Web3 Games 2024: The Absentees in the Bull Market?

In 2024, the Web3 gaming industry presents a complex situation, making significant progress while also facing numerous challenges. Although daily active users surged by over 300% and traditional gaming companies began to make concrete plans in this field, the market performance shows that the sector's market value only increased by 60.5%, significantly lagging behind the Meme coin and AI sectors. As Bitcoin hits a new all-time high and various crypto sectors thrive, a key question arises: "Has Web3 gaming missed its best development opportunity in this bull market?"

However, behind these surface data, 2024 marks an important transformation period for the industry. The sector has moved from a purely speculative phase to maturity. This report will analyze how Web3 gaming evolves in the market cycle of 2024, exploring key indicators, technological advancements, and strategic shifts in the sector. From infrastructure development to user engagement models, we will examine how the industry builds sustainable growth while addressing mainstream adoption challenges.

Note: Unless otherwise specified, all data in this report is as of December 15, 2024. Data sources are Footprint Analytics and CoinMarketCap.

Annual Key Indicators Overview

• Market Value: Reached $31.8 billion, an increase of 60.5%;

• Trading Volume: $5.2 billion, an increase of 18.5%;

• Number of Transactions: 5.3 billion, a decrease of 30.3%;

• Daily Active Users: Reached 6.6 million by year-end, an increase of 308.6% compared to the beginning of the year;

• Active Games: Out of 3,602 games, 1,361 remain active (37.8%);

• Annual Financing: 220 financing events, totaling $910 million;

• Leading Public Chains:

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• Trading Volume Share: BNB Chain (23.1%), Ethereum (17.6%), Blast (9.2%);

• Transaction Count Share: WAX (33.6%), Aptos (11.6%), Ronin (6.1%);

• Daily Active Users: opBNB (2.2 million), Ronin (1.1 million), Nebula (458,000) (average daily in December).

Market Performance Analysis

Market Value Performance

The Web3 gaming sector achieved strong growth in 2024, but underperformed compared to other crypto sectors. According to data from Footprint Analytics, the market value of gaming tokens reached $31.8 billion by year-end, an increase of 60.5% from the previous year. Although the sector hit an intra-year high of $47.4 billion in March, it remains significantly lower than the historical peak of $114.1 billion set in November 2021.

Despite the overall crypto market performing strongly in the second half of 2024, particularly in the last two months driven by Bitcoin, gaming tokens lagged behind other sectors. Data from CoinMarketCap shows that Web3 gaming ranked eighth in market value growth among the top ten sectors, significantly trailing behind leading sectors: Meme coins (421.1%), AI and Big Data (168.0%), and the Solana ecosystem (124.1%).

This poor performance extends to community engagement. In the most viewed sectors on CoinMarketCap, Web3 gaming accounted for only 6.7% of views in the top ten, ranking ninth, as the focus throughout the year was primarily on Meme coin-related projects.

Trading Volume Analysis

The Web3 gaming sector's key indicators in 2024 showed mixed results, with trading volume increasing but the number of transactions continuing to decline.

Trading Volume Trend

In 2024, the total trading volume for Web3 gaming reached $5.2 billion, an increase of 18.5% compared to 2023. While it reversed the declining trend since 2021, the trading volume remains significantly below the previous cycle's peak. The 2024 data is only 6.2% of the 2021 peak ($84.1 billion) and 15.1% of the 2022 trading volume ($34.5 billion).

Transaction Count Trend

The total number of transactions in 2024 reached 5.3 billion, a decrease of 30.3% from the previous year. This level is comparable to the 5.1 billion transactions in 2021 but fails to reverse the declining trend that began in 2022.

User Engagement

Daily active users (DAU) saw significant growth throughout 2024, increasing from an average of 1.6 million in January to 6.6 million in December, a year-on-year increase of 308.6%. This growth surpassed the previous peak of 1.8 million DAU set in November 2021. Although this data may include some bot activity, the growth still demonstrates significant user engagement in the industry.

Ecosystem Development

Public Chain Competition and Evolution

Major Public Chain Performance Analysis

In 2024, there were significant changes in the dominance of different public chains in Web3 gaming, with each chain exhibiting different advantages in trading volume, transaction count, and user engagement.

