Investors rush for web3 gaming in funding winter

Even as cryptocurrencies fell to near all-time lows, Web3 gaming companies in India saw strong investor interest this calendar year. 

These companies develop blockchain-powered games with play-to-earn (P2E) models, in which players are rewarded with crypto tokens for participating or winning.

In-game items in these games are frequently sold and traded as non-fungible tokens (NFTs).

Web3 gaming attracting the global market

Homegrown Polygon, which has gained prominence in the global crypto and NFT industries, led the funding with a $450 million Series D round from Sequoia Capital India in February.

In addition, Rario, a Gurugram-based cricket NFT gaming startup, raised $120 million in a Series A round in April, and Lysto.io, a Bengaluru-based startup, raised $12 million in August.

Related: Web3 Gaming's Future in 2023

Blockchain firms plan to invest $50 million

According to Tracxn data, web3 gaming firms in India raised $620.5 million in 2022 across 32 deals, a nearly sixfold increase from the $115.3 million raised across 39 deals last year. This is even though startups around the world are experiencing a funding winter.

As per industry experts, the boom is due to increased user interest in P2E games as well as the fact that an increasing number of web3 projects are starting in India. GuardianLink, a blockchain commerce firm, and JetSynthesys, a gaming firm, are two such examples.

In March, the former released a P2E cricket game for mobile phones and personal computers, while the latter acquired web3 product studio Metaphy Labs in September as part of its $50 million investment plan.

The gaming category surpassed AI to become the year's top category.

Metaverse

Metaverse was the second most popular investment category in 2022, trailing only Gaming. The metaverse sphere received $1.82 billion in funding, accounting for 25.4% of total investment, according to the report.

Yuga Labs, the creators of the Bored Ape Yacht Club (BAYC), were the second company to receive the most funding. Yuga Labs raised $450 million in funding in March to launch the Otherside metaverse.

Social Media Networks

In the eyes of investors, the third most popular category was start-ups that launch social networking apps suitable for the decentralised and secure nature of the Web3. In 2022, the category raised $259.1 million, accounting for 3.6% of the total amount invested in Web3.

Infrastructure, augmented and virtual reality, and artificial intelligence

Infrastructure, AR&VR, and AI were the last three categories, with $200.8 million, $178.6 million, and $136.5 million, respectively.

NFT-focused Immutable, Metaverse-focused Improbable, gaming-focused Sky Mavis and start-up-focused Sky Mavis are all infrastructure-focused. AngelList was also named one of the top ten start-ups that received the most prominent funding.

Immutable received $200 million in funding, AngelList received $100 million, and Sky Mavis and Improbable each received $150 million.

The early November collapse of one of the world's largest exchanges sent shockwaves through the industry. AXS, an Ethereum-based token used by the popular global web3 game Axie Infinity, for example, fell from $12 in October to $6.5 in December.

According to blockchain analytics firm DappRadar, gaming activity on the Solana blockchain fell by 89.42% in November due to the platform's proximity to FTX.

However, DappRadar's data showed that gaming accounted for nearly half of all blockchain activity tracked on 50 networks worldwide between October and November.

"Blockchain is now being used more widely thanks to web3. People are starting to realise its true potential. The underlying technology is extremely useful, with numerous applications such as gaming. Cryptocurrencies have received far too much attention. "The world is slowly waking up to the fact that it can do a lot of peer-to-peer things," said Siddharth Pai, founder and managing partner at Siana Capital Management.

Spenders with the most money

This year, four venture capital firms emerged as the biggest spenders, each investing more than $1 billion.

Paradigm took first place with a $2.5 billion investment in 2022. Uniswap, Magic Eden, and Optimism were among the 31 projects supported by the company.

With a total investment of $2.2 billion, Andreessen Horowitz came in second place.

Hivemind, the world's youngest venture capital firm, invested $1.5 billion in 2022 to take third place in the ranking, while Binance Labs moved up to fourth with a $1 billion investment.

Web3 Gaming FAQs

Who is putting money into Web3?

The company raised $40 million in a round led by crypto-focused venture fund Paradigm, with participation from Coinbase, Sequoia, and Greylock.

What exactly are Web3 startups?

A Web3 startup interacts with blockchain-stored data.

How much money do Web3 Developers make?

The average Web3 developer's salary ranges between $100,000 and $187,500 per year. Salary ranges are determined by technology, programming language, years of experience, location, and seniority.

How do Web3 firms make money?

These Web3 firms provide yield generation for consumer investors through staking, which involves allocating crypto assets to process transactions and secure protocols in exchange for rewards.

Is Python used in Web3?

Web3.py is a Python library that allows you to interact with Ethereum. It's very common in dapps.

Is Google investing in Web3?

To that end, Google Cloud today announced the release of Blockchain Node Engine, which it describes as "a fully managed node-hosting for web3 development."