Web3 gaming continued its retrenchment in the second quarter of 2025, with daily unique active wallets falling 17% quarter-over-quarter, and funding collapsing 93% year-over-year to just $73 million – the lowest in two years – according to a new report from DappRadar.
The downturn marks a broader correction in the blockchain gaming sector, where DappRadar’s report identifies unsustainable tokenomics, low retention, and a cooling investment climate as factors that have led to the shutdown of more than 300 web3 games.
Some teams have taken this as a signal to move on, as data shows that interest in play-to-earn is waning, and are instead developing AI dapps.
For instance, the team behind Mojo Melee is pivoting to an AI-powered movie creation platform, while operations for the game Realms of Alurya was suspended after its ecosystem backer, Treasure DAO, shifted its focus to AI.
Funding trends also reflect this shift. Of the $73 million raised in blockchain gaming during Q2, nearly 75% went to infrastructure projects rather than game studios, according to DappRadar.
Investors, the report says, appear to be prioritizing foundational technologies, such as real-time game engines, asset distribution layers, and chain-specific tooling, over direct consumer-facing titles.
Which is perhaps why the market could best be described as a consolidation, not a retreat. Even though smaller web3 games are finding the market stagnant, the users that remain are migrating to the largest titles and established web2 studios like Sega and Ubisoft continue to invest in the space.
Chain activity reflects this shift: while overall usage is down, engagement is concentrating around performant ecosystems. According to DappRadar, opBNB led in unique active wallets, WAX dominated in transaction count, and newer chains like Aptos, Sei, and SKALE gained momentum.
For those that remain, the focus has shifted from speculative hype to gameplay depth and ecosystem sustainability, a sign, analysts at DapRadar say, that while the play-to-earn era may be fading, the market for blockchain-based gaming is beginning to mature and reposition around more sustainable models.
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