Is GameFi Summer Coming? A Review of Web3 Games That Secured Significant Funding During the Bear Market and Their Progress

Written by: flowie, ChainCatcher

After a long period of silence, GameFi has recently entered a phase of concentrated growth, and the crypto community has begun to call for a GameFi Summer. In addition to still holding high hopes for GameFi to accelerate the large-scale adoption of crypto, crypto users believe that in the upcoming year of 2024, GameFi, as the sector that raised the most funding in the entire Web3 primary market during the last cycle, must deliver a report card to investors.

According to data provided by Immutable on the X platform, in 2022, Web3 game financing accounted for 62% of the total financing in the Web3 industry. DappRadar data shows that in the three quarters of 2023, the blockchain gaming sector attracted investments of $739 million, $973 million, and $600 million, respectively. In other words, following the collapse of chain games in 2021, even during the crypto winter, capital has not given up on heavily investing in Web3 games.

However, despite the high expectations for GameFi, many crypto users are pouring cold water on the anticipation of this GameFi Summer. Coingecko has compiled statistics on games in the GameFi market over the past five years, stating that approximately 2,127 Web3 games have ended in failure, accounting for 75.5% of the total launched (2,817 games). In other words, three out of every four Web3 games are inactive.

In addition to the extremely high failure rate and even rug pulls, some crypto users have expressed that compared to DeFi's revolutionary impact on certain scenarios in traditional finance, GameFi seems to lack significant disruption to traditional gaming. Following the play-to-earn model, although there are many new concepts in GameFi, most are more about names than substance.

GameFi, or Web3 games, has always been a hot topic in the primary market. After nearly two years of silence, is the recent surge just a false alarm or a genuine revival? What has happened to those projects that secured significant funding in the last cycle?

Why is everyone saying GameFi Summer has arrived?

Since mid-October, the GameFi sector has been bustling with activity. On one hand, many new and old projects have begun to take frequent actions, with token prices rising sharply. In mid-October, the AAA chain game BIGTIME saw its price increase nearly 20 times just two days after its launch on OKX, drawing some attention back to GameFi.

Subsequently, several new and old chain game projects also began to make significant moves. At the end of October, the RPG masterpiece Illuvium announced that it would conduct a public test in the first quarter of 2024, and later announced its listing on the Epic Games Store and a partnership with esports club Team Liquid, with all revenue within the ecosystem being returned 100% to ILV stakers. Its native token ILV rose from $49 to $109 within a month, an increase of over 123%.

Meanwhile, the Web3 gaming platform Immutable announced a partnership with gaming giant Ubisoft. The price of Immutable's native token surged from $0.6 to $1.12 within a week, with a 7-day increase of over 80%. According to L2BEAT data, Immutable X's TVL also surpassed $200 million last week, with a 7-day increase of 40.71% (currently falling back to $182 million). At the same time, traditional gaming giants like Unisoft entering the space have also increased the playability of chain games, bringing more possibilities.

The former king of chain games, Gala Games, also announced a strategic partnership with DWF Labs in early November to accelerate L1 adoption. Its token Gala has seen an increase of over 30% in the past month.

The previous P2E leaders Axie and STEPN have also had significant developments recently. The Ronin sidechain developed by Axie Infinity's parent company Sky Mavis has seen explosive growth in active user addresses, increasing sixfold compared to the previous month, following the migration of P2E MMO games Pixels and Zoids Wild Arena. Axie has partnered with the Philippine ride-hailing app Grab to provide additional benefits for local users. The price of the AXS token has risen by 20% within a month.

The STEPN development team also announced the launch of its second game, Gas Hero, in November, officially starting community testing on November 27. The once-popular chain game Star Atlas on Solana has introduced a new game mode, combining elements of cryptocurrency and NFTs to provide players with a fresh gaming experience. The ATLAS token has seen a monthly increase of 132%.