Trading Volume Distribution by Chain

BNB Chain maintained its leading position in trading volume, achieving $1.2 billion (23.1% market share), followed by Ethereum with $920 million (17.6%). Blast and Ronin accounted for 9.2% and 9.0% of the market share, respectively.

Transaction Count by Chain

Despite an overall decline of 30.3% in transaction counts across the industry, certain public chains showed strong performance. WAX led with 1.8 billion transactions (33.6% of the total). Aptos emerged with its "tap-to-earn" model through the Telegram game Tapos, reaching 620 million transactions (11.6%), with 540 million transactions occurring in August alone. Ronin and opBNB maintained transaction counts of 321 million and 318 million, respectively.

User Counts by Chain

User activity across chains showed significant growth, especially in the second half of 2024. opBNB stood out in user engagement, with an average daily active user count of 2.2 million in December, surpassing long-time leader Ronin (1.1 million). Nebula, as a SKALE Layer 2, ranked third with an average DAU of 458,000. Public chains like NEAR, Sui, and Sei entered the top ten in DAU, showcasing the expanding competitive landscape of the ecosystem and users' willingness to try new platforms.

The diversification trend in chain usage indicates a maturing ecosystem, with different public chains finding their respective positions for various gaming experiences and user preferences. Major networks are no longer just providing basic blockchain facilities but are evolving into comprehensive platforms for game developers. The $200 million ARB Game Catalyst program from the Arbitrum Foundation, the $50 million STRK token distribution plan from the Starknet Foundation, and significant grant programs from Sui and Xai all demonstrate how each chain attracts and retains quality gaming projects through strategic incentives.

Technological Infrastructure Improvements

Capacity Enhancement

Blockchain processing capabilities have significantly improved, with the current network's transactions per second increasing by over 50 times compared to four years ago. This growth is attributed to the rise of Ethereum Layer 2 and Layer 3 networks, including Immutable zkEVM, Avalanche L1-based chains, Oasys, SKALE, Arbitrum Orbit, and other high-throughput blockchains like Solana, Sui, and Aptos.

Dedicated gaming chains have also made significant progress. Ronin announced its Layer 2 plan, Ronin zkEVM, in June 2024, enabling Ronin developers to create their own zkEVM Layer 2. Immutable zkEVM took a strategic step toward greater accessibility by removing deployment whitelists and enabling permissionless deployment. Additionally, Avalanche completed its most significant "Avalanche9000" upgrade since the mainnet launch in 2020, focusing on addressing the barriers to custom L1 builds and improving interoperability.

Gas Fee Reduction

The "Cancun" upgrade of Ethereum in March 2024 (also known as "Proto-Danksharding" or "EIP-4844") was a significant milestone that drastically reduced fees on L2 networks. The impact was substantial, with gas fees dropping from several dollars to mere cents or even lower, eliminating one of the biggest friction points faced by blockchain game developers and players.

Enhanced Cross-Chain Interoperability

The Chainlink Cross-Chain Interoperability Protocol (CCIP) saw significant development in 2024, allowing developers to create games that can interact with multi-chain assets. This improvement greatly enhances 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 that in-game NFTs can be recognized and used across various games and platforms, simplifying asset transfer and interaction.

2024 also witnessed the significant rise of decentralized platforms supporting cross-chain gaming. Platforms like Portal, Fractal ID, and Web3Games provide the necessary infrastructure for seamless asset transfer and interaction between different blockchain ecosystems.

Project Development

2024 was a pivotal year for the development of Web3 gaming. In addition to traditional gaming companies entering the space, the ecosystem also witnessed several important game releases. Highly anticipated games like Off The Grid and MapleStory Universe entered early access, while Illuvium finally launched. Pirate Nation successfully completed its token generation event (TGE) and launched a successful "play-to-airdrop" campaign.

Active Game Analysis

As of November 30, 2024, the total number of blockchain games reached 3,602, an increase from 2,997 in January. However, the active game metrics show some challenging trends. Among the total number of games, only 1,361 (37.8%) remain active on-chain, meaning 2,241 games (62.2%) are inactive. Furthermore, despite the increase in total games, the number of active games has decreased from 1,387 in January.

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

This trend of user concentration indicates that the market is maturing, with successful games attracting larger audiences. This phenomenon is influenced by several factors, including intense competition, rapid iteration strategies, and the "head effect" created by leading games in the ecosystem.

