Quick overview of the current state of crypto gaming: market performance lags behind the overall market, with 65% still in development phase
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Quick overview of the current state of crypto gaming: market performance lags behind the overall market, with 65% still in development phase
Since the beginning of the year, the blockchain gaming sector has declined by over 60%, in line with the broader crypto market downturn. What's happening with Web3 gaming?
Navigating Web3 tides with focused insightsWritten by: Calmdonut
Compiled by: TechFlow
Since the beginning of this year, the crypto gaming sector has declined by over 60%, consistent with the broader downturn in the cryptocurrency market. What exactly is happening with Web3 gaming? This article provides an overview of the current state of the Web3 gaming landscape.
In terms of market capitalization, GameFi has underperformed both the overall market and DeFi:
- Overall market: -47%
- DeFi: -62%
- GameFi: -63%
The relationship between declining market caps and rising trading volumes indicates massive sell-offs of GameFi tokens between February and May 2022.
The entire gaming market comprises approximately 1,575 projects, with about 40% built on BSC, 26% on Ethereum, and 15% on Polygon. Gaming-specific chains such as ImmutableX, Gala Games, WAX, Enjin, and WemixNetwork each hold only 1% to 6% market share.
Currently, only 33% of GameFi projects are playable, while 65% remain in development.
One possible reason is that most game-related projects raised around $12 billion in funding from 2021 to date. Over the next 2–3 years, we can expect more games to launch.
38% of GameFi projects choose web browsers to host their games, followed by mobile (37%) and PC clients (24%).
Many game projects focus on action and role-playing genres. Recently hyped Web3 games like Move-to-Earn (e.g., Stepn, Genopets, SweatEconomy) and idle games (e.g., Axie Infinity and Illuvium) actually occupy a very small portion—less than 4%—of all GameFi projects.
To date, the best-performing gaming tokens are GMT from StepN (+615%) and BNX from Binary (+115%). The worst performers include THG from ThetanArena (-98%) and CRA from PlayCrabada (-97%).
Note: In this comparison, good token price = good game.
In the past 30 days of NFT sales, four out of the top five NFT collections on Ethereum were Yuga Labs PFPs. Sorare was the only game-related NFT, but on other blockchains, all top five NFTs were game-related!
Nonetheless, these NFTs do not reflect a game’s popularity. In reality, interest in game-related NFTs remains significantly lower than that for PFPs and art. High trading volumes suggest frequent turnover of these NFTs, indicating low holding intent among users.
Therefore, the real metric for measuring a game’s popularity is its number of players. However, 99% of "Web3" games operate off-chain, making this metric opaque.
As an alternative, we use daily active addresses (DAA) to measure smart contract activity within games (e.g., minting, trading, staking).
Judging by DAA, the current ranking of games has shifted.
Top 5 blockchain games by DAA:
- AlienWorlds
- AxieInfinity
- Solitaire Blitz
- Splinterlands
- UplandMe
As previously noted, good token price = good game. Although Alien World's TLM token has trended downward over the past year, its DAA increased (or rebounded mid-period). This inverse relationship suggests players lack economic incentives and participate purely for gameplay.
Important note: This is a multifaceted variable requiring consideration of deep gameplay and design. Hence, we observe discrepancies between token rankings and DAA-based project rankings. Beyond DAA, any metric—including DAU/MAU/retention—is highly opaque.
Token models are also why GameFi projects currently struggle—Web2 game creators dislike this model. Tokens attract speculators, cause short-term inflation, and disrupt in-game economies.
In summary, tokenomics should be designed to fit game mechanics, serving as a psychological tool rather than merely a "profit" mechanism.
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