Blockchain Gaming Secures $129M in Q3 Amid Overall Funding Decline

Executive Summary

Blockchain gaming attracted $129 million in venture capital during Q3 2025, marking its strongest quarter this year. However, the sector's total 2025 funding of $293 million remains a fraction of 2024's $1.8 billion, indicating a significant industry recalibration towards proven products.

The Event in Detail

In Q3 2025, the blockchain gaming industry registered $129 million in venture capital investments, making it the highest funding quarter within the current year. This brings the total capital secured for blockchain gaming in 2025 to $293 million. This figure represents a substantial decrease compared to the $1.8 billion recorded in 2024, with current year-to-date funding reaching only approximately 25% of the previous year's total. Notably, key funding rounds in Q3 included E-PAL attracting $30 million for its gaming platform, Shrapnel securing $19.5 million for its first-person shooter title, and SuperGaming raising $15 million to expand its battle royale game and develop an L3 network on Base. Shrapnel, developed by Neon Machine, integrates NFTs for in-game items, weapons, and customization on the Avalanche blockchain, allowing players to create and mint items as NFTs.

Market Implications

Investor sentiment in the blockchain gaming sector has evolved, exhibiting increased scrutiny and a demand for tangible progress. According to Robert Hoogendoorn, head of content at DappRadar, investors are now more discerning, requiring development teams to present working products and demonstrate actual demand, rather than relying on unproven concepts. This shift signifies a focus on product-market fit, with investors seeking evidence of growing user numbers, strong user retention, and steady revenue growth. Jeffrey Zirlin, co-founder of Sky Mavis, corroborated this sentiment, stating that investors are no longer funding projects merely termed "Axie killers" that fail to deliver. Despite a global active gamer population exceeding 2.7 billion, attracting a mainstream audience to blockchain-based games remains a challenge. However, successful examples include Dookey Dash: Unclogged by Yuga Labs, which reached the top 10 on iOS downloads, and Mythical Games' Pudgy Party, achieving nearly 500,000 downloads within two weeks. Their titles FIFA Rivals and NFL Rivals have surpassed one million downloads, showcasing potential for broader adoption. The industry is also witnessing traditional gaming entities like Sega and FIFA increasing their engagement with blockchain technology. Unlike traditional free-to-play mobile games that often rely on interruptive ads, blockchain-powered games can generate revenue through transaction fees while offering players optionality and ownership.

Expert Commentary

Robert Hoogendoorn from DappRadar suggested that the Q3 uptick in funding for blockchain gaming was likely influenced by broader positive movements in the wider cryptocurrency market, particularly the growth observed in Bitcoin. He emphasized that investors are now looking for solid products with genuine market interest. Similarly, Jeffrey Zirlin of Sky Mavis highlighted the industry's maturation, noting that capital is no longer allocated to projects that lack substantive delivery.

Broader Context

The shift in blockchain gaming funding occurs within a larger context of robust investment across the broader crypto sector. Overall crypto funding has surpassed $17 billion in 2025, exceeding 2024's total by over $7 billion, with September alone accounting for $3.3 billion. This trend indicates a consolidation towards fewer, larger deals, with institutional investors increasingly focusing on crypto infrastructure and core technologies. For Web3 gaming, this implies a strategic pivot towards enhancing user experience and developing high-quality games that appeal to a mass audience, irrespective of their interest in underlying blockchain technology. Trends for 2025 include the expected adoption of invisible wallets to simplify user onboarding by removing complex setup requirements. Furthermore, cross-chain interoperability for in-game assets, Augmented Reality (AR) integration, and the rise of Decentralized Autonomous Organizations (DAOs) for player governance are anticipated. Blockchain technology continues to enhance gaming by enabling new economic models such as play-to-earn, ensuring true ownership of in-game assets, improving security, facilitating decentralized collaboration, and increasing transparency in rewards programs. Forecasts suggest NFT-based Web3 games could generate an estimated $614 billion in revenue by 2030, with role-playing games expected to be a primary driver. Despite these optimistic projections, the sector faces challenges such as high-friction onboarding processes and a history of project shutdowns due to funding shortfalls, low engagement, and unsustainable tokenomics.