The Web3 gaming sector is experiencing a significant downturn, with its market capitalization plummeting to $8.83 billion. This represents a staggering 69% decline year-over-year, highlighting the ongoing challenges facing this segment.
Despite a temporary rally in late November, where GameFi tokens gained 7% over two weeks and trading volumes surged by 103% to reach $6.1 billion, the upward momentum was unable to sustain itself. By December 1, the market value had dipped below the $9 billion mark for the first time in over a year, indicating a lack of follow-through on the previously bullish sentiment.
This decline is occurring during a period characterized by low trading volumes, even as various companies announce partnerships aimed at reviving interest in the sector. Notably, Animoca Brands, a key player in the Web3 gaming space, is pivoting towards the tokenization of real-world assets, suggesting a shift in strategy amid the broader market decline.
In November, only a few tokens managed to escape the downward trend. Game Company (GMRT) led the pack with a remarkable 142% price increase, followed by Echelon Prime (PRIME) at 44.4%, Veracity (VRA) at 25.06%, and VisionGame (VISION) rising by 20.45%. Conversely, My Lovely Planet (MLC) and CateCoin (CATE) faced notable losses, dropping 22% and 20%, respectively, within a 24-hour period.
As of late November, GameFi was ranked 16th in DeFiLlama”s narrative tracker, reflecting a diminished role in the decentralized finance landscape. This is noteworthy given that the broader DeFi markets have seen steady inflows during the latter half of 2025.
In efforts to rejuvenate investor confidence, several new partnerships were announced in November. For instance, on November 27, Pi Network partnered with CiDi Games to enhance real-world applications for the Pi token, aiming to facilitate its use as a payment option for in-game purchases. Additionally, EdgeAI Labs confirmed its collaboration with PumpGame to transition its platform from the Sui blockchain to BNB Chain.
Despite these initiatives, the trend for Web3 gaming tokens remains downward. Analysts emphasize the persistent gap between industry hype and actual market adoption. As companies like Pi Network and Animoca Brands strive to expand their influence, the declining liquidity and weak retail participation underscore deeper structural issues within the market.
The overall trading sentiment in the GameFi space is subdued, with Crypto Twitter engagement at five-year lows. Most users currently treat gaming tokens as speculative assets rather than engaging with them through gameplay, resulting in the closure of at least 27 studios from January to October 2025.
In response to these challenges, Animoca Brands is diversifying its focus toward real-world asset tokenization. The company recently signed a memorandum of understanding with Rayls to explore suitable asset classes for tokenization using Rayls” technology. This strategic move indicates a proactive approach to navigating the current market landscape.
Looking ahead, Animoca Brands is set to launch a stablecoin and a real-world asset marketplace in 2026, further indicating its commitment to innovation in the evolving crypto space.
