Learn about Telegram Games’ impact, market growth, and sustainability challenges in one article.
Written by: Stella L
Data source: Footprint Analytics Games Research Page
In September, the total market value of blockchain gaming tokens increased by 29.2% to $23.2 billion, and the number of daily active users (DAU) rose by 12.3% to 4.7 million. A notable trend is the rapid rise of Telegram games, which has triggered fierce competition between blockchain networks and centralized exchanges for user acquisition. However, this boom raises questions about the sustainability of on-chain participation.
At the same time, new regulatory challenges are emerging and some established projects are beginning to rethink their blockchain integration strategies. As the industry continues to adapt to these changes, the focus remains on effectively leveraging blockchain technology to create sustainable and engaging gaming experiences.
Macro Market Review
The crypto market showed strong performance in September. Bitcoin opened at $57,429 and closed at $63,485 at the end of the month, achieving a 10.5% increase. Ethereum, while performing positively, is still not as good as Bitcoin. Ether started at $2,426 and ended at $2,603, a gain of 7.3%. It is worth noting that the ETH/BTC price ratio hit a new cycle low of 0.0386 in mid-September.
Data source: Bitcoin and Ethereum price trends
Several key factors contributed to this positive market sentiment:
Monetary policy shift: On September 18, the U.S. Federal Open Market Committee (FOMC) unexpectedly implemented a larger-than-expected 50 basis point rate cut. Later in the month, Chinese policymakers implemented macro stimulus measures, which provided support to global stock markets.
Regulatory progress: The U.S. regulatory environment shows signs of improvement. The U.S. Securities and Exchange Commission (SEC) approved the listing application of spot Bitcoin ETP (Exchange Traded Product) options, and more similar applications are expected to be approved.
Institutional Adoption: Bank of New York appears poised to offer custody services for crypto assets, a move that could further solidify crypto’s legitimacy in the financial sector.
Political Support: There have also been positive changes in the political context. Former US President Trump announced a new decentralized finance (DeFi) protocol, and Vice President Harris also made remarks in support of digital assets and blockchain technology.
Overview of the blockchain game market
September saw a rebound in the Web3 gaming space, in line with the overall upward trend in the crypto market. The total market value of blockchain gaming tokens jumped from $18 billion to $23.2 billion, a significant growth of 29.2%. This recovery, which comes on the heels of last month’s sharp decline, shows the space’s strong correlation with macro crypto market dynamics.
Data source: Blockchain game token market value and Bitcoin market value
User engagement continued its upward trend, with daily active users (DAU), measured in unique wallets, reaching 4.7 million in September. This was a 12.3% increase compared to August, mainly due to increased opBNB network activity.
Data source: Number of daily active users of blockchain games
Transaction metrics also showed improvement, with average daily transactions for blockchain games reaching 9.1 million, a slight increase of 2.5% from August.
Data source: Daily transaction count of blockchain games
However, the daily transaction volume of blockchain games fell by 22.9% to $13.1 million. It should be noted that this data excludes several abnormal data points on September 13, 17, 25 and 27 due to internal wallet transfers within the same game.
Data source: Daily transaction amount of blockchain games
In September, the focus shifted significantly towards games based on the Telegram platform. This change is mainly reflected in the following two aspects:
On the one hand, there is the expansion of blockchain networks: in addition to TON, multiple blockchain networks are competing to attract users of the Telegram ecosystem, a trend that has already begun to emerge last month. For example, BNB Chain has been integrated with Telegram, providing users and developers with a seamless access experience.
On the other hand, there is competition from centralized exchanges (CEX): centralized exchanges are actively competing for Telegram's traffic, viewing it as an important user acquisition channel. Binance is particularly prominent, quickly launching four tokens based on Telegram and TON. In September, Binance announced the 58th project Hamster Kombat (HMSTR) and the 59th project Catizen (CATI) on Launchpool, continuing the launch momentum of Toncoin (TON) and Dogs (DOGS) in August. Other exchanges such as Bitget are also making strategic investments, such as injecting $30 million into the TON blockchain.
Catizen
This trend is not limited to exchanges, as various entities and projects are also launching their own Telegram-based initiatives. Binance is about to launch a Telegram mini-app game called Moonbix, while CryptoKitties announced the launch of a Telegram game called “CryptoKitties: All The Zen.”
At the Token2049 conference in Singapore in 2024, Bybit CEO Ben Zhou shared some data: "Some tokens have brought us millions of new registered users, of which 400,000 to 500,000 have become deposit users. (These new users) are mainly from Eastern Europe, Africa, South Asia, Nigeria, India and some European countries."
TON established an effective user acquisition channel and conversion funnel with exchanges, inspiring similar strategies in the industry. However, there are signs that this acquisition effect may be waning as the same users may flow between projects.
Although these games excel in user acquisition, their contribution to on-chain activity appears limited. Most games simply move tokens on-chain, while gameplay and assets remain off-chain. This structure raises questions about long-term sustainability and economic viability.
The data shows a disconnect between user acquisition and sustainable on-chain engagement. Without sustained on-chain user activity, these games and developments may struggle to remain economically viable in the long term. As the industry continues to evolve, bridging the gap between initial traction and sustained on-chain engagement will be critical to the health of the Web3 gaming ecosystem.
Blockchain Game Public Chain
In September, the number of active games on various blockchain networks increased to 1,563, up 4.5% from August. Market dominance remained stable, with BNB Chain, Polygon, and Ethereum accounting for 22.0%, 18.6%, and 14.8% of the number of games, respectively.
