YEREVAN (CoinChapter.com) — The GameFi tokens price has witnessed a double-digit rally. For example, major projects in the sector, including Immutable (IMX) and Illuvium (ILV), have spiked over 130% in the past four weeks. Sandbox (SAND), as a token with a higher market cap, posted more modest gains at 56%.
Why Are GameFi Tokens Prices Booming?
This GameFi tokens’ price surge has been a part of a broader recovery trend in the sector. Notably, the crypto market cap has soared by $360 billion since Oct. 19, when Grayscale refiled its application to convert its Bitcoin trust into an exchange-traded fund (ETF). So, the GameFi tokens price followed suit.
On Nov. 13, Game7, a group of blockchain gaming developers and researchers, reported that GameFi projects represented an outsized share of Web3 fundraising in 2023. Overall, $1.5 billion floated into GameFi in H1 alone. The report examined 1,900 blockchain games, 1,000 funding rounds, and 170 blockchain ecosystems.
However, a closer look at the GameFi funding revealed a troubling trend.
GameFi Funding Fell in Q3 Vs. Q2
The GameFi sector’s funding does not match the booming price trend. In Q3 2023, the blockchain gaming industry received approximately $600 million in funding, a significant drop of 38% from the $973 million raised in Q2 2023, according to DappRadar.
This decline is notable, considering that the investment in Q2 represented a 31% increase from the year’s first quarter.
Moreover, the Game7 report noted that only 5% of projects are fully hosted on-chain on Platforms like Polygon, Arbitrum, etc. Instead, 85% of games support on-chain assets such as NFTs and fungible tokens.
Active Users Remain Loyal
According to the Q3 DappRadar report, blockchain gaming activity in Q3 2023 had an average of 786,800 daily Unique Active Wallets (UAW), an increase of 12% from the previous quarter. But, the number of unique active wallets dropped year-over-year.
The sector’s future will likely depend on various factors, including market conditions, technological advancements, and the ability of GameFi projects to attract and retain users. As the industry navigates these challenges, the coming months will be crucial in shaping the future trajectory of GameFi.
Generally, the latest bear market hit the GameFi tokens hard. Four of the five largest web3 gaming projects are still trading at a more than 95% discount compared to their all-time highs despite the recent momentum.
