In April, nearly $1 billion in investments were attracted, with 3 million daily active users. Is a bull market for Web3 games coming?

Author: flowie, ChainCatcher

Editor: Marco, ChainCatcher

Web3 games seem to have entered a strong recovery phase.

Recently, with the social mini-game Notcoin (NOT), backed by 900 million active Telegram users, launching simultaneously on Binance and OKX, Web3 games have once again attracted massive attention from the crypto market.

According to Jack Booth, market director of the TON Foundation, Notcoin achieved 6 million daily active users during its mining phase, compared to the peak of 2 million daily active users of the original Web3 game king Axie Infinity. In just three months, the user base grew to 35 million.

On May 16, Notcoin's official data showed that its market capitalization surpassed $820 million just one hour after launching on various exchanges.

In addition to Notcoin's astonishing growth, the blockchain game report released by DappRadar and the Blockchain Game Alliance in April indicates a clear growth trend in the entire chain game market, with an average of 2.9 million daily unique active wallets (dUAW) in April, a 17% increase compared to March.

Data from Footprint Analytics shows that the average daily active users (wallets/players) in blockchain games exceeded 3 million in April.

Furthermore, the DappRadar report states that the investment scale in the blockchain gaming sector reached $988 million in April, setting a new high since January 2021.

Two Venture Capitals Raise Nearly $900 Million to Fuel Web3 Games

The total investment in Web3 games in the first quarter of 2024 was around $288 million, while the total investment in April suddenly surged more than twofold, mainly due to a16z and Bitkraft Ventures completing a new round of fundraising.

On April 17, a16z announced that it successfully raised a massive new fund of $7.2 billion, with $600 million allocated to the gaming industry, including companies developing new games, gaming platforms, game-related technologies, or other innovations in the gaming industry.

Regarding the use of the $600 million gaming industry investment fund, Andrew Chen, general partner at a16z and head of the a16z Games Fund One, revealed that it will be used to create a second gaming fund covering more diverse fields: from AI, Web3 games, VR/AR, 3D tools, gaming apps to studios.

Earlier, Andrew Chen also announced that by May 19, through the a16z Speedrun program, a total of $30 million would be invested in multiple gaming companies, including Web3 games, with each startup joining the Speedrun program receiving $750,000.

RootData shows that Web3 games are the second-largest investment area in a16z's crypto investments, following infrastructure, with at least 25 Web3 games already invested in.

So far this year, a16z has participated in two investments in Web3 games: a $13 million Series A funding for the apocalyptic NFT shooting game MadWorld and an $8 million financing for the gambling ecosystem developer MyPrize.

In addition to a16z, another venture capital firm, Bitkraft Ventures, also announced in April the launch of its third gaming fund, which has raised $275 million and will focus on seed and Series A stage gaming studios, technologies, and platforms.

Bitkraft Ventures recently announced the introduction of two new executives to expand the Asian Web3 gaming market: Jin Oh, former president of Riot Games and CEO of Garena, and Jonathan Huang, former vice director of Temasek.

Bitkraft Ventures has been very active in investing in Web3 games. In 2021, Bitkraft Ventures raised $75 million to launch its first token fund for investing in blockchain games and digital entertainment. By the end of March 2023, Bitkraft Ventures raised $220 million for its second "token fund."

To date, Bitkraft Ventures has publicly announced nearly 50 investments, the vast majority of which are in the Web3 gaming sector, with representative cases including YGG and Immutable.

From the beginning of this year to now, Bitkraft Ventures has participated in investments in four game projects: Metalcore, MadWorld, Avalon, and My Pet Hooligan, with MadWorld being co-invested with a16z.

Record High Daily Active Users: Which Web3 Games Are the Leaders?

Despite the overall downturn in the crypto market, the active users of Web3 games are on the rise.

Robin Guo, a16z gaming investor, quoted Footprint Analytics on social media, exclaiming: "The MAU (monthly active users) of Web3 games is 3.3 million, far exceeding the previous peak created by Axie. If the data hasn't been cleaned, I'm sure many of them are bots, but the recent growth led by Pixels is still impressive. It feels like this has really been overlooked."

According to DappRadar's report, the dUAW (daily unique active wallets) of Web3 games reached 2.9 million in April, setting a historical high.

Among them, the top ten Web3 game applications in terms of UAW (unique wallet addresses) all exceeded 1.5 million. Pixels still holds a strong dominant position, with UAW exceeding 20 million, followed closely by Sweat Economy and StarryNift, both exceeding 5 million UAW.

