The world of blockchain gaming witnessed an unprecedented surge in activity during the month of January 2023, as revealed by market analysis firm DappRadar. Gaming dominated the blockchain landscape, accounting for an impressive 48% of all blockchain activity, a significant increase from the previous month’s 45%. The statistics speak volumes, with 839,436 daily unique active wallets engaging in transactions within blockchain games throughout January.

But it doesn’t stop there. The remarkable growth in this nascent industry is further underscored by a recent report from DappRadar and the Blockchain Games Alliance, which highlights the influx of substantial investments into web3 gaming projects. A staggering $739 million was poured into these projects, with an astonishing $434 million raised in March 2023 alone, constituting nearly 60% of the total funds.

While game and metaverse companies secured the lion’s share, with $214 million invested in their ventures, infrastructure companies also received a significant boost, garnering $159 million in funding. In comparison, the $10 million allocated to NFT companies represents only a small fraction of the overall investment pool.

The convergence of blockchain technology and gaming is rapidly reshaping the industry landscape, propelling it toward uncharted territories. Join us as we delve into the intricate world of blockchain gaming and explore the factors behind its meteoric rise, offering insights into its potential implications for the future.

What is blockchain gaming?

Blockchain games encompass a new breed of video games that leverage cryptocurrencies, smart contracts, and non-fungible tokens (NFTs) to drive their mechanics. Referred to interchangeably as web3 gaming, play-to-earn (P2E) gaming, or crypto gaming, these terms often spark semantic debates, largely fueled by marketing considerations.

Unlike traditional games, blockchain games exclusively utilize NFTs as their game items, refraining from other forms of assets. However, they also embrace the incorporation of a cryptocurrency-powered in-game economy.

Yet, the fundamental cornerstone of blockchain gaming lies in the concept of ownership. Players possess in-game assets and currencies, enabling them to engage in trading activities on exchanges and marketplaces. These assets encompass a wide range of virtual items such as skins, tools, services, weapons, and in-game currencies.

Moreover, player ownership fosters an element of composability within the blockchain gaming ecosystem. Companies can empower players by granting them influence over the game’s future through governance models, while third-party developers are encouraged to create additional services and functionalities atop existing games. This collaborative environment enables the gaming community to actively shape and expand the boundaries of the blockchain gaming landscape.

A short history of blockchain gaming

Blockchain games or web3 gaming is nothing new. Back in 2017, the mobile game Spells of Genesis was the first to introduce non-fungible tokens (NFTs) to its players. This was a time when the ERC-721 token standard didn’t exist yet, and these non-fungible tokens existed on Counterparty, a layer 2 network on top of the Bitcoin blockchain.

With the ERC-721 token standard launch in 2018, the idea for NFTs took off. But it’s only now, four years later, that we’re seeing the release of games that approach the quality traditional gamers are used to. More importantly, the onboarding mechanics have changed. Instead of messing around with private keys and MetaMask, gamers can now simply create an account. In the background games can create a wallet, never giving gamers the idea there’s blockchain technology powering their experience.

In the coming years, we’ll see mainstream gaming companies like Sega, Square Enix, and Ubisoft releasing NFT collections and blockchain-powered games. While web3 native companies like Gala Games, Mythical Games, and Animoca Brands will become part of the next generation of gaming.

Blockchain Gaming Sees Strong Growth and Potential

Rise in Blockchain Gaming Activity

According to market analysis firm DappRadar, blockchain gaming experienced significant growth, comprising 48% of all blockchain activity in January, up from 45% in December. This surge indicates the potential of blockchain gaming in the long term, although it is still far from mainstream acceptance.

Optimism for the Future of Blockchain Gaming

DappRadar’s latest report expresses optimism for the future of blockchain gaming, with ongoing excitement and anticipation for upcoming developments in the sector. Despite the challenges posed by the cryptocurrency winter and global economic downturn, the positive trend in blockchain gaming and the growth of decentralized finance (DeFi) platforms provide reasons for hope.

