With nearly $1 billion in investments in April and 3 million daily active users, is the bull market for Web3 games coming?

Author: flowie, ChainCatcher

Editor: Marco, ChainCatcher

Web3 games seem to be entering a strong recovery phase.

Recently, with the social mini-game Notcoin (NOT), backed by 900 million active Telegram users, simultaneously launching on Binance and OKX, Web3 games have once again attracted significant attention in the crypto market.

According to Jack Booth, Marketing Director of the TON Foundation, compared to the peak of the first-generation Web3 game king Axie Infinity with 2 million daily active users, Notcoin achieved 6 million daily active users during its mining phase, and within almost three months, the user base grew to 35 million.

On May 16, official data from Notcoin showed that within just one hour of NOT being listed on various exchanges, its market value exceeded $820 million.

Besides Notcoin's astonishing growth, the April blockchain game report released by DappRadar and the Blockchain Game Alliance shows a clear growth trend in the entire blockchain game market, with an average of 2.9 million unique active wallets (dUAW) per day in April, a 17% increase from March.

Footprint Analytics data shows that the average daily active users (wallets/players) of blockchain games in April exceeded 3 million.

Additionally, the DappRadar report states that the investment scale in the blockchain game sector reached $988 million in April, setting a new high since January 2021.

Two Major VCs Raise Nearly $900 Million, Fueling Web3 Game Ammunition

The total investment in Web3 games in the first quarter of 2024 was around $288 million, while the total investment in April suddenly surged more than twice, mainly due to new rounds of fundraising completed by the two major VCs, a16z and Bitkraft Ventures.

On April 17, a16z announced that it had successfully raised a massive $7.2 billion in new funds, of which $600 million will be allocated to the gaming industry, including companies developing new games, game platforms, game-related technologies, or other gaming industry innovations.

Regarding the use of the $600 million gaming industry investment fund, Andrew Chen, General Partner of a16z and head of the a16z Games Fund One, revealed that it will be used to create a second gaming fund, covering more diverse areas: from AI, Web3 games, VR/AR, 3D tools, game apps to studios.

Earlier, Andrew Chen also announced that by May 19, through the a16z Speedrun program, a total of $30 million would be invested in multiple gaming companies, including Web3 games, with each startup joining the Speedrun program receiving $750,000.

RootData shows that Web3 games are the second-largest investment area in a16z's crypto investments, second only to infrastructure, with at least 25 Web3 games invested so far.

Since the beginning of this year, a16z has participated in two Web3 game investments: a $13 million Series A funding for the post-apocalyptic NFT shooting game MadWorld and an $8 million funding for the gambling ecosystem developer MyPrize.

Besides a16z, another VC, Bitkraft Ventures, also announced in April the launch of its third gaming fund, which has raised $275 million and will focus on seed and Series A stage game studios, technologies, and platforms.

Bitkraft Ventures recently announced the introduction of two new executives to expand the Asian Web3 gaming market: Jin Oh, former President of Riot Games and CEO of Garena, and Jonathan Huang, former Deputy Director of Temasek.

Bitkraft Ventures has been very active in investing in Web3 games. In 2021, Bitkraft Ventures raised $75 million to launch its first token fund for investing in blockchain games and digital entertainment. At the end of March 2023, Bitkraft Ventures raised $220 million for its second "token fund."

To date, Bitkraft Ventures has publicly announced nearly 50 investments, most of which are in the Web3 gaming sector, with notable cases including YGG and Immutable.

Since the beginning of this year, Bitkraft Ventures has participated in investments in four game projects: Metalcore, MadWorld, Avalon, and My Pet Hooligan, with MadWorld being a joint investment with a16z.

Daily Active Users Hit New Highs, Which Web3 Games Are Leading?

Despite the overall downturn in the crypto market, active users of Web3 games are on the rise.

a16z game investor Robin Guo cited Footprint Analytics on social media, exclaiming: "The MAU (monthly active users) of Web3 games is 3.3 million, far exceeding the previous peak created by Axie. If the data hasn't been cleaned, I'm sure many of them are bots, but the recent growth led by Pixels is still impressive. It feels really overlooked."

According to DappRadar's report, the dUAW (daily unique active wallets) of Web3 games reached 2.9 million in April, setting a new record.

Among them, the top ten Web3 game applications by UAW (unique wallet addresses) all exceeded 1.5 million. Pixels still holds a strong leading position, with UAW exceeding 20 million, followed by Sweat Economy and StarryNift, both with UAW exceeding 5 million.

