Blockchain gaming is facing a significant slowdown in 2025, with daily user engagement dropping to its lowest level this year. According to data from DappRadar, April saw a 10% decline in daily active users (DAUs), bringing the number down to 4.8 million unique active wallets. This marks the first time in 2025 that DAU figures have fallen below the 5 million mark — a sobering milestone for an industry that once prided itself on rapid growth and innovation.
Web3 gaming’s market share within the decentralised app (dApp) ecosystem has also diminished, now tied with decentralised finance (DeFi) at 21% each. In contrast, artificial intelligence (AI) projects have made strong gains, capturing a 16% share, signalling a notable shift in interest across the Web3 sector.
Funding Collapse Reflects Market Reset
The downturn in user activity is mirrored by a steep drop in investment. April’s blockchain gaming and metaverse funding reached only $21 million — a 69% plunge from March levels. DappRadar’s blockchain analyst, Sara Gherghelas, described the month’s investment activity as having “almost fallen flat,” but pointed out that this downturn might be a healthy correction.
Investments in web3 | Source: DappRadar
“Capital is harder to secure, but that’s not necessarily a bad thing,” Gherghelas noted. “Weak projects are falling away, and funds are flowing into the builders who are quietly laying the groundwork for the next generation of blockchain games.”
This signals a broader shift in investor sentiment, with funds now favouring projects that prioritise sustainable growth, strong gameplay, and genuine user retention over short-term token hype.
Selective Investment: Big Funds Still Active
Despite the overall funding slump, some large-scale ecosystem funds remain active. Arbitrum Gaming Ventures, for instance, has started deploying capital from its $200 million gaming fund, with $10 million already invested in key projects such as Wildcard, XAI Network, and Proof of Play.
These moves suggest that while the broader funding environment is tight, there is still appetite for well-structured projects with strong development teams and long-term vision. Gherghelas described the current climate as a “reset mode,” where only the most resilient and value-driven initiatives are able to secure backing.
Big Gaming Names Still Testing Web3 Waters
Even amid the market cooldown, mainstream gaming giants continue to experiment with blockchain. The results, however, have been mixed. Sega launched its NFT game KAI: Battle of Three Kingdoms, indicating ongoing interest in the space. On the other hand, Square Enix pulled the plug on its project Symbiogenesis following a disappointing launch. Ubisoft, a consistent Web3 supporter, is pushing ahead with Might & Magic: Web3 Edition, a blockchain-based card game in collaboration with Immutable.
Gherghelas believes that success for major publishers in blockchain gaming hinges on collaboration with native Web3 teams. These partnerships, she argues, are more likely to produce experiences that resonate with the decentralised gaming community — prioritising gameplay, user retention, and cross-platform interoperability over hype-driven launches.
A Turning Point for Blockchain Gaming
As blockchain gaming endures its toughest month of 2025 so far, industry watchers see this period as a necessary shakeout. Projects lacking substance or user appeal are being weeded out, while those with solid fundamentals are positioning themselves for long-term success.
While April’s numbers are a cause for concern, they also mark a potential inflection point. The focus is clearly shifting from unsustainable tokenomics to more meaningful player experiences. If the current trend continues, the winners in blockchain gaming will be those who build with patience, quality, and community in mind — not just speculative hype.
In the words of Gherghelas: “This isn’t the end of blockchain gaming — it’s the beginning of its next, more mature phase.”
