As 2024 draws to a close, web3 gaming continues to evolve with advancements in technology, adoption, and regulatory clarity shaping the year’s trajectory. Today, we’re highlighting some of 2024’s most impactful developments and looking ahead to 2025’s emerging trends and innovations.

Game7’s 2024 Report

The best place to start is the State of Web3 Gaming 2024 by Game7, which we contributed to. The report provides a comprehensive overview of web3 gaming, but there are a few key areas worth highlighting around production, distribution, and blockchains themselves.

Production

The Game7 report reveals a significant maturity gap in web3 game development, with only 45% of projects reaching playable status and a mere 34% achieving blockchain integration. This underscores the ongoing challenges in bringing web3 games from concept to market.

However, 2024 marked a notable shift in the industry's composition and output. While indie developers continued to drive innovation, producing over 90% of new web3 games this year, 2024 saw the first meaningful wave of anticipated and AAA releases.

Titles like Illuvium, Guild of Guardians, Off the Grid and EVE Frontier reached various stages of public release. Ubisoft also deepened its commitment to the space with the introduction of Champions Tactics and Captain Laserhawk.

The pipeline for 2025 appears healthy, with Nexon’s Maple Story N conducting playtests, and several other major publishers announcing new web3 initiatives, including Sega's Rent-A-Hero, Gameloft's partnership with Claynosaurz, and Krafton's Overdare.

This dual track of indie innovation and major studio investment suggests web3 gaming is entering a new phase of maturity, though production challenges clearly remain.

Distribution

Many optimists believed 2024 would see web3 games flood traditional mobile app stores following updated platform guidelines, but two alternative channels emerged to reshape how web3 games reach their audiences.

Telegram became a surprising focal point for distribution, driven by its TON network launch. The platform's low barrier to entry sparked a surge of simple, rapidly developed games, predominantly with basic clicking mechanics and play-to-earn models.

This trend, while not necessarily advancing gaming innovation, demonstrated the potent combination of social platforms and web3 integration, with native mobile and Telegram games accounting for over 40% of new launches.

Social platforms’ abilities to accelerate gaming isn’t a new phenomenon (just look at Facebook and WeChat), but web3 gaming also gained further validation through Line's mini dapp SDK late 2024 release, which will allow for Kaia blockchain web3 apps to integrate into Line messaging.

The Epic Games Store emerged as the other major distribution channel, adding 85 web3 titles throughout 2024. Despite lacking specialized web3 infrastructure, Epic's content-friendly policies position it as a crucial partner for more sophisticated web3 games. The store's expansion into EU mobile markets (and eventually others) signals a promising pathway for cross-platform web3 games, potentially bridging the persistent mobile distribution gap.

Blockchains

2024 marked a decisive shift in blockchain gaming infrastructure, with developers increasingly favoring purpose-built gaming networks over general purpose Layer 1 solutions. This trend manifested most notably in the emergence of gaming-specific chains, which represented 64% of new blockchain launches targeting the gaming sector.

The industry's architecture underwent significant restructuring, with Layer 3 networks accounting for 43% of new gaming-related chains, closely followed by Layer 2 solutions at 34%. Layer 2 networks (Immutable, Polygon) are generally built “on top” of Layer 1 networks (Ethereum, Solana) to provide additional scalability and features, with Layer 3 networks (Arbitrum Orbit) typically enhancing the interoperability and communication for Layer 2s. While legacy web3 games predominantly remain on Layer 1 networks (66% of active games), this new development tells a different story: 57% of games launched in 2024 opted for L2 or L3 solutions — a clear directional shift in the ecosystem.

This year also witnessed unprecedented blockchain migration activity, with 105 web3 games changing chains. Immutable emerged as a primary beneficiary, expanding its ecosystem across two networks: Immutable X and Immutable ZK-EVM.

Arbitrum and Ronin also captured significant market share, with Ronin being particularly noteworthy for transforming from an Axie Infinity-specific chain into a broader gaming platform, highlighted by the successful launch of Pixels, despite its bot-heavy user base.

Breakthroughs, Innovations, and Launches

Now that we’ve looked at the key stories in the data, let’s dig one layer deeper and explore the most important moments from 2024.

