Ethereum News

What’s behind the nearly $1 billion surge in blockchain gaming investments

What's behind the nearly $1 billion surge in blockchain gaming investments

The following is a guest post from Yaniv Baruch, COO at Playnance.

The first quarter of 2024 reinvigorated investors’ sentiment in the crypto market. With the landmark litigation against the SEC ending, US investors have finally received access to spot Bitcoin ETFs. This opened the doors to Web3 for large institutional investors: the weekly net cash inflow to US-based ETFs has repeatedly overperformed the initial projections, triggering a bull rally to the all-time high price of Bitcoin.

Despite the broader market’s optimism, investments in Web3 gaming remained cautious, with $288 million injected in the first quarter. Nevertheless, April brought the industry a windfall—a staggering $988 million, the highest monthly investment since January 2021. 

Investment Surge: The Data

The root causes of this year’s investment spike seem to be similar to those of early 2021. More than three years ago, the GameFi industry was anticipating a round of explosive growth, facilitated by the emergence of new technologies like NFTs. From 2020 to 2021, the total market capitalization of NFTs skyrocketed by 29 times, while at the same time the total value locked in DeFi protocols reached historic peak levels.

Likewise, the steep increase in committed investment in April 2024 is driven by Ethereum implementing its recent new technology of Account Abstraction and the rise in Layer 3 blockchain solutions in general. The corporate activity is abnormal: a16z is raising a $600 million gaming fund, Bitcraft Ventures is following up with its third GameFi fund of $275 million, and Ubisoft Studios is becoming increasingly interested in blockchain collaboration and joint ventures. By all signs, Web3 gaming is bracing for a powerful headstart.

The uncommonly strong fundamental user engagement metrics bolster this. The average unique active wallets for gaming dApps almost reached 3 million daily — a record-setting number. According to data by DappRadar, every third person logging into dApps…

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