TreasureDAO, which created the phenomenon game The Beacon at the end of last year, recently announced plans to develop its own gaming public chain and stated that it would use MAGIC as the gas token.

With the concentrated rise of tokens in the chain game sector, the total market capitalization of chain games has increased by over 10% in the past week, currently nearing $1.5 billion. From the perspective of primary market investment and financing, according to RootData, investment in the GameFi sector has also warmed up in October, with financing exceeding $100 million, a 61% increase from September's $67 million, while financing amounts in July and August were both below $15 million. Among these, Animoca Brands received a $50 million investment from the NEOM fund led by the Saudi Crown Prince, while Shrapnel, dubbed the CS of chain games, secured $20 million in Series A funding. In November, the metaverse game MATR1X received $10 million in Series A2 funding, with participation from Folius Ventures, SevenX Ventures, and ABCDE Capital.

In addition to some actual actions in the chain game sector, the high calls for this wave of GameFi Summer from crypto users also stem from a basic logic: in the last cycle, too much money was poured into the GameFi primary market, with many projects raising tens of millions of dollars but ultimately making little impact. As the crypto market gradually shifts from bear to bull, with a large number of game public tests in Q1 and Q2 of 2024, the secondary market for GameFi is bound to perform better, providing some accountability to investors.

After "P2E," chain games are divided into Web2.5 games and full-chain games

After the "collapse" of GameFi at the end of 2021, the crypto market gradually entered a deep bear phase, and GameFi also fell into silence. There have been almost no paradigm innovations like Axie or STEPN in the play-to-earn model, but some minor developments have emerged, such as the NFT-based Free to Own model, emphasizing more playability in AAA RPG games, and incorporating elements of gambling and competition in Bet to Earn/Skill to Earn, among others.

For example, in August last year, the blockchain game Limit Break announced the completion of a $200 million financing led by Paradigm and introduced the new "Free to Own" model. Although this model faced skepticism, Binance CEO Zhao Changpeng even tweeted sarcastically, "Venture capitalists (VCs) just created a new term: Free-to-own. If everything in the world is free, why do we work so hard… it won't be free forever. Work hard!" However, the NFT series DigiDaigaku released by Limit Break ranked first in trading volume on OpenSea within 24 hours, with peak floor prices reaching around 18 ETH.

After the brief popularity of Limit Break and DigiDaigaku, the game The Beacon incubated by TreasureDAO also became a hit, arguably one of the hottest chain games during this bear market. Over 10,000 players entered The Beacon within a week, and the "founder game character" priced at $40 sold over 17,000 copies, with many YouTubers live-streaming gameplay introductions. The success of The Beacon can largely be attributed to its demo, which added significant playability, with daily new content in its "dungeon" challenges, allowing users to enjoy the game itself beyond just obtaining airdrops.

In October this year, the AAA chain game BigTime also gained popularity due to the astonishing rise of its game token BIGTIME, with even preseason invitation codes appearing on second-hand e-commerce platforms.

Overall, since the collapse of chain games at the end of 2021, chain games have been trying to shed the purely "Play to earn" label by increasing playability and transitioning to a Play and earn model to cultivate a group of genuine gamers. Throughout 2022, the narrative of AAA chain games emerged, with many claiming to be AAA chain games like Bigtime, Delysium, and Abyss World. By 2023, the narrative shifted towards full-chain games, with projects like Dark Forest, Loot, and Arena of Faith dedicated to becoming full-chain games. Many crypto VCs from Paradigm have expressed optimism about the development of full-chain games.

EMC_Labs researcher @0xNing0x, in summarizing the fundamentals of Web3 games this year, mentioned that the industry has gradually categorized Web3 games into Web2.5 games and full-chain games. ABCDE Capital also classified current Web3 games into Web2.5 games and full-chain games in their article "Why We Invest in Matr1x?"

