Crypto gaming is one of the most promising web3 sectors, which is also notoriously difficult to build.

Blockchain-based games are in continuous experimentation and adaptation mode, which explains an average failure rate of over 75%, as calculated by Coingecko. What’s more, since web3 gaming startups often rely on their tokens as the only source of long-term monetization, bear markets are deadly for many. Without substantial support from the VCs, developing teams often find it difficult even to finish their development cycle, which is longer than in DeFi or simple NFT DApps domains.

Suffice it to say, crypto gaming is going through a tough patch, and investments plummeted from $7.6 billion in 2022 to only $2.9 billion in 2023.

However, the new crypto growth cycle is bringing new hope – and new money – to the sector. The tokens of gaming blockchains are on the rise (+68% for $IMX, +76% for $BEAM since the beginning of the year) and newly launched tokens of Xai, Heroes of Mavia, Ronin, and Pixels have sparked wide interest across the crypto space.
The past two years have been challenging, yet the games that persevered have gained invaluable knowledge and experience to harness moving forward.

Furthermore, traditional gaming giants continue to increase their blockchain exposure, bringing their weight into the young sector.

The state of crypto gaming

Thanks to blockchain’s inherent transparency, we can monitor the development of crypto gaming closely. According to DappRadar’s recent report, despite the bear market, crypto games sustained their activity in 2023, registering an average of 1.1 million daily active users – the same number as in 2022. The sector accounted for 34% of all DApps activity overall.

WAX was the most popular blockchain, which drew over 3 million unique active wallets (UAW), the majority of which (2.25 million) connected to its flagship game Alien Worlds. BNB Chain lost 16% of yearly UAW, and Polygon gained approximately the same percentage, both now registering 1 million yearly UAW.

In the in-game NFT market, the card game Gods Unchained has set a new high, achieving $209 million in trading volume and a 4.71 million sales count. The second-most-popular game Axie Infinity registered with 1.74 million sales for an overall volume of $17.4 million.

Blockchain-wise, most gaming NFT trading volume was generated on Ethereum with $347 million. However, it is worth mentioning that this number reflects an impressive 80% loss vs 2022, while Immutable X ($IMX), which now holds the second position with $209 million, has gained +119% since last year.

Traditional gaming keeps its eyes on crypto

Traditional gaming is a giant industry with over 1.2 billion users (data: Statista). If it were to embrace the blockchain, even partially, the impact on the web3 space would be remarkable.

The 2021 surge in play-to-earn games initially drew interest from traditional gaming companies.  Ubisoft, the creator of the famous Assassin’s Creed franchise, launched several in-game NFTs for the Tom Clancy game. They were, however, badly received by the game’s community, which accused Ubisoft of trying to lure them into spending money on unnecessary items.

Nonetheless, Ubisoft continued its foray into blockchain gaming, partnering with Immutable X for new projects, as reported by PC Gamer last November. The CEO of its American counterpart Electronic Arts has also recognized NFTs and blockchain games as the industry's future. Last summer, EA Sports (a division that includes the prominent FIFA game) announced its partnership with Nike’s NFT platform Swoosh.

These initial steps are modest, but they hold the potential to pave the way for the profound transformation of the industry.

Also, the progressing integration of crypto games into gate-keeping platforms such as Epic Games Store, Google Play Store, and AppStore marks a wider acceptance and an evolution in game distribution.

The future of crypto gaming lies in enhancing user experience and concentrating on making the games fun and aesthetically beautiful. This, however, necessitates a lot of time and a lot of investment, and it might be some time before blockchain-based games can even approach the quality of traditional ones. Visibly, crypto games developers believe that the effort is worth it: the blockchain can offer gamers true ownership of in-game artifacts, a unique cross-game experience, as well as decision-making rights, and of course, a way to earn money while playing.

Until that time, however, we are likely to see more hybrid approaches bridging web2 and web3, accustoming traditional gamers to the idea that cryptoassets can actually enhance their gaming experience.

Written by D.Center