GameFi token capitalization plunges 86%.

The combined market capitalization of 183 gaming tokens during 2023 fluctuated between $4 billion and $7 billion, 86% below the historical peak, according to a Delphi Digital report.

While everyone is busy packing Christmas gifts, I keep reading research to stay well-positioned for 2024.

Here are 20 key insights from @Delphi_Digital‘s report “The Year Ahead for Gaming 2024” ↓ pic.twitter.com/JQwIQeNcMm

— Stacy Muur (@stacy_muur) December 24, 2023

However, in their view, the sector’s growth potential remains, as traditional gaming giants are increasing interest in entering the market Web3.

Asian Expansion

Leading markets in blockchain gaming are the Philippines, Nigeria, Pakistan, Singapore, Vietnam, South Korea, Hong Kong, China and the UAE.

The number of networks focused on the segment grew by 76% in 2023. On that basis, experts suggested that in the near term the main theme would be competition for player liquidity.

Optimism for Developers

Delphi Digital noted that the infrastructure for Web3-game development is expanding rapidly. The most popular framework among projects is the OP Stack from Optimism, with StarkNet in second place. A new trend has emerged: gaming crypto apps on TON.

In 2023, blockchain games generated on average 23 times as many intra-network transactions as DeFi protocols. Experts forecast that this will draw attention to the segment from many platforms.

By year-end, about 1.2 million daily active wallets were involved in GameFi. Daily transactions ranged from 15 million to 25 million.

Moreover, only slightly over 5% of blockchain games have a daily user base exceeding 100 gamers. The figure remained roughly at this level throughout the year. Experts believe that only this category of GameFi apps should be considered active.

Delphi Digital noted that gamer incentives, rising costs of development and ongoing operations render Web3 games financially burdensome for projects.

According to sector studies, user acquisition costs for new users of blockchain-based mobile games are 77% higher than for non-Web3 alternatives. To achieve profitability and scale, developers must broaden their monetizable gamer base.

CoinGecko had noted that in five years since the advent of play-to-earn gaming, 2,127 of 2,817 projects in this space failed, about 75.5%.

Delphi Digital identified AI in blockchain games as a trend. In their view, this unlocks new possibilities for users. Among the most interesting projects at the intersection of these technologies they named Parallel, Today, AI ARENA, Geppetto AI and AVALON.

In October, Electronic Arts CEO Laura Miele stated the positive impact of AI on the gaming industry.

Fortune Business Insights had forecast the blockchain gaming market to reach $615 billion by 2023.