@0xNing0x explained that Web2.5 games refer to "traditional" chain games that have game assets on-chain, core game logic off-chain, and lack community governance mechanisms, while ABCDE believes that Web2.5 games emphasize Play & Earn, weakening the Earn component while increasing the Play proportion. Full-chain games are easier to understand, as @0xNing0x stated, they refer to new chain games that have both game assets and core game logic fully on-chain and possess DAO governance mechanisms. ABCDE noted that this narrative is grander and more blockchain-native but is still in its early stages, similar to DeFi in 2018, and will require a few more years for iteration and development.

However, despite the emergence of new narratives and wealth-effect projects in the chain game sector, and the recent frequent activities and decent price increases of chain game projects, doubts about whether chain games will perform well in the next bull market remain. dForce founder @mindaoyang mentioned, "Full-chain games are still AW; aside from a change in terminology, they haven't given people that 'wow' transparency like DeFi's Uniswap." Chain games still face three contradictions: the conflict between playability and financial attributes; the conflict between developers' minting rights and the decentralization of token models; and the unequal status between players and developers, with many players but few good developers.

From the current chain game projects, there indeed hasn't been much paradigm innovation in gameplay and economic models, making it difficult to escape the cycle of explosive growth and decline.

How are those Web3 games that raised significant funding progressing?

Although Web3 games have been relatively quiet during this bear market, financing in this field has continued to occupy an important position in Web3 industry investments. ChainCatcher has compiled a list of representative projects that have secured significant funding (over $10 million) from well-known capital from January 2022 to the present, along with their recent developments.

Animoca Brands
Animoca Brands has raised nearly $600 million in funding since 2022. Recently, Animoca Brands has engaged in a strategic partnership with TON, becoming the largest validator on the TON blockchain and strategically investing in the TON ecosystem. The TON Play project, based on TON, provides the necessary infrastructure and solutions for launching new game projects on TON, enabling Animoca Brands' portfolio of over 400 Web3 projects to be smoothly migrated to Telegram.

Proof of Play
Proof of Play is a Web3 game studio that completed a $33 million financing round led by Greenoaks Capital and a16z Crypto in September this year. Proof of Play has launched its first game, "Pirate Nation," where players can collect and dispatch pirates for adventures, gather crafting materials, treasures, and pirate gold, with pirates gaining experience and leveling up through multiple adventures.

Mythical Games
Mythical Games is a game technology studio aiming to create world-class products that drive consumer adoption of distributed ledger technology. In June this year, Mythical Games secured $37 million in Series C1 funding led by Scytale Ventures, with participation from Animoca Brands, PROOF, MoonPay, and a16z Crypto. Recently, Mythical Games launched the blockchain-based video game NFL Rivals on Apple and Android devices and released another mobile game called "Nitro Nation World Tour."

CCP Games
CCP Games received $40 million in funding led by a16z Crypto in March this year. Founded in 1997, CCP Games is an Icelandic game development company known for its modern sci-fi MMO game "EVE Online." Following this funding, CCP Games plans to create a new AAA blockchain game set in the EVE Online universe.

Gunzilla Games
Gunzilla Games is a game developer currently working on "Off The Grid" (OTG), a cyberpunk battle royale 2.0 game. In June last year, Gunzilla Games completed $46 million in funding, led by Republic Capital, with participation from Griffin Gaming Partners, Animoca Brands, and Jump Crypto.

Wildcard
Wildcard is a Web3-based video game for gamers, fans, and collectors. In June last year, Wildcard completed $46 million in funding led by Paradigm. In April this year, Wildcard launched 4,444 Wildpass tokens on Magic Eden's Launchpad, which provide unique access to the Wildcard Universe.

Irreverent Labs
In May last year, Irreverent Labs secured $40 million in Series A funding with participation from a16z Crypto, Solana Ventures, and Infinity Ventures Crypto. Led by esports veteran and Unikrn founder Rahul Sood, Irreverent Labs is launching its first play-to-earn NFT fighting game, "MechaFightClub."

