For example, homegrown Polygon, which has gained fame in the global crypto and NFT industry, led the way in funding with a $450 million Series D round in February from Sequoia Capital India. Additionally, Gurugram-based NFT cricket gaming startup Rario raised $120 million in the Series A round in April and Bangalore-based Lysto.io raised $12 million in August.

According to data from venture investment research firm Tracxn, web3 gaming companies in India raised $620.5 million in 2022 through 32 deals in 2022, nearly six times the $115.3 million raised through of 39 deals last year. This comes despite a funding winter hitting startups around the world.

Industry insiders attributed the boom to growing user interest in P2E gaming and the fact that an increasing number of web3 projects are starting up in India. Blockchain trading firm GuardianLink and gaming firm JetSynthesys are two examples. The former launched a P2E cricket game for mobile phones and PCs in March, while the latter acquired web3 product studio Metaphy Labs in September, as part of its plans to invest $50 million over the next three years in metaverse projects. .

Additionally, the cryptocurrency market crash has prompted venture capital (VC) firms to redirect some funds from cryptocurrency startups to web3 gaming companies, they said.

“P2E gaming and the metaverse are emerging as major segments of the web3 landscape. Currently, more than half of the traffic in the space comes from gaming platforms. P2E gaming is also doing well in terms of NFT trading volumes,” Neha Singh, Co-Founder and CEO of Tracxn said, also due to a shift in investor interest.

Priya Ratnam, CEO of the Avisa Games Guild (AGG), a blockchain gaming community, agreed, saying that prominent venture capitalists are actively investing despite current market trends.

Games represent an important part of web3’s activity. According to a November report by gaming investor Lumikai, 30% of India’s 450 web3 companies are gaming. IT industry body Nasscom also identified gaming and the metaverse as one of the top four web3 application use cases in the Nasscom web3 startup landscape report published in October.

That being said, AGG’s Ratnam said that web3 gaming is still in its infancy.

He said that many web2 game companies are switching to web3 models to make games more interesting and lucrative.

The interest is not just coming from traditional game development companies. In March, game streaming startup Loco raised $42 million from South Korean crypto risk firm Hashed, with plans to fund and develop its own web3 integration.

However, despite an overall good year for web3 gaming companies, experts also warned that the recent crash on the FTX exchange may affect this industry. “The recession has been felt more strongly after FTX, so there is some inertia in investment appetite that will become more evident in the coming months. Despite this, several funds committed to the web3 space before the recession and are still investing, perhaps out of necessity,” said Justin Shriram Keeling, founding general partner of Lumikai.

The collapse of one of the world’s largest exchanges in early November has had a ripple effect throughout the industry. For example, the price of AXS, an Ethereum-based token used by the popular global web3 game Axie Infinity, fell from $12 in October to $6.5 in December. Solana’s blockchain gaming activity also fell 89.42% in November due to the platform’s proximity to FTX, according to blockchain analytics firm DappRadar.

However, data from DappRadar also showed that gaming still accounted for almost half of all tracked blockchain activity across 50 networks around the world, between October and November.

“There is a broader use of blockchain now with web3. People are starting to see its true potential. The underlying technology is extremely useful with many use cases like gaming. Cryptocurrencies have received too much attention. Slowly the world is realizing that a lot can be done peer-to-peer,” said Siddharth Pai, founder and managing partner of Siana Capital Management.