The blockchain gaming sector faced a series of challenges in the first quarter of 2025, with a significant drop in total funding despite an increase in deal volume. According to DappRadar’s latest State of Blockchain Gaming report, Web3 gaming projects raised $91 million in Q1 2025, marking a 71% decrease from the previous quarter and a 68% decline year-over-year.
DappRadar analyst Sara Gherghelas highlighted the tough environment for early-stage startups, pointing to the macroeconomic conditions as a major factor. She expressed concerns about the potential difficulties that 2025 may bring for the industry if market conditions do not improve.
Despite the decline in total funding, the number of closed deals in the blockchain gaming sector rose by 35% in Q1. Gherghelas noted that investors are still interested in the space but are taking a more cautious approach, spreading their investments across a wider range of projects. Most of the funding in Q1 went to infrastructure-related blockchain gaming projects, indicating a preference for scalable technologies that can support long-term growth.
Two standout projects in the sector were MARBLEX from South Korea and The Game Company from Dubai. MARBLEX, the blockchain division of Netmarble, is working on a Semi-Publishing Model to support a variety of Web3 titles, backed by a $20 million joint fund with Immutable. The Game Company secured $10 million to develop a cloud gaming platform that utilizes blockchain technology to allow users to play any game on any device.
However, the industry also faced challenges, with the Arbitrum DAO voting to revoke funds for its gaming ecosystem initiative due to lack of progress and transparency. ZKsync also discontinued its liquidity rewards program citing poor market conditions.
Despite these challenges, blockchain gaming saw a significant increase in onchain activity in January, with a threefold rise compared to the previous year. The sector recorded over 7 million unique active wallets daily, reflecting a 386% surge year-over-year. OpBNB emerged as the top gaming blockchain, with Polygon experiencing a 100% increase in gaming activity.
Telegram has become a significant platform for Web3 gaming, capturing 21% of new game launches in 2024. Developers and publishers are leveraging the messaging app to enhance user acquisition and engagement, according to Game7’s 2024 State of Web3 Gaming Report.
Overall, the blockchain gaming sector may be facing challenges in terms of funding, but investor interest remains strong. With a shift towards cautious investing and a focus on scalable technologies, the industry is poised for long-term growth despite the headwinds it currently faces.