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Web3 gaming has come a long way in the last five years. From little more than a concept to a working reality that’s entertaining millions of daily users, while keeping an army of developers working around the clock, gaming is now a crypto industry mainstay.
But while the infrastructure, user experience, and game quality have improved markedly, there’s still work to be done if web3 gaming is to capture a slice of the $200B video market that attracts over 3 billion players. Nevertheless, the industry is streets ahead of where it was in 2022, when the reality couldn’t match the hype that saw the first wave of web3 games record a spike in users before rapidly plummeting as economic incentives tailed off.
The web3 gaming ecosystem today is multi-layered, multi-chain, and multi-themed, encompassing everything from simple mobile games to expansive MMORPGs that are approaching AAA standard.
The State of Web3 Gaming Today
With a $16B market cap and daily volume of over $1B, GameFi tokens account for a significant tranche of all crypto economic activity. While some of these assets, such as ALICE, are unique to particular games or gaming studios, others serve as protocol native tokens for gaming chains. These are used to cover network fees, for staking by developers building on the chain, and by players to power in-game upgrades and purchases. This is true of the native assets of gaming-centric chains Chromia (CHR) and Oasys (OAS).
A better gauge of the value of web3 gaming can be found by looking at investment that has poured into the sector in recent years. Between 2022-23, $10B was invested into blockchain gaming. The results of this capital have already begun to manifest: gaming now accounts for 34% of all dapp activities with an average of over 1.1M daily users. A drop in the bucket when measured against the video game market, perhaps, but GameFi has captured a respectable share of the blockchain market and the numbers are growing steadily.
So far this year, $2.9B has been invested into 163 gaming and metaverse projects. Even more encouragingly, traditional gaming studios are entering the arena, re-releasing classic titles with web3 features integrated, and launching new GameFi titles that leverage IP. As a result, the quality of web3 games available has markedly improved.
As the leading web3-native games have matured, loyal communities have coalesced around them formed of players who are in it for fun primarily rather than profit. Examples include My Neighbor Alice, a multiplayer builder game inspired by Animal Crossing. Players can buy and own virtual land, collect items, meet friends and build the island.
Alien Worlds, a community-built meraverse, has also prospered with 2.25M unique wallets created this year. Other titles that have carved out a corner of the market include Gods Unchained, Splinterlands, and Upland. Web3 gaming now occupies a number of categories that have proven ideally suited to tokenization and blockchain components including Move-to-Earn (Sweat Economy, SuperWalk, Genopets), Metaverse (Alien Worlds, SecondLive), Card-based (BLCR), Sports (Gamifly, motoDEX, Ultimate Champions), and RPG (CryptoBlades, Nine Chronicles, DeFi Kingdoms).
Game-Changers and Game Losers
In the grand quest to bring players onchain and deliver rewarding experiences that will attract daily active users, some ecosystems have prospered while others have lost market share and will struggle to regain the momentum they once had. In the former camp, Chromia and Oasys are both going strong.
Chromia’s architecture, which includes novel onchain logic that supports enhanced NFTs, has made it an attractive proposition to gaming developers. Its relational blockchain makes it possible to query data directly onchain, perform hundreds of read-and-write operations with a single transaction, and index block data in real-time. All of which allows developers to create rich gaming experiences that aren’t burdened by scalability issues or reliant on centralized databases.
Oasys, meanwhile, recently unveiled its technical roadmap which is focused on solving the challenges of App Data Availability, Layer 2 Interoperability, and Ecosystem Stability. It’s introducing a solution that will allow L2 gaming assets to be mirrored on L1 and rolling out gaming-specific cross-chain bridges and standardized APIs. XPLA recently launched its own L2 on Oasys with participation from South Korea’s Com2uS Group. The first games confirmed for release are “Summoners Wars: Chronicle,” an action RPG based on “Summoners War: Sky Arena,” and “The Walking Dead: All-Stars” based on the popular zombie comics.
Other gaming-oriented chains have struggled, however. The number of active user wallets on Solana are down 85% YoY, despite the success of a handful of titles such as Genopets and Star Atlas. Tezos and Avalanche have suffered a similar fate. Many of the games released onchain have mirrored this trend, with 75% of titles launched in the last five years now regarded as having failed.
Such attrition is to be expected, of course, and is a normal part of free market economics. Just as forest fires clear the ground for new growth, the failure of unsustainable GameFi projects leaves space for clear winners to take root and flourish. Axie Infinity had 2.8M DAU at its peak and a fully diluted valuation of $44B at one stage, but its inevitable collapse has helped ushered in an era of more sustainable game economies. No one talks about Play-to-Earn anymore but GameFi is very much alive.
The Future of Web3 Gaming
For players and developers alike, a number of trends have crystallized. For one, it’s clear that the choice of chain is paramount. Games do not exist in a vacuum: they require a full supporting cast in order to operate successfully, from optimum technical infrastructure to the right marketing, related titles, tokenomics, incentive structure and community.
For this reason, the gaming chains that have established momentum, five years into GameFi’s existence, will prove hard to unseat. The best gaming-oriented chains, such as Chromia, Oasys, and Polygon, combine scalability with features that make playing – and developing – as frictionless as possible.
Of course, the average mobile player, checking out a simple quest-based game with web3 components, should not be expected to know or care what blockchain their game is deployed on. But more serious players should take a much keener interest. Great ecosystems give birth to great games. GameFi is still waiting for its viral smash, the game that accelerates mass adoption and has video gamers FOMO’ing in. But in the meantime, the quality of web3 games is getting steadily better. As the millions who play them on a daily basis will aver, GameFi is here to stay.
