Industry Experts Discuss Challenges In Blockchain Gaming

Since the bear market of 2022, Web3 gaming has faced significant hurdles, such as player engagement sustainability, lackluster funding models, and competition from new technologies like AI-driven dApps. Addressing these challenges in 2025 will prove vital for the sector’s long-term viability.

Industry leaders from the gaming sector explained that project builders need a shift in mindset, with the emphasis primarily on the game itself rather than blockchain technology and complex tokenomics. 

According to the DappRadar’s latest rankings, Befriend AI by Xterio, OasChoice, LOL, and MEET48 led the metrics for the most popular blockchain games in the last 30 days.

While ongoing innovation and development within the industry inspire confidence in blockchain gaming’s long-term potential, the sector has encountered challenges, including onboarding obstacles, poor user experience, complicated infrastructure, and increasing competition from AI-driven dApps. 

Onboarding Obstacles and Poor User Experience

According to a 2024 Blockchain Game Alliance (BGA) report based on 623 responses, 53,9% of respondents indicated that onboarding and poor user experience (UX) remained the top challenges in blockchain gaming. 

This latest set of responses marked the third consecutive year that these two issues have been cited as the industry’s primary concern.

For Sam Patton, COO of Drift Zone, this overall lack of accessibility highlights the sector’s misunderstood approach to blockchain gaming. 

“The key is remembering that most players aren’t coming to blockchain games because they’re interested in blockchain– they’re coming for fun. Games must be fun first, with blockchain benefits as an enhancement rather than the core appeal,” he said. 

Instead of trying to convert traditional gamers into blockchain users, developers might find more use in making the blockchain aspect of gaming so inconspicuous that players are unaware of the additional value that blockchain technology enables.

The Complexities of Blockchain Gaming

Compared to blockchain gaming, traditional gaming studios have well-established methods for attracting and engaging players.

The decentralized nature of Web3 requires users to interact with various elements, including cryptocurrency wallets, tokens, and concepts like decentralized governance. These complexities can deter mainstream gamers accustomed to the more seamless and user-friendly experience offered by Web2 gaming platforms.

According to the BGA report, 36.3% of respondents identified onboarding and ease of use as crucial factors for the industry’s growth, reflecting a significant increase in their perceived importance compared to previous years.

Some industry players address onboarding barriers by leveraging social media platforms to keep engagement alive. 

“Players stay when they’re having fun, when they’re part of a community, and when their time investment creates lasting value. We’re seeing this with our TikTok integration, where social engagement amplifies game engagement,” said Chris Zhu, CEO and Co-Founder of Sonic SVM.

Other gaming platforms have remained competitive by launching their products on social media applications like Telegram to introduce Web2 users to blockchain concepts within familiar social environments.

Accessibility for Web2 Gamers

Designing a good blockchain-powered game involves meeting players where they’re at. Improving user experience is vital to bridging the gap between Web2 and Web3 gaming.

“The‬‭ future of‬‭ blockchain gaming is an experience no different than that of traditional gaming today,” said Kadan Stadelmann, Chief Technology Officer at Komodo Platform.

According to Patton, making blockchain technology the central appeal behind Web3 gaming often does more harm than good.

“The overall sentiment of Web2 gamers is overwhelmingly negative towards Web3 games, mainly due to the industry’s focus on tokens and technology rather than creating a fun experience,” he said.

To address these issues, developing user-friendly interfaces and simplified wallet creations can help newcomers transition to blockchain-powered games more smoothly.

“Creating and managing crypto wallets, and understanding private keys and self-custody are complex concepts for new users. There’s also the hurdle of acquiring game tokens, which often involves creating exchange accounts, funding with fiat currency, navigating crypto markets, and dealing with limited payment options. That’s a lot to ask from someone who wants to play a game,” Patton told BeInCrypto.

Some gaming projects have introduced free-to-play options and gasless transactions to reduce onboarding obstacles. These types of transactions do not require users to pay network fees, simplifying user interaction with blockchain-based games. 

“I see a future where players can jump into games without worrying about wallets, gas fees, or exchanges. They should be able to start playing immediately, just like any Web2 game,” said Patton.

Ultimately, the success of blockchain gaming hinges on creating a harmonious and simplified user experience.

The Emergence of AI-Driven dApps 

Though blockchain gaming continues to play a pivotal role in the Web3 ecosystem, the constantly changing sector of AI-driven dApps is starting to challenge its dominance. 