Jadu
Jadu is a Web3 augmented reality platform developing a world-class AR game where players will use jetpacks and hoverboards to traverse real-world locations in search of rare NFTs in the game. In April last year, Jadu completed $36 million in Series A funding led by Bain Capital Crypto. In February this year, Jadu announced that users could register to use the platform, and according to its official website, Jadu is available for download on the App Store and Google Play.

Matr1x
Matr1x is a metaverse brand planning to build the Matr1x brand through self-developed high-quality games or collaborations with third parties, game IP development, and global esports events. Matr1x will showcase its gaming trilogy (Cyber Earth - Mars Colonization - Interstellar Exploration) through three large games with a unified worldview: Matr1x FIRE (first-person shooter), Matr1x WAR (shooter + MMORPG), and Matr1x EVOLUTION (SOC). Recently, Matr1x announced it secured $10 million in funding with participation from Folius Ventures, SevenX, and ABCDE. In August this year, Matr1x FIRE launched its Alpha test and airdropped tens of millions of FIRE tokens to test users.

After the funding announcement, the floor price of MATR1X's NFT series - MATR1X 2061 - once surged to 2.65 ETH. MATR1X is also launching another platform-level NFT, MATR1X KUKU, which enjoys MATR1X creator economy benefits and premium rights on the MATR1X platform.

SHRAPNEL (SHRAP)
Shrapnel is a competitive multiplayer FPS game developed by a team of industry-leading AAA game and blockchain project experts. Last year, it completed $7 million in funding through a token sale, with participation from Dragonfly and Three Arrows Capital. Recently, its development studio Neon Machine secured an additional $20 million in funding. "Shrapnel" is set to launch for paid users in December and will be fully released as a free game in 2024.

On November 8, the game was also launched on Bitget, with an initial price of $0.03, which later surged to $0.19, an increase of over 533%. However, with larger funding amounts recently, internal issues have arisen at Shrapnel, with Neon Machine mentioning lawsuits to several investors, claiming attempts to seize control of the company and its treasury.

Pahdo Labs
Pahdo Labs is developing Halcyon Zero, an isometric action RPG set in an anime-style ethereal world. Pahdo Labs' mission is to cultivate a virtual world built by players. The upcoming game will allow players to create their own anime-style worlds using AI or procedurally generated enhanced tools, bringing creativity and social features to the forefront of anime role-playing games. In September this year, Pahdo Labs completed $15 million in Series A funding led by a16z Crypto.

Mahjong Meta
Mahjong Meta is a Web3 Mahjong competitive community created by former Tencent and NetEase employees. In August this year, Mahjong Meta completed $12 million in funding led by Dragonfly and Folius Ventures. Users can log onto the official website to play games and participate in Mahjong master competitions.

Illuvium (ILV)
Illuvium is an open-world RPG adventure game based on the Ethereum blockchain, allowing players to collect, trade, and battle NFT assets. In May this year, Illuvium announced the completion of $10 million in funding from Framework Ventures.

Recently, Illuvium announced it would conduct a public test in the first quarter of 2024, followed by its listing on the Epic Games Store and a partnership with esports club Team Liquid, with all revenue within the ecosystem being returned 100% to ILV stakers.

Azra Games
Azra Games is a blockchain gaming company aiming to create mainstream collectible battle RPGs. In February, Azra Games completed $10 million in seed funding, led by a16z, with participation from NFX, Coinbase Ventures, Play Ventures, and Franklin Templeton. Azra plans to release the first installment of the game Legions & Legends later this year.

Angelic / Metaverse Game Studios
Metaverse Game Studios is a blockchain game development studio, and its game Angelic is a narrative strategy RPG with a dark sci-fi theme. In March last year, Angelic / Metaverse Game Studios completed $10 million in funding led by Animoca Brands and Solana Ventures.

In addition to the above-mentioned Web3 game projects that have secured significant funding in the past year or two, the previously mentioned Star Atlas, Ronin Network, Treasure DAO, and the new game Gas Hero launched by the STEPN development team are also worth paying close attention to.