*June 2024, *[email protected]

*Data Source: *GameFi Research Page

In May 2024, Ethereum’s performance boosted by the SEC’s approval of the initial filings for spot Ethereum ETFs. The total market cap of blockchain game tokens closed at $20.1 billion, an increase of 6.7%. Despite these gains, the industry faced intriguing shifts in user engagement, with daily active users hitting new highs, even as transactions declined. Additionally, the rising popularity of mini-games and game bots is reshaping the gaming landscape.

Data for this report was obtained from Footprint’s GameFi Research page. This easy-to-use dashboard, updated in real-time, contains the most vital stats and metrics to understand the Web3 Game industry.

Monthly Market Review

In May 2024, Bitcoin rebounded from its April-end lows to register a gain, climbing from $60,653 at the start of the month to $67,606 by its close, an increase of 11.5%. Similarly, Ethereum showed a robust recovery, with its price moving from $3,011 to $3,778 over the same period, an uplift of 25.5%.

Source: BTC Price & ETH Price

In May 2024, significant regulatory developments contributed to market dynamics, with the U.S. Securities and Exchange Commission (SEC) approving the initial filings for spot Ethereum ETFs. This breakthrough helped Ethereum outperform the broader crypto market, supported by a shift in regulatory attitudes towards cryptocurrencies.

Additionally, the political landscape influenced market sentiment as the Trump campaign announced it would accept cryptocurrency donations. This move suggests potential impacts of the upcoming U.S. presidential election on the crypto market, akin to shifts driven by Federal Reserve monetary policies.

Conversely, the ongoing resolution of Mt. Gox’s bankruptcy slightly restrained Bitcoin’s price. The exchange, which has been in bankruptcy for a decade, announced last September that creditor repayments would begin in October 2024, raising concerns about potential market impacts from coin sell-offs.

Overall Web3 Game Market

In May, the market cap of blockchain game tokens saw fluctuations but ultimately closed the month at $20.1 billion, an increase of 6.7%.

Source: GameFi & Bitcoin Market Cap

The average daily transactions for blockchain games amounted to 8.0 million, a 7.3% decrease from April.

Source: Web3 Game Daily Transactions

The average daily active users (DAUs, measured by wallets) climbed to 3.3 million, marking a 9.6% rise from April and establishing another all-time high.

Source: Web3 Game Daily Active Users

After observing the market dynamics in May, it’s intriguing to note a downward trend in daily transactions alongside an upward trend in DAUs in Web3 gaming. Since October 2023, the ratio of daily transactions to DAUs has steadily decreased from 17.2 to 2.3.

Daily Transactions / Daily Active Users Ratio

We think several factors may be contributing to this trend. First, the rise of “play-to-airdrop” strategies has led to more users engaging with games primarily to complete tasks rather than for fun, resulting in fewer interactions. Second, many developers are opting for partially on-chain games or mini-games that balance seamless Web3 integration with engaging gameplay. They often create user wallets or launch tokens, but manage most activities off-chain, which exemplifies this shift.

Additionally, security concerns resurfaced in May when an unidentified hacker breached Gala Games’ internal controls, minting 5 billion new GALA tokens on May 20. The hacker then sold 600 million tokens on decentralized exchanges for nearly 6,000 ETH. However, within hours of the attack, the Gala Games team detected the breach and deployed their blocklist functionality to isolate the attacker’s address. The compromised funds were swiftly transferred from the hacker’s wallet to one controlled by Gala Games. Although the GALA token initially dropped over 15% following the incident, it quickly rebounded thanks to the team’s rapid response. A lesson learned.

Source: GALA Price and Trading Volume in May 2024

Web3 Game Chains

In April, 1,525 games were active across various blockchains, with BNB Chain, Polygon, and Ethereum leading with market shares of 23.3%, 19.7%, and 15.7% respectively.

