TL;DR

• AI Dapps now have 28% of blockchain activity, surpassing GameFi Dapps at 26%
• GameFi is still growing: 4 million daily active wallets, up 79% month-over-month.
• Q2 2024 saw $1.1 billion investment in blockchain gaming; July dropped significantly.

Introduction

Blockchain’s decentralized application (Dapp) industry has witnessed a significant shift in recent months, with artificial intelligence (AI) Dapps surpassing crypto gaming (GameFi) Dapps as the leading category for the very first time. 

This development, highlighted in the July 2024 DappRadar Games Report, means that gaming remains a robust and growing sector, but that AI-powered Dapps are the hotter current tech trends, and hold a bit more mindshare in the space right now. 

AI Dapps Take the Lead

• In July 2024, the Dapp industry maintained its impressive milestone of over 15 million daily unique active wallets (dUAW) interacting with blockchain applications. 
• However, the most striking development was the rise of DappRadar’s ‘Other’ category, which primarily consists of AI-based Dapps, to the top position with a 28% share of user activity. 
• Gaming Dapps still demonstrated significant growth.The sector now represents 26% of DApp activity, engaging 4 million dUAW – a remarkable 79% increase from the previous month. 

The rise of AI Dapps reflects a broader trend in the tech industry, where artificial intelligence and machine learning are being integrated into sectors from finance to entertainment. In the blockchain space, AI applications are leveraging decentralized networks that provide services from decentralized AI computations by projects like Render to AI-driven data analysis and prediction markets.

Gaming Sector Plays On

Despite being overtaken by AI Dapps, the blockchain gaming sector continues to show strength and innovation. The report highlights several key developments and trends:

1. Blockchain Diversity: Ronin remains the leading blockchain for gaming activity, driven by popular titles like Pixels and Lumiterra. Other networks like opBNB, Oasys, NEAR, and Immutable zkEVM are also seeing significant engagement, showcasing the diverse ecosystem of blockchain gaming platforms.

2. Emerging Titles: New games like SERAPH: In the Darkness, which launched in mid-July, have quickly gained traction, indicating ongoing innovation and user interest in fresh gaming experiences.

3. NFT Trading: Despite a general decline in metaverse-based NFT collections, gaming NFTs continue to see active trading. Gods Unchained and Axie Infinity remain the most traded gaming NFT collections, while newer entries like Guild of Guardians are gaining popularity.

4. Cross-Platform Integration: The success of games published on major platforms like the App Store and Epic Games Store shows the growing acceptance of blockchain and NFT elements in mainstream gaming channels.

Investment Landscape

The investment climate for blockchain gaming and metaverse projects is a mixed picture. July 2024 saw the lowest investment level since Q3 2020 – just $23 million across three deals – but the preceding quarter (Q2 2024) was notably strong. 

Q2 marked the best quarter for blockchain gaming investments since Q3 2022, with $1.1 billion raised – a 314% increase from the previous quarter.

Key investments in Q2 included:

1. a16z Gaming Fund: Raised $600 million for game studios, infrastructure, and the Games x Consumer ecosystem.

2. Bitkraft Venture Fund: Secured $275 million for early-stage investments in gaming and interactive media companies.

3. Metaverse Projects: Significant investments in Baby Shark Universe ($34 million) and The Sandbox ($20 million) demonstrate ongoing interest in metaverse development.

These investments, focused on infrastructure and foundational development, suggest a strategic approach to enriching the Web3 gaming ecosystem. The contrast between the robust Q2 and the subdued July may indicate a temporary summer lull rather than a long-term trend.

GameFi Q2 Industry Snapshot and Analysis

1. User Engagement: Blockchain games remain strong in the Web3 industry, accounting for 26% of all Dapp activity and attracting 2.8 million active wallets daily. This persistent engagement suggests that gaming remains a key driver for Web3 adoption.

2. Blockchain Performance: Ronin has reclaimed the top spot among gaming blockchains, with a 100% increase to 1.9 million dUAW. This indicates the Ronin platform has strong user appeal. Newer platforms like Immutable zkEVM and opBNB grow rapidly.

3. Game Performance: Pixels leads the gaming landscape with 48 million unique wallets this quarter, demonstrating the enduring appeal of well-established titles. The success of newer entries like Guild of Guardians, especially following their mobile launch, shows the potential for growth through strategic platform expansions.

4. Metaverse Developments: Metaverse-based NFT collections saw a 29% decline in trading volume and a 21% drop in sales. Projects like Animoca Brands’ Mocaverse continue to dominate, capturing half of the trading volume. This suggests that while the metaverse concept may be experiencing reduced hype, established projects are maintaining their market positions.

5. Technological Advancements: The industry continues to focus on seamless gameplay experiences, investing in infrastructure and cross-chain compatibility. This focus on user experience is crucial to acquire and retain users.

6. Friend or Foe? The rise of AI Dapps presents both a challenge and an opportunity to GameFi. Gaming developers may need to integrate AI elements to stay competitive, potentially leading to more sophisticated and engaging gameplay experiences.

Looking Ahead

Despite the challenges, the blockchain gaming industry shows promising signs for future growth, especially if the 2024/2025 crypto bull run gets back on track.

New game launches are succeeding, and lots of blockchain platforms are getting traction. These trends show continuing innovation in tech, in gameplay, tokenomics, and user engagement strategies. There is potential crossover with traditional gaming platforms (as we’ve seen with Gunzilla and PS5), and interest from established tech companies. Broader industry collaborations will help the GameFi industry scale beyond what we’ve seen.

Significant investments in gaming funds and infrastructure projects continue to lay the groundwork for more sophisticated and scalable blockchain gaming experiences. Also, the rise of AI Dapps may lead to innovative hybrid models, combining elements of AI and gaming to create new, engaging experiences for users.

The rise of AI Dapps presents both a challenge and an opportunity for the GameFi sector to evolve and integrate new technologies. The capital is there. Substantial investments in Web3 gaming, infrastructure, emerging platforms, and cross-industry collaborations are laying the foundations for an exciting next phase of blockchain gaming evolution.

Let us know your thoughts! Sign up for a Mindplex account now, join our Telegram, or follow us on Twitter.