Thriving NFT Market and Promising Outlook

Significant Growth and Activity in the NFT Market

The NFT market has witnessed remarkable growth in the early months of 2023. On-chain metrics indicate a thriving quarter, with the total value locked in blockchain protocols reaching $74.6 billion, a 26.8% increase from the previous month. The trading volume in the NFT market reached $941 million, with a sales count of 9.2 million.

Polygon’s Impressive Performance in NFTs

Polygon stands out in the NFT market, demonstrating a 124% increase in trading volume and a remarkable 157.39% rise in sales count. The popularity of NFT collections like Collect Donald Trump Cards and the launch of Mocaverse Realm Ticket Pass have contributed to this growth.

OpenSea’s Dominance and Revenue Generation

As the leading NFT marketplace, OpenSea experienced a substantial 66.58% increase in trading volume, amounting to $495 million. This represents 58% of the total trading volume in the NFT market. OpenSea’s revenue generated through transaction fees is estimated to be approximately $12.3 million.

Recovery and Growth in the NFT Market

Increased NFT Activity Despite Decrease in Daily Unique Active Wallets (dUAW)

Despite a decrease in daily unique active wallets (dUAW) in the industry, the on-chain metrics for NFTs show increased activity, providing a positive outlook for the market. Solana and Ethereum exhibited noteworthy growth in dUAW, with Solana experiencing a 70% increase and Ethereum witnessing a 39% growth.

Positive Signs of Recovery in TVL

Solana saw a remarkable 57.33% surge in Total Value Locked (TVL), reaching $548 million. Ethereum maintained dominance in the NFT market, recording a 37.29% increase in trading volume, amounting to $659 million.

Improved Blockchain Security and Market Optimism

Although there was a decrease in the amount lost to exploits in January, the lowest since January 2022, it indicates improved blockchain security. These positive developments and on-chain metrics in the DeFi and NFT markets provide reasons for optimism, suggesting a potential recovery and continued growth in the coming months.

Strong Investment Flow into Web3 Gaming Projects

According to a joint report by DappRadar and the Blockchain Games Alliance, web3 gaming projects attracted a significant amount of investment, totaling $739 million. The report reveals that $434 million, nearly 60% of the funds, were raised in March 2023.

Distribution of Investment

Out of the funds raised in March, $214 million, nearly half of the total, was invested in game and metaverse companies. Infrastructure companies received $159 million, indicating the importance of supporting the underlying technology. In comparison, NFT companies received a smaller portion of the investment, totaling $10 million.

Analysis of Wallets and On-Chain Transactions

The report provides insights into the trends of wallets and on-chain transactions over the last quarter, with additional data from March. It’s important to note that unique active wallets (dUAW) may not directly translate to unique users, as individuals can own multiple wallets. However, it remains a robust metric for assessing game activity.

Daily Unique Active Wallets (dUAW) and Blockchain Gaming

In March 2023, the average number of daily unique active wallets connected to blockchain gaming dapps was slightly over 740,000, representing a 3% decrease from the previous month.

Despite the decrease, blockchain games accounted for 44% of activity in March and 45% in Q1 2023. This indicates their resilience compared to other types of dapps.

Top Blockchain Gaming Protocols

Wax

Wax remains the most active blockchain gaming protocol, with an average of around 314,000 dUAW in March, representing about 42% of dUAW. However, this figure reflects an 8% decrease from February’s 342,000 dUAW.

Polygon

Polygon surpassed Hive to become the second most active protocol. In March, Polygon averaged 138,000 dUAW, experiencing a notable 53% increase from February. DappRadar attributes this growth to the success of Hunters On-Chain by BoomLand and Planet IX, with the latter contributing 43% of Polygon’s activity.

Hive

Hive, on the other hand, witnessed a downward trend, with an average of 27% fewer dUAW compared to February. Splinterlands continues to drive 99% of the protocol’s activity, underscoring its significance to Hive’s success.

Top Blockchain Games of the Month

Alien Worlds

Alien Worlds maintained its position as the top blockchain game in terms of unique active wallets, reaching 580,000 in March 2023. It also secured the title of the most-played blockchain game in Q1 2023.