Launches

The release of Off the Grid, a F2P battle royale game from Gunzilla Games, represented a watershed moment for web3 gaming, earning Game of the Year at the Gam3 Awards and establishing a new standard for blockchain-integrated games. As the first web3 title to achieve a console release alongside its PC early access launch, Off the Grid demonstrated that web3 games can deliver AAA production values while incorporating blockchain elements.

The game's success stems from implementing web3 features in ways that enhance rather than dominate the experience. This supports a rich gameplay experience that blends battle royale and extraction mechanics with narrative elements across multiple game modes.

Off the Grid's marketing strategy proved equally innovative. The involvement of director Neill Blomkamp and actor Sharlto Copley brought Hollywood production values to the game, while partnerships with prominent streamers helped bridge the gap between traditional and web3 gaming audiences. This has established a new template for how web3 games can achieve initial success without compromising on technological innovation. It’s still uncertain if the game can sustain its early success when it is released fully, as the battle royale genre is overcrowded, and retention soon becomes difficult. For more Off the Grid analysis, see our previous piece here.

Innovations

Play-to-Airdrop (P2A) mechanisms gained prominence over traditional Play-to-Earn (P2E) models in 2024. This transition represents a rethinking of token distribution strategy, implementing fixed reward pools rather than the unlimited emission schedules that led to unsustainable token inflation in previous P2E iterations.

P2A's implementation as a competitive, leaderboard-driven event system marks a departure from continuous token distribution models. While this approach echoes elements of Axie Infinity's seasonal AXS token distribution, P2A innovates by capitalizing on broader cryptocurrency market dynamics, particularly the enthusiasm surrounding airdrops, rather than purely competitive gameplay mechanics.

The success of this approach was notably demonstrated by Pixels, which achieved over 1M monthly active users through P2A events. However, this success revealed both the model's potential and its limitations: Subsequent bot detection efforts led to significant declines in player numbers, highlighting the challenges of distinguishing between genuine engagement and automated participation for profit.

Despite these challenges, token-based user acquisition strategies appear positioned to endure as a potentially cost-effective alternative to traditional advertising spend for UA. This suggests that while implementation methods may evolve, tokens will remain a crucial tool in web3 gaming's marketing arsenal.

Breakthroughs

The evolution of Horizon Blockchain Games' Sequence platform in 2024 represents a quiet but pivotal advancement in web3 gaming infrastructure. Originally developed as internal technology for the pioneering and polished TCG, Skyweaver, Sequence has transformed into an essential middleware solution powering many of the year's most notable releases, including Champions Ascension, Saltwater Games and Ubisoft's duo of Captain Laserhawk and Champions Tactics.

Sequence's breakthrough lies in its comprehensive approach to web3 integration. Its embeddable wallet and marketplace platforms eliminate the friction traditionally associated with blockchain gaming, offering in-app functionality that surpasses conventional wallet solutions like MetaMask and Phantom. The platform's support for social logins and non-custodial wallets with recovery options, combined with cross-chain compatibility, has established a new standard for user experience in web3 gaming.

Strategic partnerships with major players like Immutable, Xai, and Aethir, along with its availability on the Google Cloud Marketplace, have accelerated adoption. The platform's Unity and Unreal SDK frameworks have significantly lowered the technical barriers to web3 integration in games. As we move into 2025, this maturation of development infrastructure suggests a shift in focus from blockchain implementation technical challenges to more sophisticated considerations around business models and game economies.

Sequence’s partnership with Immutable has also resulted in another wallet/account platform gaining traction this year: Immutable Passport. Similar to Sequence, Immutable Passport also provides passwordless social logins and a noncustodial wallet. While it has primarily been implemented in Immutable games like Gods Unchained, Guild of Guardians and Shardbound, it provides another option to solve what was one of the biggest challenges to web3 game adoption.

2025 and Beyond

Based on what we’ve seen evolve since the big burst of excitement in 2022, here are a few areas with huge potential in 2025.

Social Platforms

The success of web3 gaming on Telegram and through WeChat minigames signals a potential renaissance of social platform gaming. This trend appears set to expand in early 2025, with Line positioned to become a significant player in the Japanese market through its Dosi network and mini dapp ecosystem.

Services like Zebedee (see our coverage here) have also demonstrated that bitcoin-based rewards can enhance player retention, suggesting a potential evolution in reward mechanisms. This combination of social virality and economic incentives creates an attractive environment for rapid user growth, though the quality of experiences varies significantly.