Among the 3.3 million DAUs in May, Ronin, Polygon, and Near continued to lead the sector, similar to the previous month. Ronin maintained its dominance with approximately 29.0% market share. Near saw its share increase from 12.1% at the beginning of May to 14.8% by the end of the month. Flow also experienced growth, with its share rising from 0.7% to 3.3%. Conversely, BNB Chain’s share declined from 8.0% to 5.9%.

Source: Daily Active Users by Chain

May saw several strategic initiatives aimed at enhancing game ecosystems.

On May 24th, the Arbitrum community initiated voting on the 200 million ARB Gaming Catalyst Plan, set to conclude on June 8th, aimed at bolstering gaming on the network. At the time of this report, the proposal has secured majority support, with 80.6% in favor. Concurrently, Arbitrum is developing a Layer 3 game-specific chain ecosystem, with the multi-chain NFT game ecosystem Polychain Monsters announcing a similar initiative through Altlayer.

The Starknet Foundation awarded a 2 million STRK grant to the on-chain metaverse game, Realms.World, as part of a broader strategy to distribute 50 million STRK tokens to enhance Starknet’s gaming ecosystem, announced in March.

The iconic Web2 soccer game Captain Tsubasa debuted on Oasys in May, developed by Mint Town, Co., Ltd. and BLOCKSMITH&Co., subsidiaries of mobile gaming giant KLab Inc. Oasys is actively pursuing further collaborations with Mint Town and other developers to integrate premium intellectual properties(IP) into blockchain games.

The Open Network (TON) continued to attract significant attention. In early May, Pantera Capital, managing over $5 billion in assets, announced its “largest investment ever” in TON. Additionally, gaming bot projects like Tapswap and Hamster Kombat are gaining traction amid the Notcoin hype.

Web3 Games Overview

In May, the total number of blockchain games reached 3,153, with 1,272 actively engaged. Among these, 263 games, constituting 8.3% of the total and 20.7% of active games, attracted over 1,000 monthly users.

Source: Monthly Active Web3 Games

While the gaming sector has been vibrant in recent years, it lacks sufficient flagship titles to truly highlight its potential. Popular games in May such as Pixels, Matr1x FIRE, Sweat Economy, and Another World have drawn attention, yet many games still struggle to surpass 1,000 monthly active users. This stagnation is partly due to the prevalence of partially on-chain games, with most data remaining off-chain, despite the ongoing popularity of fully on-chain and AAA games.

In response to these challenges, the rise of Telegram game bots and mobile mini-game apps, exemplified by Notcoin, suggests a shift in the landscape. Binance’s introduction of the NOT token through its launchpool on May 9th, and subsequent trading starting May 16th, has catalyzed this movement. Notcoin now boasts a robust Telegram community of over 7.7 million subscribers, and similar projects like Hamster Kombat and Tapswap are also gaining significant traction, with 25.3 million and 18.0 million subscribers respectively.

These developments indicate that mini-games and game bots could pave the way for broader Web3 adoption. Unlike the extensive development cycles required for fully on-chain games or AAA titles, these platforms prioritize agility and rapid deployment. They move fast and fail fast. This approach may prove more effective in attracting and maintaining a large user base than the pursuit of sophisticated, but less accessible, gaming experiences.

Game Investment and Funding

In May, the Web3 gaming sector secured $44.95 million across 15 funding events, a 42.9% decrease from April.

Web3 Gaming Industry Funding Rounds in May 2024 (Source: crypto-fundraising.info）

Seeds Labs has raised $12 million in a seed funding round with contributions from Avalanche’s Blizzard Fund, Solana Foundation, and Hashkey Capital. Their flagship product, the Web3 game Bladerite, was launched in May. The game is built on Solana.

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Footprint Analytics is a blockchain data solutions provider. It leverages cutting-edge AI technology to help analysts, builders, and investors turn blockchain data and combine Web2 data into insights with accessible visualization tools and a powerful multi-chain API across 30+ chains for NFTs, GameFi, and DeFi.

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