In Q1 2025, blockchain gaming witnessed a significant funding contraction despite a rise in investor activity.

According to DappRadar’s State of Blockchain Gaming report, Web3 gaming startups raised $91 million — a sharp 71% drop from Q4 2024 and 68% lower than the same period last year.

Analyst Sara Gherghelas described the quarter as a tough one for emerging projects navigating a challenging economic environment.

“If conditions don’t shift, startups may face an uphill battle in the months ahead,” she commented.

Investor Focus Turns to Infrastructure Amid Deal Surge

The silver lining? The number of deals grew by 35%, indicating sustained investor engagement — albeit with more selective capital deployment.

Investors favored infrastructure-heavy plays this quarter, backing projects that offer scalability and foundational tools for the Web3 gaming space.

Standouts included MARBLEX, which secured $20 million with Immutable to support multiple Web3 titles, and The Game Company, which raised $10 million to build a blockchain-based cloud gaming service.

Ecosystem Struggles with Policy Setbacks but Shows Onchain Growth

Some setbacks emerged at the governance level. Arbitrum’s DAO voted to revoke previously committed gaming funds due to lack of transparency.

ZKsync also pulled back its incentive program, citing macro headwinds.

Still, onchain user activity showed signs of growth. Daily active wallets in blockchain gaming hit 7 million in January, a 386% YoY increase.

OpBNB and Matchain led gaming chain activity, while Polygon saw month-over-month growth double.

Telegram’s role expanded as a launchpad for new games, hosting 21% of all new Web3 game releases in 2024, per Game7’s latest research.