According to DappRadar, AI dApps accounted for 28% of the industry’s activity in the third quarter of 2024. These dApps surpassed blockchain gaming’s 25% share, jeopardizing its long-term dominance.

The growing use of AI in dApps reflects a broader societal trend towards automation and data-driven decision-making. As individuals become more reliant on digital systems, the demand for more intelligent and user-friendly technologies increases significantly.

However, some industry experts view AI as a tool rather than a threat.

“AI-driven‬‭ apps‬‭ are‬‭ no‬‭ detriment‬‭ to‬‭ blockchain‬‭ gaming,‬‭ as‬‭ blockchain‬‭ game‬‭ developers‬‭ leverage AI to design better apps,” said Stadelmann.

This way, AI can be used to maintain blockchain gaming’s competitive edge. 

Using AI to Solve Existing Issues in Blockchain Gaming

Roman Cyganov, founder & CEO of Antix, says that AI can particularly be used to counteract onboarding obstacles. By integrating AI agents into gaming infrastructure, builders can provide users with educational resources to better understand and interact with Web3 games.

“By leveraging advanced technologies like digital humans, developers can create interactive tutorials and personalized assistance, guiding players step by step. Utilizing advanced solutions like this will foster trust, reduce confusion, and ease adoption into blockchain ecosystems,” Cyganov told BeInCrypto.

For Zhu, AI-driven dApps raise the bar for all blockchain gaming projects.

“We’re seeing AI enable truly dynamic gaming experiences where NPCs evolve, storylines adapt, and content generates itself. This has shifted competition from who can create the most content to who can create the most engaging AI-driven experiences. The intersection of AI and blockchain is particularly powerful because blockchain provides the infrastructure for AI agents to have persistent identities, own assets, and participate in game economies,” he said.

Developers can complement the integration of AI into their projects with other emerging technologies to incentivize renewed engagement among users.

“Augmented and virtual reality, decentralized identity protocols, and zero-knowledge proofs are poised to drive the next wave of blockchain gaming innovation. These solutions can make gameplay more immersive, secure, and accessible. Tying them together with AI that can generate specific characters and gaming worlds opens pathways for hyper-personalized experiences, bridging the gap between real and virtual realms,” added Cyganov.

The convergence of these emerging technologies creates new opportunities for gaming developers, offering them new tools to create more personalized and dynamic experiences. 

A Decline in Traditional Investment Venues

Blockchain gaming has experimented with different funding models in recent years. Venture capital investments played a pivotal role in driving growth in 2021 and 2022. However, the 2023 bear market witnessed a slowdown in investment activity. 

According to data from Dapp Radar, in the second quarter of 2024, gaming investments surged to $1.1 billion, showing a 314% increase from the previous quarter. However, the trend shifted dramatically in the following quarter, with investments dropping to $110 million, marking a 90% decrease.

This shift reflected a broader market trend characterized by increased investor caution rather than a diminished interest from founders in pursuing innovative projects. As a result, funding venues for gaming builders have changed significantly. 

“The current funding landscape for blockchain games is challenging, with investments down significantly from previous years. This environment demands a more strategic approach to both development and fundraising,” said Patton.

The significant decline in funding underscores the need for adaptability, especially in times of fluctuating market conditions.

New Outlooks on Funding

For some industry leaders, this changing sector presents a unique opportunity for developers to reinvent their approach toward financial sustainability. 

“The decline in traditional gaming investments has actually created an opportunity for projects with real traction and clear value propositions,” Zhu told BeInCrypto.

To that point, Patton added:

“Many projects fail because they focus on token price appreciation rather than building sustainable revenue models. Games need clear paths to revenue generation at launch, not theoretical tokenomics that only work in bull markets. Development efficiency is crucial. Game development is inherently expensive, but teams need to be strategic about where they allocate resources in this funding environment—focusing on core gameplay mechanics over cutting-edge graphics or launching with a minimal viable product to expand based on player feedback and revenue.”

Beyond traditional investment options, alternative funding sources exist, such as strategic partnerships with blockchain platforms, community funding through early access programs, and grants from blockchain foundations. 

“Crowdfunding platforms, community-driven token sales, and strategic partnerships with traditional gaming companies offer fresh capital channels. If developers can build stronger and immersive narratives around their projects, they will succeed in attracting stakeholders who value transparent communication and user-centric design,” said Cyganov.

Adapting to changing funding opportunities by exploring alternative models and prioritizing an engaging player experience will enable blockchain gaming developers to continue innovating successfully.