The current wave of game developers porting existing titles to Telegram reflects the platform's momentum. However, this strategy may face diminishing returns by mid-2025, unless accompanied by meaningful improvements in game quality, which may be difficult due to the limitations of HTML5 tech.

While the rushed development cycles often associated with social platform gaming may result in simple experiences, Telegram continues to serve as an effective gateway for introducing web3 gaming to broader audiences. Much like other social HTML5 gaming attempts (like Facebook's instant gaming), there may not be a long-term future, but the quick buck to be made has at least brought it a lot of attention.

Regulation

The U.S. presidential election outcome, resulting in a crypto-friendly administration and the anticipated appointment of Paul Atkins to replace Gary Gensler at the SEC, has already impacted market sentiment, helping drive bitcoin beyond the $100,000 mark. A push for pragmatic regulatory frameworks could now provide much-needed clarity for the industry.

The potential for clearer stablecoin regulations may facilitate more straightforward transaction systems that reduce dependence on custom tokens. Simultaneously, ongoing efforts to curtail mobile platform gatekeepers' power may create new opportunities for web3 gaming in mobile markets.

South Korea's web3 gaming sector also stands at a critical juncture. Recent political turbulence, including a brief period of martial law, may lead to leadership changes that could also reshape the country's approach to web3 gaming regulation. Progress in establishing investor protection frameworks offers hope for positive change, though the ultimate impact remains uncertain. The execution of web3 gaming in South Korea will also have to evolve, as it has been stuck in the P2E mentality for some time.

AI Agents

While the broader artificial intelligence investment landscape shows signs of cooling, the intersection of AI agents and web3 technology has emerged as a particularly interesting frontier. This convergence offers unique opportunities as smart contracts provide a structured, deterministic environment for AI agents to operate in.

The integration of AI and web3 presents potentially compelling use cases across both financial and gaming sectors. On the financial side, blockchain technology enables efficient micropayment systems that could push forward how AI computational resources are monetized and distributed. Similar to existing token-based systems for shared GPU resources and distributed file storage, we anticipate multiple initiatives in 2025 aimed at decentralizing AI processing power through blockchain networks.

In gaming, the implementation of AI agents presents both opportunities and challenges. While AI-powered NPCs could enhance game worlds, developers will also need to architect economies that account for the presence of AI agents, rather than attempting to eliminate them. Hopefully the tide will turn from seeing AI bots as a nuisance to treating them like a service.

The fusion of AI and web3 technologies will also likely feature prominently in 2025's fundraising narratives. This convergence may well become a crucial differentiator for projects seeking investment in an increasingly competitive landscape, but it will take work to separate the hype from the substance.

Wrap-Up

In 2024, web3 gaming demonstrated meaningful progress toward mainstream viability, marked by significant shifts in infrastructure, distribution, and business models. The industry's maturation is evident in the emergence of middleware solutions like Sequence, the success of AAA-quality titles like Off the Grid, and the evolution of more sustainable token economics through Play-to-Airdrop models.

Challenges remain, particularly around bot manipulation and regulatory uncertainty, but the ecosystem shows signs of sustainable growth. The convergence of social platform distribution, improved development tools, and potential regulatory clarity suggests 2025 could mark an additional step in web3 gaming's integration into the broader game industry.

For gaming executives and developers, these developments indicate web3 technology is evolving from an experimental feature into a viable tool for user acquisition, monetization, and engagement — provided it is implemented thoughtfully and in service of genuine player value.

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Content Worth Consuming

How to Find Market Signal: Part Two (pushtotalk.gg): “Part one of How to Find Market Signal was about the history of games marketing and the need for a new approach. Today we get into the nitty gritty of how to find your vision and relevant signals in the early stages of game dev. Here’s an argument. Maybe you’ll buy it, maybe you won’t: Finding market signal for a game is mostly about weeding out ideas and approaches that aren’t working.”

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Mastering Hybrid-Casual Game Design: Lessons in Balancing Depth and Accessibility (gamedeveloper.com): “The balance between simplicity and complexity is essential for increasing player retention and monetization. At SayGames, we've learnt it through our own experience of developing hybrid-casual games and mastered this balance. We were the first publisher to successfully switch to hybrid-casual, and it stays at the core of our strategy.”

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