This report provides an in-depth analysis of the blockchain gaming market in June 2024, detailing the impact of the crypto market downturn, shifts in user engagement, and a focus on creating sustainable and enjoyable gaming experiences.

【Key Words: GameFi, Web3 Game, Blockchain Game, Pixels, Ronin, Polygon, Matr1x】

June 2024 Web3 Gaming Report: Pixels’ Decline and Sector Insight

July 2024, Stella L (stella@footprint.network)

Data Source: GameFi Research Page

In June 2024, the crypto market experienced a notable pullback, with Bitcoin declining by 7.3% and Ether by 9.8%. This downturn impacted the blockchain gaming sector, which saw the market cap of game tokens drop by 28.1%. Despite this, daily transactions in blockchain games increased by 8.0%, but daily active users (DAUs) fell by 8.8% to 3.0 million. Major developments included discussions on the future of Web3 gaming, innovative strategies by leading chains like Ronin and Polygon, and significant user engagement shifts in games like Pixels and Matr1x FIRE. As the industry evolves, the focus remains on creating sustainable, enjoyable gaming experiences that integrate blockchain technology.

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 June, the crypto markets experienced a pullback. Bitcoin saw a decline, starting the month at $67,730 and closing at $62,795, a drop of 7.3%. Similarly, Ether mirrored this downward trend, beginning at $3,820 and ending at $3,444, resulting in a 9.8% decrease.

Ongoing and expected selling pressure from multiple sources weighed heavily on Bitcoin. Trustees for the Mt. Gox bankruptcy estate announced on June 24 that Bitcoin and Bitcoin Cash repayments would begin in July 2024, causing uncertainty about creditors’ conversion to fiat and the timeline. Additionally, U.S. Spot Bitcoin ETPs experienced net outflows in the second half of June.

Government actions also played a significant role. A German government agency began liquidating Bitcoin confiscated in 2013, sending nearly 4,000 BTC to exchanges in June. The U.S. government transferred 3,940 BTC to Coinbase. It was seized from a convicted drug trafficker’s wallet.

Weakness in Bitcoin appeared to spill over to the broader crypto market, despite progress toward listing spot Ether ETPs in the U.S. market.

Overall Web3 Game Market

In June, the market cap of blockchain game tokens declined from $27.2 billion to $19.6 billion, marking a 28.1% decrease. This drop reflected the broader downward trend in game token prices, influenced by the sluggish performance of Bitcoin and the overall crypto market. As a result, the market cap saw a significant reduction.

The average daily transactions for blockchain games rose to 8.6 million, reflecting an 8.0% increase from May.

The average daily active users (DAUs), measured by wallets, fell to 3.0 million in June, marking an 8.8% decrease from May. This unexpected decline was primarily driven by Pixels, one of the largest Web3 games by DAU, on the Ronin Network.

Pixels migrated to Ronin from Polygon in Q4 2023, experiencing significant growth in DAU since the migration, peaking at over 1 million DAU on May 13. However, its DAU dropped sharply from 976.1K on June 11 to 251.6K on June 19, a 74.2% decrease. The average DAU in May was 842.2K, which fell to 646.5K in June, marking a 23.2% decline.

Pixels Chapter 2 went live on June 18, featuring improved gameplay and changes to enhance long-term sustainability by refining incentive design and reward distribution. According to a tweet from the Pixels Team, they have been implementing systematic changes to discourage bot activities, claiming that “Chapter 2 broke all bots.”

Pixels’ DAU began to recover on June 20, ending the month with 423.4K DAU. However, we don’t know how many of these users might be evolving bots. More time is needed to observe the impact of these changes. Making bot activity economically unsustainable is crucial for Pixels and many other Web3 games.

Web3 Game Chains

In June, there were 1,580 active games across various chains. BNB Chain, Polygon, and Ethereum led the market with shares of 22.4%, 19.5%, and 16.1% respectively.

Meanwhile, among the 3.0 million DAUs in June, Ronin, Polygon, and NEAR remained at the forefront, though they faced increasing challenges. Ronin’s DAU share dropped from 29.8% on June 1 to 18.4% on June 30, influenced by Pixels. Polygon’s DAU fell from 15.1% to 8.0% due to a 31.6% MoM decline in the average DAU of its largest game, Matr1x FIRE.

Saakuru Verse, an Oasys Layer 2 chain, witnessed a surge in DAU in the last 10 days of June. The successful launch of Copycat Killer, Panic, and Parkour Battle by Web3 game publisher PlayGround caused the chain’s DAU to skyrocket from 17.6K on June 21 to 464.5K on June 30, with an average DAU of 378.5K in the last week. If this trend continues, Saakuru Verse could soon rank among the top three chains by DAU.

Additionally, opBNB’s average DAU in the last week of June was 285.3K, achieving nearly 10% of the market share of all DAUs.

Public chains have been actively enhancing game ecosystems, such as launching grant programs specific for Web3 game builders. Building additional chains is also becoming a popular strategy. Ronin announced plans to build Layer 2s using the Polygon Chain Development Kit (CDK), which could mean playing Axie Infinity and Pixels on their own game chains in the near future. This strategy is similar to approaches taken by Avalanche, Oasys, and SKALE. Will this strategy or similar ones succeed? We will continue to monitor the situation.

Web3 Games Overview

In June, there were 3,289 blockchain games in total, with 1,319 actively engaged. Among these, 257 games attracted over 1,000 monthly on-chain users, accounting for 7.8% of all games and 19.5% of active games.

The stability of these figures has been consistent for some time, leading to discussions on whether “blockchain gaming is dead.” While we don’t support such exaggerated claims, it’s crucial to understand the context. These figures represent strictly on-chain users. Many games allow play without Web3 integration, such as connecting wallets, making off-chain data hard to track. This is why blockchain and on-chain data are essential.

We have more chains (Layer 1s, Layer 2s, Layer 3s, subnets, and more), more games, and more DAUs. Instead of focusing solely on DAUs, we recommend following the retention rates of different games. Retention rate is a key metric for determining a game’s appeal and the number of real users.

For example, despite a significant DAU decrease in June, Pixels showed strong monthly retention rates after migrating to Ronin, comparable to Web2 titles. The average retention rate in the second month was over 40%, and over 20% in the sixth month.

Conversely, Matr1x FIRE on Polygon had less than 10% retention of new users acquired in April and May into the second and third months.

Play-to-earn, play-and-earn, and play-to-airdrop elements distinguish blockchain games from traditional ones, but the core motivation remains fun. We need to ensure that the excitement over potential profits doesn’t overshadow the enjoyment of the game. Long-term sustainable blockchain games are essential. As we said in our tweet, “Web3 gaming is not dead, Web3 gaming is building.”

Investment and Funding

In June, Web3 gaming secured $43.05 million across 12 funding events, with 4 of these events not disclosing their amounts. This total is close to last month’s $44.95 million.

The Sandbox raised $20 million at a $1 billion valuation through convertible promissory notes, led by Kingsway Capital and Animoca Brands. The team’s priority over the past year has been to boost user-generated content (UGC) globally.

Uniswap Labs acquired Crypto: The Game, an on-chain survival game that quickly gained popularity on Crypto Twitter during its first season. In the game, players form tribes, with challenges determining tribe members’ fates. The last person standing wins. The game’s team chose to join Uniswap Labs to scale further.

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About ABGA

ABGA is a groundbreaking club centered around Web3 games, supported by prominent institutions in the Web3 industry. By integrating the collective strength of the Asian gaming industry, ABGA is dedicated to shaping a promising future for the global Web3 gaming arena.

About Footprint Analytics

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.