Blockchain Gaming Sector Continues to Experience Significant Decline

The web3 gaming industry experienced a significant downturn in the second quarter of 2025, with a 17% decline in daily unique active wallets and a 93% year-over-year collapse in funding to $73 million, the lowest in two years, according to DappRadar's latest report. This decline marks a broader correction in the blockchain gaming sector, driven by unsustainable tokenomics, low user retention, and a decline in investment, resulting in the shutdown of over 300 web3 games. As interest in play-to-earn models wanes, some developers are shifting their focus to AI-powered dapps, with teams behind Mojo Melee and Realms of Alurya pivoting to AI-based projects. Funding trends reflect this shift, with nearly 75% of the $73 million raised in Q2 going to infrastructure projects rather than game studios. Investors are prioritizing foundational technologies over direct consumer-facing titles, indicating a consolidation rather than a retreat. While smaller web3 games struggle, users are migrating to larger titles, and established studios like Sega and Ubisoft continue to invest in the space. Chain activity is also shifting, with opBNB, WAX, and newer chains like Aptos, Sei, and SKALE gaining momentum. The focus has shifted from speculative hype to gameplay depth and ecosystem sustainability, signaling the maturation of the blockchain-based gaming market and a move towards more sustainable models.