These ten games were mostly launched around 2020 and 2021.

Pixels is a pixel-style farming game launched in 2021, which migrated from Polygon to the Ronin network at the end of last year. Ronin is an Ethereum Virtual Machine (EVM) chain developed by Sky Mavis, the developer of Axie Infinity. The growth of Pixels has also made Ronin the most active gaming chain currently.

In February of this year, Pixels launched on Binance, and as of May 21, its fully diluted market capitalization was around $1.9 billion. Recommended reading: “Pixels Two-Year Anniversary: Shouldering the Metaverse Pixel-style Farming Chain Game of the Ronin Ecosystem”

Sweat Economy is a fitness-themed move-to-earn game, which is a mini-game adapted from a traditional fitness app with 100 million users, built on the Near chain.

StarryNift is an AI-enhanced co-creation metaverse platform that provides immersive 3D virtual experiences for gaming, creation, and socializing. The founder of StarryNift was a founding partner of Matrix and co-founder of DEx.top. StarryNift has completed three rounds of financing, with investors including OKX Ventures, SIG Asia Investment Fund, Binance Labs, GBV Capital, BNB Chain Fund, Alameda Research, LD Capital, and CoinGecko Ventures.

Another World was established in 2021 and is a South Korean Web3 metaverse project built on the Klaytn chain, originally named Terra World, and has just completed its public beta. According to public reports, Another World has the support of South Korea's Kakao Group and LG Group, with a large global user community of 200,000 and a strong blockchain token system.

Alien Worlds is a relatively old space exploration game that integrates DeFi, NFT, and DAO. In 2021, it received $2 million in funding from investors including Animoca Brands and LD Capital. As of May 22, its token TLM had a fully diluted market capitalization of over $100 million. Recommended reading: “Understanding Alien Worlds in Three Minutes: A Space Exploration Game Integrating DeFi, NFT, and DAO”

MotoDex is a motorcycle racing game built on the Ethereum sidechain SKALE. According to DappRadar data, its UAW has surpassed Pixels in the past 30 days.

Nine Chronicles is a classic decentralized RPG (role-playing game) that has completed two rounds of financing, with Binance Labs and Animoca participating in the investment. As of May 22, the fully diluted circulating market capitalization of Nine Chronicles' token WNCG was around $70 million.

Apeiron is a card duel and deity simulation game. In December last year, Apeiron announced its migration to the Ronin network. It completed a $10 million seed round led by Hashed in 2022. On February 28, the public beta of Apeiron Arena was released on the Epic Game Store, allowing players to earn ANIMA airdrop points by downloading and participating in competitions. Its token APRS was launched on Bybit and the decentralized exchange Katana on the Ronin blockchain, with a fully diluted market capitalization of $580 million as of May 22. Recommended reading: “Exploring Apeiron: A Disruptive Blockchain Game Merging Mythology and Modern Gameplay”.

Ultiverse is an AI gaming platform backed by a strong lineup of investors, having completed three rounds of financing with a total of $135 million raised, with Binance Labs participating in two rounds of financing, along with well-known investment institutions such as IDG Capital, Animoca Brands, and DWF Labs. On May 3, Ultiverse's gold chip NFT saw a 24-hour trading volume exceeding 1,100 ETH, ranking first on the BLUR trading list.

World of Defish is a decentralized NFT game world running on the BNB chain, incubated by the decentralized IDO platform Poolz and funded by Poolz Ventures.

In addition to these ten Web3 games with high UAW, the shooting mobile game Matr1x has also shown outstanding monthly active users in the past 30 days. Matr1x received strategic financing from Animoca in February, and in previous rounds of financing, well-known institutions such as OKX Ventures, SevenX Ventures, Folius Ventures, ABCDE, and Hashkey Capital participated.

Conclusion

Although there are popular games like Pixels and Notcoin in this bull market, there still seems to be a gap compared to the phenomenal games like Axie and STEPN that led the new paradigm of Web3 games.

After the P2E era, the hotspots for venture capital investment in Web3 games are trying to create AAA masterpieces that replicate Web2 gaming experiences and are committed to putting all game logic and assets on-chain.

Currently, AAA chain games face skepticism regarding capital speculation due to high production costs and long implementation cycles, while lightweight games like Notcoin attract a large amount of traffic. Will the next phenomenal Web3 game emerge from social mini-games?