Web3 Gaming May Report: Signs of Growth Emerging, But Challenges Remain

On May 13, Line's NFT subsidiary announced plans to release five NFT games in 2023. An increasing number of game developers and projects are emerging, making Web3 gaming no longer just a symbol of speculation, but truly having more project teams deeply cultivating in this space. However, declining trading volumes and decreasing user numbers indicate that truly quality Web3 games remain scarce.

Currently, there are still few high-quality games that can operate long-term without relying on hype. However, truly good games are built on the foundation of being fun, having substantial support, and lasting appeal, rather than chasing short-term profits.

The data in this report comes from Footprint Analytics' GameFi Research page. This page provides an easy-to-use data dashboard containing the most important metrics for understanding the GameFi industry, updated in real-time. You can click here to find the latest information on GameFi-related prices, individual projects, funding rounds, and more.

**Key Article Points**

**Cryptocurrency Macro Overview**

Bitcoin (BTC) opened at $28,074 in May, reached its peak of $29,528 on May 5, then declined to $27,223 by May 31.

**Web3 Gaming Market Overview**

The overall trading volume of the Web3 gaming market showed a declining trend, and user numbers experienced a significant drop at the beginning of the month, only slightly recovering by mid-May.

The total number of active games in the market increased to 1,004, compared to 979 in March and 1,001 in April, with more and more new games entering users' view.

**Web3 Gaming Blockchain Data**

In the Web3 gaming market, BNB Chain, Ethereum, and Polygon dominate, with games on these chains accounting for 75% of total games.

The daily active users in the current blockchain gaming market remain around 900,000. Polygon users rose in late April and early May, then returned to normal levels.

**Web3 Gaming Project Overview**

Axie Infinity maintained its leading position with $6.6 million in trading volume.

In terms of token prices, Zodium's token led in May with a 130% gain.

**Web3 Gaming Investment and Financing Overview**

May's total funding reached $79.1 million, up 76% from the previous month's $45 million.

However, compared to April, funding rounds decreased from 12 in May to 8.

**Cryptocurrency Macro Overview**

**Bitcoin (BTC)**

Opened at $28,074 in May, reached its peak of $29,528 on May 5, then declined to $27,223 by May 31. Overall for the month, Bitcoin price fell slightly by 0.5%.

However, as a reference indicator for market health, Bitcoin has risen over 64% year-to-date (compared to $16,605 on January 1). Ethereum (ETH) followed a similar trend, declining less than 1% in May while rising 58% year-to-date.

However, the market should not develop a false sense of security due to Bitcoin and Ethereum's current stable price trends. This month, Bitcoin's on-chain transaction volume dropped significantly by 13.3%, indicating reduced Bitcoin trading activity.

**Web3 Gaming Market Overview**

May's Web3 gaming market showed signs of slowdown, related to cryptocurrency market sentiment and global economic uncertainty.

Data shows the Web3 gaming market's overall trading volume exhibited a declining trend, and user numbers experienced a significant drop at the beginning of the month, only slightly recovering by mid-May. This declining trend is within controllable limits and is not an absolutely bad sign, but rather gives Web3 games an opportunity to consolidate and improve their technology and design before the next wave arrives.

However, game developers have not stopped their efforts. By the end of May, the total number of active games in the market increased to 1,004, compared to 979 in March and 1,001 in April, with more and more new games entering users' view. The number of newly launched games in May increased slightly to 60, bringing the total number of games in the market to 2,381.

While the number of new games in May rebounded, the growth rate was relatively slow. As the hype effect of games gradually fades, high-quality games with solid gameplay and well-developed token economics may receive more attention and lead a new round of market growth in the future.

**Web3 Gaming Blockchain Data**

In the Web3 gaming market, BNB Chain, Ethereum, and Polygon dominate, with games on these three chains accounting for 75% of total games.

Currently, daily active users in the blockchain gaming market remain around 900,000. Polygon users rose in late April and early May, then returned to normal levels. This indicates that Polygon attracted a batch of short-term users, possibly due to marketing campaigns, but did not produce long-term effects.

SUI blockchain shows promise for the future, as Mysten Labs raised $300 million last year to provide high-end gaming on the Sui Layer 1 blockchain. With SUI chain's mainnet launch on May 3, it is expected to increase its influence and provide a platform for better immersive gaming experiences.

Despite experiencing nearly 12 months of market downturn, the Web3 gaming industry continues to innovate and will attract more users and investors in the future.

Market winter is the best time to improve project quality.

Although the overall cryptocurrency market remains volatile, high-quality projects with strong fundamentals should continue to attract users through their own strengths, rather than through speculation or market sentiment manipulation.

**Web3 Gaming Project Overview**

According to May 31 data, Axie Infinity maintained its leading position with $6.6 million in trading volume, demonstrating its strong liquidity and solid position. This achievement is attributed to Axie Infinity's continuous efforts to optimize the game. This month, Axie Infinity took a series of actions, launching an iOS version in its key markets and introducing user-created unique and customizable PFP avatar functionality, highlighting its emphasis on game design and expanding user base. Battlefly and Illuvium also performed excellently in trading volume, ranking second and third among all games.

In terms of token prices, Zodium's token led in May with a 130% gain, followed by Taroverse in second place and Victoria VR in third. However, significant price increases alone do not determine a project's profitability.

It's worth noting that projects with large gains are not necessarily well-known projects, indicating that price increases are driven by hype and speculation rather than strong support from the project's design and user base. Rapid price increases alone cannot prove a project's high quality and sustainability.

From active users perspective, on May 31, Alien Worlds led with 233,684 active users, Sweat Wallet followed closely with 90,189 active users, while Splinterlands had 74,876 active users, which is a remarkable achievement in a bear market.

**Web3 Gaming Investment and Financing Overview**

May's total funding reached $79.1 million, up 76% from the previous month's $45 million, but compared to April, funding rounds decreased from 12 to 8.

The larger investment amounts reflect investor confidence in the industry and recognition of its long-term potential. However, the slight decrease in total funding indicates the market remains sluggish.

This month's most notable investment events included funding for M80, Pomerium, and Illuvium, which raised $3 million, $20 million, and $10 million respectively, performing excellently while overall market sentiment remained low. These projects deserve continued attention.

May's gaming funding data indicates that despite the trading market remaining subdued, capital market confidence in blockchain gaming's long-term prospects remains firm. Projects that survive market turbulence are more promising.

**May Web3 Gaming News**

- Line disclosed five "player-first" NFT games to be released in 2023

- Blockchain game Illuvium completed $10 million funding, led by Framework Ventures

- Axie Infinity: Origins will be available on Apple App Store in parts of Latin America and Southeast Asia

- Axie Infinity launched PFP avatar minting function that can serve as digital identity proof

- Web3 gaming studio Pomerium received $20 million in angel investment

- PancakeSwap (CAKE) launched gaming project, CAKE price rose 20%

This article is from Footprint Analytics community contribution.

Source: Footprint Analytics