\Planet IX, Hunters On-Chain, & Yuliverse

Hunters On-Chain, Planet IX, and Yuliverse experienced significant growth in dUAW in the past month. Hunters On-Chain made its debut in March, while Planet IX and Yuliverse witnessed remarkable increases of 708% and 2,656%, respectively. Planet IX’s partnership with GAMEE, a subsidiary of Animoca Brands, to sponsor tournaments likely contributed to its activity surge. Yuliverse’s announcement of exclusive benefits for OG NFT holders also likely stimulated transactions.

To find web3 gaming DApps, you can follow these steps:

Research Web3 Platforms: Explore different web3 platforms that host gaming DApps. Some popular platforms include Ethereum, Binance Smart Chain, Polygon, Solana, and others. Each platform has its own ecosystem of DApps, including gaming projects.

Visit DApp Aggregator Websites:

There are several DApp aggregator websites that provide comprehensive listings and information about various decentralized applications, including gaming DApps. Examples of such websites include DappRadar, Dapps.co, Dapp.com, and State of the DApps. These platforms allow you to browse and discover different web3 gaming DApps, along with relevant statistics and user data.

Follow Blockchain Gaming Communities:

Join online communities and forums dedicated to blockchain gaming. These communities often share information about the latest gaming DApps, discuss their features and gameplay, and provide insights into the web3 gaming industry. Platforms like Discord and Telegram are popular for connecting with gaming enthusiasts and developers.

Explore Social Media Channels:

Follow social media accounts and hashtags related to web3 gaming. Twitter, Reddit, and Medium are often used by developers and players to share updates, announcements, and reviews of gaming DApps. Engaging with these communities can help you stay up-to-date with the latest releases and trends in web3 gaming.

Participate in Gaming NFT Marketplaces:

NFT (Non-Fungible Token) marketplaces, such as OpenSea, Rarible, and SuperRare, often feature gaming-related NFTs and provide a gateway to discover associated DApps. By browsing these marketplaces, you can find NFT-based games and explore the underlying DApps they are built on.

Read Gaming DApp Reviews and Guides:

Once you find potential web3 gaming DApps, search for reviews, guides, and gameplay videos. These resources can provide insights into the gameplay mechanics, user experiences, and overall quality of the DApps. Look for reputable sources, gaming influencers, or community-driven reviews to make informed decisions.

Gaming dApps: An Investment Opportunity

Investing in gaming DApps can be an attractive opportunity, but it’s important to approach it with a long-term perspective and a thorough understanding of the associated risks. Here are some factors to consider:

Adoption Potential:

Gaming has the potential to drive the mainstream adoption of web3 technologies, such as blockchain, cryptocurrencies, and NFTs. If successful, gaming DApps could attract a large user base and contribute to the growth of the overall ecosystem.

Value Proposition:

Evaluate the value proposition of the gaming DApp. Consider factors such as the uniqueness of gameplay, the utility of in-game assets (NFTs), the potential for in-game economies, and the overall user experience. Strong value propositions can contribute to the success and value appreciation of a gaming DApp.

Team and Development:

Assess the development team behind the gaming DApp. Look for experienced individuals with a track record of successful projects. Evaluate their technical expertise, vision, and commitment to the project. A strong team increases the likelihood of a project’s success.

Community and Engagement:

Examine the community surrounding the gaming DApp. A vibrant and engaged community can contribute to the growth and longevity of the project. Look for active social media channels, forums, and developer engagement with the community.

Market Conditions:

Consider the current market conditions and trends in the web3 gaming industry. Evaluate the competition, regulatory landscape, and potential challenges that may impact the success of gaming DApps. Market conditions can significantly influence the investment potential of gaming projects.

Risk Management:

As with any investment, it’s crucial to manage risks. Allocate only a portion of your investment portfolio to gaming DApps and diversify across different projects. Stay informed about the project’s progress, monitor market trends, and be prepared for potential volatility.

Remember that investing in gaming DApps involves risks, and not all projects will succeed. Conduct thorough research, stay informed, and seek professional advice if needed.