Overview of Blockchain Games: A Look Back at 2023, Outlook for 2024

Author: [email protected]

Source: Blockchain Game Annual Report

2023 Game Data: Decrease in Trading Volume, but Not Significant Decrease in Number of Trades

Blockchain Game Market Value

This year, the market value of Bitcoin (BTC) has strongly rebounded from the previous year's low, reaching $828.35 billion, a staggering 159% increase. In contrast, the growth of the blockchain game market has been relatively flat, but it also saw a significant upward momentum towards the end of the year.

Active Game Wallets

Despite the increasing number of games in the market, user participation has shown a significant decline. In 2023, the number of games in the market increased from 2,070 to 2,780. However, only 6% of the games had over 1,000 active wallets, a decrease from 10% the previous year. This reflects the challenges faced by blockchain games in attracting users and a decline in game quality compared to the previous year.

Monthly Trading Volume & Number of Trades

Major industry participants believe that the market downturn in 2023 is only temporary, so they are spending time optimizing the game infrastructure and waiting for the arrival of a bull market.

In 2023, although the overall trading volume decreased from the peak in 2022, the number of trades remained relatively stable. This trend highlights the determination of industry participants to improve the on-chain infrastructure and enhance user experience. For example, through games like SUI 8192, SUI successfully addressed people's concerns about blockchain processing capabilities. In July 2023, the daily trading volume of SUI's chain reached an astonishing 20 million.

We can see that the blockchain gaming industry is undergoing strategic adjustments to seize opportunities when market sentiment improves.

2023 Market Review: Game Industry is Developing, but On-chain Data is Not Optimistic

Game Industry is Developing, and AI is Profoundly Changing the Industry

• Play-to-earn is evolving into Play-and-earn
• More and more Web2 game studios are embracing Web3 technology
• The integration of AI and blockchain gaming industry has taken a crucial first step

Data from Footprint Analytics indicates that although the number of active players in Web3 games decreased in 2023, the industry as a whole is still moving towards mass adoption and improved user experience. The entire industry is gradually shifting from focusing solely on native crypto players to a broader mainstream market.

2023 Annual Token Price Increase Ranking

Despite the market's anticipation of a bull market, the development of the game industry has not stopped. In 2023, the prices of four game tokens grew by over 500%, with Nakamoto Games performing the best with an astonishing 1931.55% increase in token value.

Additionally, the token prices of gaming platforms such as HYTOPIA, Fabwelt, and Merit Circle also grew by over 500%. Projects with strong ecosystems continue to excel even in challenging market conditions.

In 2023, a significant trend is the development of Play-to-earn in blockchain games into Play-and-earn. Many Web2 companies are beginning to show increasing interest and investment in blockchain games, injecting vitality into this emerging field. HYTOPIA is a successful example, with its token growing by 1086.75% this year. This game originated from the sandbox game Minecraft by Mojang Studios in the traditional gaming industry.

Furthermore, the renowned AAA game Illuvium has collaborated with multiple mainstream entertainment companies in the Web2 sector. Web2 studios are showing strong interest in entering the blockchain space. Even traditional gaming giants like Ubisoft and Square Enix are exploring this new field.

Looking ahead to 2024, the trend of integrating AI into games will become more prominent. AI is not only significantly increasing productivity, allowing small teams to efficiently create high-quality games, but also has the potential to quickly adjust game balance and mechanisms through player data analysis and real-time feedback, better responding to player needs.

While AI is still in the early stages of development and its comprehensive impact on the gaming industry is yet to be fully explored, its potential is promising.

Layer 2 blockchain development is progressing rapidly, but established blockchains like BNB Chain still dominate the market

• Layer 2 blockchain development is progressing rapidly, attracting attention from the entire gaming industry
• Established blockchains such as BNB Chain, Polygon, and Ethereum still account for 80% of all active games in the market, dominating the current market

The significance of Layer 2 blockchain development in 2023 is underscored by the emergence of several major projects. In July, SUI demonstrated remarkable performance, proving the powerful potential of Layer 2 blockchains in handling a large number of transactions. Shortly after, in August, Base launched friend.tech, integrating social and entertainment elements, quickly becoming a focal point in the industry. By November, due to the outstanding performance of Axie Infinity and the launch of Pixels on the Ronin chain, Ronin also rapidly drew industry attention.

On December 31, 2023, Rollup technology saw rapid development, with the combined total value locked (TVL) of Arbitrum and Optimism accounting for as much as 83% of the market share. Optimistic rollup, known for its user-friendliness, is particularly popular in the DeFi field. Game-oriented Layer 2 blockchains are still striving to find direction and gain a larger market share.

In 2023, established blockchains such as BNB Chain, Polygon, and Ethereum still hold 80% of the active games in the market, indicating their continued dominance in the market.

Investment Status in 2023

Due to the FTX incident and regulatory impact, investment in the blockchain gaming industry rapidly slowed down in 2023. Throughout the year, the gaming sector completed a total of 131 financings, amounting to $9.839 billion, a significant decrease from the previous year's $26 billion. Investors became more cautious in the 2023 market environment.

A highlight in these investment events comes from the gaming giant Nexon, which is currently valued at $27 billion. The company invested $100 million to expand its Web3 intellectual property project, MapleStory Universe.

Outlook for 2024: Rise of Top Games, More Web2 Users Enter Blockchain Games

• The market is eagerly anticipating the emergence of top blockchain games

As the market's expectations for high-quality games such as AAA games continue to grow, the blockchain gaming industry is poised for significant growth.

The development cycle for games typically exceeds two years. Following the substantial infusion of funds in 2022, it can be speculated that many games have made substantial progress in their development.

Web2 giants are gradually entering Web3, and as the bull market approaches, they will have a profound impact on the blockchain gaming industry. These game studios with traditional game development experience can inject their expertise into Web3, creating superior blockchain games. Additionally, the integration of blockchain technology is expected to enhance the transparency of in-game assets and economic cycles, as well as improve game security, bringing more opportunities.

• GambleFi may experience growth but still faces regulatory challenges

Against the backdrop of the presidential election year and the continuous development of the sports betting industry, platforms like Rollbit are expected to achieve significant success. It has been reported that the platform's revenue reached approximately $300 million in 2023. The platform uses on-chain destruction to track revenue, a practice that has drawn attention but still requires verification of its accuracy.

Despite facing regulatory challenges, GambleFi has become one of the highest-yielding applications in the crypto field, demonstrating the tremendous growth potential of blockchain-based gambling platforms.

• Many are developing games based on cryptographic technology on traditional social platforms in an attempt to acquire users

The blockchain industry has been seeking to include more users. This year, it has become a trend to reach a large user base through platforms like Telegram and X (Twitter). The collaboration between Animoca Brands and The Open Network TON blockchain is a significant case in this field. As the largest validator of TON, Animoca Brands will help Telegram users transition to Web3. This collaboration not only expands the user base but also brings practical value and utility to Web3 applications.

The blockchain gaming industry continues to develop, leveraging the advantages of existing major platforms and integrating them with the innovative capabilities of blockchain technology, playing a crucial role in promoting the popularization of the blockchain industry and its future development.

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