Blockchain Games Are Dominating Decentralized App (dApp) Market

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    • DeFi accounts for 32% of the activities in the dApp space.
    • VC-backed Web3 startups raised only $1.8 Billion in Q2 2023.

    Decentralized application (dApp) market is not limited to decentralized finance (DeFi) anymore. Blockchain gaming is a top contributor for the sector with it seeing a plethora of web3 investments going into metaverse games. Data aggregator DappRadar, and blockchain technology advocate Blockchain Gaming Alliance (BGA) released ‘State of Blockchain Gaming in Q2 2023’ report, shedding light on the burgeoning gaming sector in dApp industry.

    DeFi Segment Dominance Rising in dApp Ecosystem

    Share of daily unique active wallets (dUAWs) in games have declined to 36% in Q2 2023. However, it still holds dominance in the dApp ecosystem. DeFi accounts for 32% of the activities in the space, a 9% gain in a quarter. Social apps are rising gradually, currently having a 13% market share.

    Segment dominance in dApp ecosystem

    Source: DappRadar

    Wallets on Klaytn and Oasys blockchains grew substantially by 1067% and 5573% respectively. The former hosts most number of dUAWs with 426,360 wallets on the network. WAX leads blockchain gaming in terms of total transactions. The network registered 1.5 Billion transactions followed by Hive with 68 Million and DeFi Kingdoms with 31 Million.

    The metaverse segment appeared weakened as trading volume and sales count in virtual worlds took a nosedive. While the previous quarter registered $311 Million in volume, Q3 2023 managed only $58 Million till now. Total sales slid from 146K to 39K during the period.

    Trading volume and sales count in the metaverse

    Source: DappRadar

    Fading interest in the metaverse and Securities and Exchange Commission’s (SEC) clampdown on crypto sector is the likely reason for the drop in numbers. Gary Gensler’s statement against crypto entities affected metaverse tokens negatively including The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS) and more.

    Investments in Blockchain Gaming Picking Up The Pace

    The Web3 sector, on the other hand, is prospering, attracting investments in the space. While the amount plunged drastically from $1.22 Billion to $654 Million between Q3 and Q4 last year. Nonetheless, the number increased in the following quarters with investment amount reaching $973 Million in the second quarter of 2023.

    Investments in Web3 gaming projects

    Source: DappRadar

    However, data suggests that venture capitalists backed Web3 startups were struggling to find investments amid the artificial intelligence (AI) boom. According to business data aggregator Crunchbase, VC-backed Web3 startups raised only $1.8 Billion in Q2 2023. Additionally, the number of deals were slashed to half year-on-year.

    Decline in investments in VC-backed Web3 Startups

    Source: Crunchbase

    According to DappRadar, a large share of Web3 gaming investment was settled within the metaverse market during Q1 and Q2 this year. Web gaming accounts for almost half the activity in the blockchain market. Play-to-earn (P2E) games are still a nascent segment in the crypto market and almost 40% users were reportedly bots.

    Investments segmentation in Web3 gaming sector

    Source: DappRadar

    The Web3.0 sector could take decades to go mainstream, experts believe. Mainstream adoption will happen when advanced technologies are focused primarily on Web3. It is still an unpopular concept across the world. People are more likely to accept those technologies that mainstream companies adopt. The enthralling artificial intelligence (AI) is a “lively” example.


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    Anurag Batham
    Anurag Batham is a journalist and research analyst at CryptoSunday. He has covered blockchain, crypto, metaverse and more since 2021 and holds a keen interest in global economy and climate change with a passion to deliver useful information to the readers.