Most of these 10 games were launched around 2020 and 2021.

Pixels is a pixel-style farming game launched in 2021, which migrated from Polygon to the Ronin network at the end of last year. Ronin is an Ethereum Virtual Machine (EVM) chain developed by Sky Mavis, the developer of Axie Infinity. The growth of Pixels has also made Ronin the most active gaming chain at present.

In February this year, Pixels was listed on Binance, and as of May 21, its fully diluted market value was around $1.9 billion. Recommended reading: "Pixels Two-Year Anniversary: The Metaverse Pixel-Style Farming Chain Game Leading the Ronin Ecosystem"

Sweat Economy is a fitness-themed move-to-earn game, a mini-game chain transformation of a traditional fitness app with 100 million users, built on the Near chain.

StarryNift is an AI-enhanced co-creation metaverse platform that provides immersive 3D virtual experiences for gaming, creation, and socializing. The founder of StarryNift was a founding partner of Matrix and a co-founder of DEx.top. StarryNift has completed three rounds of financing, with investors including OKX Ventures, SIG Asia Investment Fund, Binance Labs, GBV Capital, BNB Chain Fund, Alameda Research, LD Capital, and CoinGecko Ventures.

Another World, established in 2021, is a Korean Web3 metaverse project built on the Klaytn chain, formerly known as Terra World, which has just ended its public beta. According to public reports, Another World has received support from South Korea's Kakao Group and LG Group, with a large global user community of 200,000 and a robust blockchain token system.

Alien Worlds is a relatively old space exploration game that integrates DeFi, NFT, and DAO. In 2021, it received $2 million in funding from investors including Animoca Brands and LD Capital. As of May 22, its token TLM has a fully diluted market value of over $100 million. Recommended reading: "Three Minutes to Understand Alien Worlds: Integrating DeFi, NFT, and DAO"

T and DAO's Space Exploration Game

MotoDex is a motorcycle racing game built on the Ethereum sidechain SKALE. According to DappRadar data, its UAW in the past 30 days has surpassed Pixels.

Nine Chronicles is a well-established decentralized RPG (role-playing game) that has secured two rounds of funding, with investments from Binance Labs and Animoca. As of May 22, the fully diluted market cap of Nine Chronicles' token WNCG is around $70 million.

Apeiron is a card battle and god simulation game. In December last year, Apeiron announced its migration to the Ronin network. It completed a $10 million seed round led by Hashed in 2022. On February 28, the Apeiron Arena open beta was released on the Epic Game Store, where players can earn ANIMA airdrop points by downloading and participating in competitions. Its token APRS is listed on Bybit and the decentralized exchange Katana on the Ronin blockchain, with a fully diluted market cap of $580 million as of May 22. Recommended reading: "Exploring Apeiron: A Revolutionary Blockchain Game Combining Mythology and Modern Gameplay."

Ultiverse is an AI gaming platform with a strong lineup of investors. It has completed three rounds of funding, raising a total of $1,350, with Binance Labs participating in two rounds, and other notable investors including IDG Capital, Animoca Brands, and DWF Labs. On May 3, Ultiverse's Gold Chip NFT had a 24-hour trading volume exceeding 1100 ETH, ranking first on the BLUR transaction list.

World of Defish is a decentralized NFT game world running on the BNB chain, incubated by the decentralized IDO platform Poolz and backed by Poolz ventures.

In addition to these 10 Web3 games with high UAW, the shooting mobile game Matr1x also had notable monthly active users in the past 30 days. Matr1x received strategic funding from Animoca in February, with previous rounds involving OKX Ventures, SevenX Ventures, Folius Ventures, ABCDE, and Hashkey Capital.

Conclusion

Although this bull market has seen popular games like Pixels and Notcoin, they still seem to fall short compared to the phenomenon-level games like Axie and STEPN that once led the new paradigm of Web3 games.

After the P2E era, venture capital's investment hotspots in Web3 games are twofold: one is to create AAA titles that aim to deliver a Web2 gaming experience, and the other is to develop fully on-chain games where all game logic and assets are on the blockchain.

Currently, AAA blockchain games face challenges due to high production costs and long development cycles, and there are doubts about whether they are merely capital hype. In contrast, lightweight games like Notcoin, which are quick and easy to play, have attracted a large amount of traffic. Will the next phenomenon-level Web3 game emerge from social mini-games?