Data source: Percentage of active game projects on each public chain
The DAU landscape has changed significantly, with opBNB, Ronin, and Nebula (SKALE subnet) becoming the top performing chains, averaging 1.1 million, 1.1 million, and 458,000 daily DAU respectively. As of the end of September, these chains’ DAU shares were 28.2%, 20.1%, and 9.2% respectively.
Data source: Daily number of active game users on each public chain
opBNB has shown significant growth, with its average DAU in September surging 62.0% from August, and market share increasing from 22.4% to 28.2% during the month. This growth was driven not only by the hit game SERAPH: In The Darkness, but also by the launch of a new game in mid-September, Elfin Metaverse, an esports gaming platform and open-world metaverse.
In contrast, Ronin’s DAU share continued to decline, from 29.5% in August to 20.1% in September. This trend is mainly attributed to the decline in Pixels, whose DAU dropped from over 700,000 to 470,000 during the month. It is worth noting that although Ronin’s average DAU in August was almost twice that of opBNB, opBNB surpassed Ronin in September, marking an important shift in the competitive landscape.
Sui’s average daily DAU increased by 48.4% to 92,000, thanks to the success of the Telegram game BIRDS, which attracted a large number of users in its first week. This performance highlights the trend of blockchain using Telegram for user acquisition.
Core’s average DAU grew 66.9% to 62K, helped by the second season of the Core Ignition Drop, which included Web3 games in addition to BTCFi. Games such as World of Dypians and Pixudi played a key role in attracting users to the Core ecosystem.
Pixudi
Competition between blockchains for games and users is becoming increasingly fierce. The Treasure DAO community is discussing a proposal to migrate its Web3 gaming ecosystem from Arbitrum to ZKsync. This potential migration is mainly due to the delay of Arbitrum's "Gaming Catalyst Program", which has not yet been implemented. The program proposes to distribute 200 million ARB tokens within two years to incentivize game development on its blockchain.
Overview of Blockchain Games
The blockchain gaming space now includes 3,448 games, of which 1,295 are active. Notably, 285 games have attracted more than 1,000 monthly active on-chain users (MAUs), accounting for 8.3% of all games and 22.0% of active games. This distribution highlights the ongoing challenges facing the blockchain gaming space in terms of user retention and engagement.
Data source: Number of monthly active blockchain games
In September, the blockchain gaming industry encountered new regulatory scrutiny that went beyond the previous CEX, stablecoin, and DeFi sectors. Particularly notable was the case of fantasy sports company Sorare being charged in the UK for “providing unlicensed gambling facilities.” This case shows that regulators are increasingly paying attention to blockchain gaming platforms, especially those that blur the lines between gaming, gambling, and digital asset trading.
Also in September, the blockchain gaming space saw the exit of certain projects. Dimensionals, a roguelike deck-building game developed by Mino Games, officially switched to a pure Web2 model, abandoning its initial blockchain and NFT integration. Mino Games has received strong support from venture capital firms such as Andreessen Horowitz (a16z), Y Combinator, and Standard Crypto, with a total financing amount of $18.2 million.
The project’s Web3 journey began with the launch of the Genesis Stone series in March 2023, but encountered numerous challenges along the way, including whitelist giveaways being hacked by bots and DDoS attacks. The well-funded project’s transition from Web3 to Web2 has sparked important discussions about the challenges of integrating blockchain technology into traditional gaming models, and the long-term viability of certain Web3 gaming paths.
Increased regulatory scrutiny and difficulties in implementing the technology are forcing companies to re-examine their strategies. Successful projects will need to deftly navigate compliance issues, ensure strong security, develop engaging gameplay that demonstrates the value of blockchain integration, and find a balance between satisfying the expectations of both traditional gamers and crypto enthusiasts.
Blockchain game investment and financing
In September, Web3 gaming received $65.6 million in 13 funding events, up 6.6% from August. Three of the funding events did not disclose the specific amount.
Investment and financing events in the blockchain gaming sector in September 2024 (Source: crypto-fundraising.info)
Gaming and social platform E-PAL has launched Balance, its AI-based blockchain experience platform. This move follows two successful funding rounds led by a16z and Galaxy Interactive. This significant investment will be used primarily for the development of Balance infrastructure, which is critical to E-PAL's ambition to build an open, inclusive, and fair Web3 ecosystem. This move also highlights the convergence trend between AI, blockchain, and social gaming platforms.
Speaking of a16z, its game fund Game Fund One, which started with a scale of $600 million, has achieved remarkable results in the past two years. The fund announced that it will invest $30 million in game-related technology startups, focusing on cutting-edge fields such as AI, VR/AR, and Web3 games. The application window will open on August 26, 2024 and end on September 30, and is scheduled to be officially launched in San Francisco in January 2025. For the selected startups, the fund will provide full support, including expert speeches, personalized coaching, and an investment of $750,000 per company. In addition, these companies will also benefit from the expertise and resources of the a16z SPEEDRUN team.
In addition, some innovative projects also received new financing.
Puffpaw, an innovative platform combining health initiatives with blockchain technology, has raised $6 million in seed funding. Their “Quit & Earn” model built on Berachain represents a new way to incentivize positive health behaviors through blockchain rewards.
Universal Health Token (UHT), which gamifies healthcare through blockchain technology, has successfully raised $1.2 million in pre-seed funding, attracting investment from industry leaders including Animoca Brands and Polygon. The project demonstrates the trend of applying game and blockchain principles to traditional non-game fields, which has the potential to revolutionize the way health is engaged and managed.
