms.

Platform and multi-chain development attracted substantial attention, particularly projects building cross-chain gaming ecosystems. Seeds Labs secured $12 million for its flagship product Bladerite on Solana, while B3's launch of its Open Gaming Layer with Prime Chain demonstrated investors' interest in expanding cross-chain gaming capabilities.

Besides, new gaming categories gained significant investor attention in 2024, particularly Telegram-based gaming initiatives and gambling gaming projects despite regulatory challenges.

V. Industry Evolution and Future Outlook

The Web3 gaming industry witnessed significant evolution in gaming models throughout 2024. The "play-to-earn" model that dominated previous cycles gave way to more sustainable approaches. "Tap-to-earn" games on Telegram demonstrated unprecedented user acquisition capabilities, while "play-to-airdrop" strategies like Pirate Nation and Pixels' campaign offered new user acquisition methods. Meanwhile, established projects shifted toward "play-and-earn" models that prioritize gameplay over financial incentives.

However, the sector faced persistent challenges. Technical barriers remained significant, particularly in achieving seamless blockchain integration without compromising gaming experience. Regulatory uncertainty, especially around gambling features and token classifications, continued to influence development decisions.

Most critically, sustained on-chain engagement emerged as a fundamental concern. This was particularly evident in Telegram games' performance: Hamster Kombat's MAU dropped from over 100 million in September to 22.9 million by mid-December, with only 0.0004% of users engaging in on-chain gaming activities. While other Telegram games showed higher conversion rates, most remained below 1%. It's worth noting that these metrics specifically reflect on-chain gaming activities, as most Telegram games' core gameplay remains off-chain, with users potentially more active in other sectors like memecoins or DeFi. This highlights the persistent challenge of converting platform users into active blockchain gamers.

2025 Outlook: Reclaiming Relevance

As Web3 gaming seeks to reassert its position in the crypto landscape, several key trends emerge as potential catalysts for transformation:

Social platform integration stands as the most promising path to mainstream relevance. The phenomenal success of Telegram-based games has demonstrated the power of meeting users where they are, with platforms like Line and TikTok poised to follow. This approach could finally solve the sector's user acquisition challenges by tapping into established social networks rather than building communities from scratch.

AI integration will evolve from a marketing feature to a fundamental driver of innovation. Beyond enhancing game development and NPC interactions, AI could address the sector's core challenges in economic design and user retention - areas where Web3 gaming has traditionally struggled to compete with traditional gaming experiences.

Sustainable growth through integration may ultimately determine the sector's relevance. Success will likely come not from competing with traditional gaming or other crypto sectors, but from seamlessly blending with them. This means focusing on how blockchain can enhance gaming experiences rather than define them, developing more sophisticated token economics, and prioritizing user experience over crypto-native features.

The path forward suggests that Web3 gaming's role in the crypto ecosystem may be less about dominance and more about integration - creating genuine value by bridging the gaps between traditional gaming, social platforms, and blockchain technology. This evolution could help the sector move beyond being just another crypto vertical to becoming an essential layer in the future of gaming.

About Footprint Analytics

Footprint Analytics is a comprehensive blockchain data analytics platform that simplifies complex analysis for businesses and projects in the Web3 ecosystem. It offers tailored solutions that eliminate the need for extensive expertise and infrastructure maintenance. The platform provides long-term growth tools designed to help build and manage communities step by step, emphasizing sustainable growth and user loyalty. By combining powerful analytics with community management tools, Footprint Analytics enables projects to leverage blockchain data effectively for decision-making and growth strategies across various sectors including GameFi, NFT, and DeFi.

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