Innovation Landscape

Cross-Platform Gaming Trends

Mobile gaming emphasized accessibility and seamless user experience, establishing itself as the primary platform for Web3 gaming in 2024. The mobile-first approach has influenced how developers design blockchain games, focusing on intuitive interfaces and simplified onboarding processes. In 2024, mobile games accounted for 29.4% of newly released Web3 games.

Social platforms, especially Telegram, have become powerful catalysts for Web3 gaming adoption, accounting for 20.9% of newly released Web3 games. Telegram's success stems from its large user base, simplified in-app experience, and ability to bypass traditional app store restrictions. The platform's influence peaked in the third quarter of 2024, with 11 games surpassing 10 million MAU. Notably, TON successfully converted this large user base into on-chain participants, creating spillover effects in Web3 gaming, Meme coins, and DeFi sectors. This success has prompted multiple blockchain networks outside of TON to compete for Telegram traffic, with Aptos, Sui, and Core launching or supporting Telegram-based games.

Similarly, Line announced plans to launch 20 mini dApps in December 2024, marking an increasing interest from mainstream messaging platforms in integrating blockchain gaming.

The console gaming space remains relatively untapped in Web3 gaming, with major manufacturers like Microsoft and Sony maintaining a cautious stance. However, new approaches are emerging to bridge this gap. Some developers, such as Gunzilla Games with Off The Grid, are choosing to separate core gameplay from blockchain features to align with traditional console gaming expectations. Meanwhile, blockchain platforms are beginning to develop their own Web3 gaming handhelds, such as Sui's SuiPlay0X1 and Solana's Play Solana Gen1 (PSG1), potentially creating a new category of dedicated Web3 gaming devices.

Traditional Gaming Companies Entering the Space

2024 marked a significant shift in traditional gaming companies' attitudes toward blockchain gaming, with major studios moving from experimental actions to strategic development.

Ubisoft launched Champions Tactics: Grimoria Chronicles on the Oasys Layer 2 HOME Verse in October. This tactical RPG incorporates a range of NFT-based features while maintaining traditional gaming elements.

Square Enix is strengthening its blockchain segment through strategic investments and partnerships. In addition to investing in gaming platforms Elixir Games and HyperPlay, the company announced it would bring its Symbiogenesis game to HyperPlay.

Sony Group's involvement signifies a major push toward blockchain gaming, both through investments and infrastructure development. While supporting double jump.tokyo Inc.'s $10 million Series D funding, Sony also announced the launch of Soneium, a Layer 2 network aimed at connecting Web3 innovations with consumer applications in gaming and entertainment.

AI Integration in Game Development

As artificial intelligence revolutionizes various industries in 2024, the Web3 gaming sector has become a significant beneficiary of AI innovations, opening new opportunities for game development and player experiences.

AI has transformed in-game interactions and content generation. Game studios are leveraging AI to create more complex non-player characters (NPCs) that can adapt to player behavior and generate personalized quests based on individual gaming history and preferences. This personalization enhances player engagement by making the gaming experience more relevant and tailored.

In development, AI has significantly streamlined the creative process. Developers are using AI tools to automatically generate game environments and assets, drastically reducing production time and costs. This enables 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 used to automate game testing processes and monitor on-chain transactions to prevent potential fraud or cheating, which is particularly important in games with complex economic systems. Additionally, AI algorithms are helping optimize game economies and token models, addressing one of the main challenges in Web3 game design.

Investment Landscape

Annual Financing Event Overview

Web3 gaming raised $910 million through 220 financing events in 2024. Although the funding amount decreased by 7.3% compared to 2023 and is significantly lower than the boom periods of 2021-2022 (which were $3.2 billion and $2.7 billion, respectively), the number of financing events increased by 48.7% compared to 2023, indicating sustained investor interest, despite smaller individual deal sizes.

This year showed a clear trend toward early-stage investments, with 76 early-stage deals (34.6% of total events) compared to only 20 Series A or later financing rounds (9.1%). This trend suggests that while new projects continue to attract initial funding, many projects from the 2021-2022 boom period face challenges in securing follow-up financing.

