Decentralised financial instruments heavily influenced the last major bull run during the pandemic. Since then, the crypto industry has seen a Web3 uprising.
Between 2022 and Q1 2023, Web3 projects submitted over 8500 NFTs and nearly 6,000 cryptocurrency trademark applications. The next bull run will likely be centred around the practical application of Web3 solutions in a predominantly Web2 world – and blockchain gaming will be a major focus of this shift.
We're already witnessing it in the current market rally: popular gaming tokens like Axie Infinity and The Sandbox soared by over 40 per cent in December. Overall, in 2023, the blockchain gaming sector marked a milestone with one million daily unique active wallets, accounting for 33 per cent of the blockchain industry's monthly activity.
Significant financial investments bolstered the growth – in the first quarter of 2023 alone, they reached $739 million, signalling strong investor confidence.
So, how will the Web3 gaming industry shape up in 2024? What will be the key trends? Let's dive in.
Increased Convergence of Real-World and Virtual Economies
In the first three quarters of 2023, blockchain games raised nearly $1.5 billion in investments, with over half of these funds exclusively dedicated to Web3 gaming. This reflects a strong investor confidence in the market.
At the same time, the increasing demand and trading volume of popular gaming tokens suggest that players enjoy the gaming experiences and find significant value in the fusion of real assets and economies created by gamers and traders in the blockchain space.
This integration, especially the tokenisation of Real World Assets (RWAs), is turning heads in blockchain and traditional finance sectors.
The value of RWAs nearly doubled to $2.5 billion in September 2023, compared to the previous year. Although this growth clearly indicates a trend towards traditional income-generating assets such as U.S. Treasury bonds and private credit., the adoption of RWAs is primarily driven by existing crypto users.
They are predominantly adopted by users who are already active and familiar with the crypto space rather than attracting new users or traditional investors. As the market potentially matures in 2024, we're likely to see more convergence of RWAs and GameFi in the blockchain gaming sector.
Utility-Driven Web3 Integration: Beyond Tokenisation
In 2024, the approach to Web3 development will undergo a fundamental transformation. The trend will shift from the novelty of tokenisation to a more utilitarian perspective, focusing on how Web3 elements can enhance consumer products. This reflects a move towards meeting consumer needs better and going beyond innovation compared to older Web2 products.
More projects will likely focus on enhancing the value proposition of existing products or services by introducing practical and user-focused Web3 elements. These might include features like advanced personalisation, streamlined peer-to-peer interactions, and improved data privacy and ownership controls, which offer tangible benefits to users.
In the last two years, many Web3 projects failed – primarily due to their lack of utility. You'd sign up for a Web3 platform, be it a game or an app, and their core function was based on offering you tokens or NFTs.
However, developers have realised that this is not a sustainable approach, and users now see beyond the mere appeal of a token. In the future, companies will start embedding Web3 components into the core functionality of products and services to provide a level of utility and user experience that surpasses traditional offerings.
For instance, in the gaming sector, we might see games that use blockchain to create exclusive decentralised asset marketplaces, allowing players to securely buy, sell, or trade in-game items with verifiable ownership and provenance.
The Year of Web2.5: Driving Real-World Adoption
Web2.5 has been a buzzword for a couple of years now. The concept represents a transitional phase between the current Web2 and the emerging Web3 technologies. However, Web2.5 never really took off, as most projects jumped straight to Web3.
But this year is likely to be different; we will see a significant growth of Web2.5 projects. This shift is crucial for real-world adoption as it offers a more accessible and user-friendly approach to integrating blockchain technologies into mainstream applications.
Web2.5 is a hybrid model combining the familiarities of Web2 with the decentralised features of Web3.
It's about enhancing existing platforms with blockchain elements to offer consumers the benefits of decentralisation without the complexities typically associated with blockchain systems. Web2.5 focuses on adding value to the user experience through the integration of tokenised assets, transparency, equality, and other decentralised elements into established business models.
Web2.5 is not just a theoretical concept, rather we've already seen its successful implementation outside the gaming industry.
For example, the popular Brave browser has successfully achieved this by integrating blockchain technology to improve privacy and security for its users, while also maintaining some centralised elements characteristic of Web2, such as user-friendly interfaces and centralised development and governance of the browser software.
So, 2024 might be the year we finally see this model be effectively adopted in the blockchain gaming space.
A key benefit of Web2.5 is its utility. It allows businesses to innovate within their existing frameworks, gradually introducing their audiences to blockchain concepts like NFTs and other crypto assets.
This incremental change is crucial for traditional organisations: they can implement these utilities without disrupting their everyday operations. Thus, Web2.5 is not just a stepping stone towards Web3 but a necessary phase that balances innovation with familiarity and grants a smoother transition for businesses and consumers.
More Blockchain Games Based on iGaming Models
One of the biggest setbacks for blockchain games has been their lack of accessibility and adoption among non-crypto or traditional users. Developers are increasingly looking to build GameFi products that appeal to both crypto and non-crypto audiences – and online gambling is one of the sectors that can be integrated into the blockchain gaming sector.
Gambling will tend to grow inside the GameFi industry as there are clear benefits for both sectors in such setups. For players, this offers a distinctive advantage, as the integration of smart contracts promises fair rules and transparent payouts, significantly enhancing player trust.
Unlike traditional gaming models where the 'house always wins,' blockchain-based games provide a level playing field, where players are not competing against an inherently biased system. This transparency and fairness can be a compelling draw for players who are sceptical of conventional online gambling platforms.
For developers, adopting blockchain in the iGaming sector opens several strategic avenues. The decentralized nature of blockchain allows these platforms to bypass geo-restrictions and make a rapid expansion into new markets.
This flexibility helps in navigating the complex web of international regulations more efficiently. Moreover, leveraging blockchain technology can aid in building a transparent reputation, addressing the trust issues often associated with online gambling.
Overall, it helps developers to significantly broaden their user base, tapping into both traditional gaming communities and the growing pool of crypto-savvy users.
Web3 Gaming Set to Shine in 2024
Overall, the Web3 market has significant scope for growth in 2024. As the hope of Bitcoin ETF turns into a reality and takes crypto officially into the traditional financial ecosystem, Web3 projects will try to achieve the same.
The industry is full of optimistic forecasts, with experts predicting steady growth fueled by innovative trends surrounding Web2.5, RWA, and tokenisation. We will likely see businesses find new ways to venture into the Web3 gaming space, targeting both native crypto and traditional users.
With these trends, 2024 can finally be the year that Web3 gaming takes its much-awaited leap towards mainstream adoption.
Oleg Bevz is a marketing executive and communications expert. He started working in the tech communications sector in 2015 and has gained valuable experience in the Web3 startup growth landscape over the past eight years.
Oleg has had a robust career in the IT and Web3 gaming space for close to a decade. He has grown with these entities, from his initial role with an IT services company to his senior management roles with notable blockchain service and media companies. At the moment, he is participating in a government-supported project that aims to burgeon Web3 space in Ukraine.
Since October 2023, Bevz serves as the Chief Marketing Officer (CMO) and Advisor for Playnance.