Among investors, Animoca Brands maintained its leading position, completing 38 investments, a 192.3% increase from 2023, participating in 17.3% of all financing events in 2024. Spartan Group and Big Brain Holdings followed closely with 22 and 15 investments, respectively, with the top ten investors collectively completing 152 investments.

Major Financing Events

Seven projects raised over $20 million in a single event in 2024. Azra Games led with $42.7 million in Series A funding, focusing on bringing console-level gaming experiences to mobile platforms.

In terms of cumulative funding, Monkey Tilt raised $51 million through two rounds of financing, positioning itself as a platform for the "gaming-entertainment-gambling" hybrid model. Gunzilla Games secured four rounds of financing from notable investors, including VanEck, Coinbase Ventures, Delphi Ventures, and Avalanche's Blizzard Fund, showcasing strong investor confidence.

Strategic Investment Trends

As the industry matures from the frenzy of 2021-2022, the focus has shifted to fewer but higher-quality projects, with investors becoming more selective in their approaches.

Funding is increasingly targeting gaming infrastructure and development tools, rather than just games themselves. Notable examples include NPC Labs raising $18 million in seed funding to build Web3 games on Base, and Alliance Games raising $5 million in Series A funding for AI-driven decentralized infrastructure. This trend reflects growing investor interest in foundational technologies that can support multiple games and platforms.

Platform and multi-chain development have attracted significant attention, particularly projects building cross-chain gaming ecosystems. Seeds Labs raised $12 million for its flagship product Bladerite on Solana, while B3 launched Open Gaming Layer, demonstrating investor interest in expanding cross-chain gaming capabilities.

Additionally, new gaming categories received significant investor attention in 2024, especially Telegram-based games and gambling game projects, despite facing regulatory challenges.

Industry Evolution and Future Outlook

The Web3 gaming industry experienced significant evolution in gaming models in 2024. The previously dominant "play-to-earn" model has given way to more sustainable approaches. Telegram-based "tap-to-earn" games demonstrated unprecedented user acquisition capabilities, while the "play-to-airdrop" strategies of Pirate Nation and Pixels provided new user acquisition methods. At the same time, mature projects are shifting to "play-and-earn" models, prioritizing gameplay over financial incentives.

However, the field still faces ongoing challenges. Technical barriers remain significant, particularly in achieving seamless blockchain integration without compromising the gaming experience. Regulatory uncertainties, especially surrounding gambling features and token classifications, continue to impact development decisions.

Most critically, maintaining on-chain engagement has become a fundamental issue. This is particularly evident in the performance of Telegram games: the monthly active users of Hamster Kombat dropped from over 100 million in September to 22.9 million by mid-December, with only 0.0004% of users participating in on-chain gaming activities. While other Telegram games show higher conversion rates, most still fall below 1%. Notably, these metrics particularly reflect on-chain gaming activity, as the core gameplay of most Telegram games remains off-chain, with users likely being more active in other sectors like Meme coins or DeFi. This highlights the ongoing challenge of converting platform users into active blockchain gamers.

2025 Outlook: Reestablishing Relevance

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

Integration with social platforms stands as the most promising path toward mainstream relevance. The remarkable success of Telegram games demonstrates the power of meeting users where they are, with platforms like Line and TikTok poised to follow suit. This approach may ultimately address the user acquisition challenges in the field by leveraging existing social networks rather than building communities from scratch.

AI integration is likely to evolve from a marketing feature to a fundamental driver of innovation. In addition to enhancing game development and NPC interactions, AI may address core challenges in economic design and user retention in the field. These are areas where Web3 games have traditionally struggled to compete with conventional gaming experiences.

Achieving sustainable growth through integration may ultimately determine the relevance of the field. Success may not come from competing with traditional games or other crypto sectors, but from seamlessly blending with them. This means focusing on how blockchain enhances rather than defines the gaming experience, developing more complex token economics, and placing user experience above crypto-native features.

In summary, the role of Web3 gaming in the crypto ecosystem may not be about dominance but about integration. By cleverly connecting traditional gaming, social platforms, and blockchain technology, Web3 gaming is poised to create genuine innovative value. This evolution will not only help the industry break through the current limitations of being "just another crypto vertical" but is also likely to become a key force in reshaping the future of the gaming industry.

This report is a joint annual report launched by Footprint Analytics and CoinMarketCap Research.