Key Challenges Facing Web3 Gaming

Web3 gaming continues to generate buzz across the industry, but behind the scenes, many projects face challenges that rarely make it into public conversations. Drawing from discussions with hundreds of founders, Matthew Buxton offers a candid look at the realities shaping the space today.

His observations highlight key issues—from funding-driven decision-making and inflated engagement metrics to delays in token launches and a noticeable gap between what’s promised and what’s prioritized. The result is a clearer, more grounded perspective on where web3 gaming stands—and where it may be heading next.

Key Challenges Facing Web3 Gaming

Key Challenges Facing Web3 Gaming

Matthew Buxton has provided a detailed summary of ten key observations from conversations with hundreds of web3 gaming project founders. His insights reflect the current state of the industry, shaped by both evolving expectations and persistent structural limitations.

Confidence Often Comes from Outside Traditional Gaming

One of the most notable patterns Buxton identified is that the most confident founders in web3 gaming often come from web3-native backgrounds or unrelated industries, rather than from traditional gaming. This trend suggests that confidence in the space may be more closely linked to familiarity with blockchain ecosystems and fundraising mechanisms than with game development itself.

Web2 Teams Enter Web3 Primarily for Funding

Buxton observed that many teams transitioning from web2 companies do not engage with web3 technology for its capabilities or technical potential. Instead, their primary motivation is access to funding opportunities available within the web3 ecosystem. This indicates a funding-first approach, where blockchain integration is often secondary to capital considerations.

Key Challenges Facing Web3 Gaming

Game Quality is Discussed More Than It Is Funded

Although game quality is frequently mentioned in conversations around web3 gaming, Buxton noted that it often receives minimal financial support. While stakeholders commonly emphasize the importance of delivering polished gaming experiences, actual investment in development tends to lag behind other priorities, such as marketing and token strategy.

Investment Strategies Prioritize Visibility Over Players

Buxton described what he refers to as the "web3 dance," where projects focus less on attracting real players and more on gaining the attention of venture capital firms, launchpads, and centralized exchanges. In this context, key opinion leaders (KOLs), player acquisition, and community building are often treated as secondary concerns, with short-term investor interest taking precedence.

Engagement is Frequently Artificial or Incentivized

Across web3 gaming company accounts, Buxton found that engagement is often either bot-generated or driven by incentive systems such as quests or token rewards. This creates an inflated sense of activity and interest, masking the actual level of organic community engagement.

Key Challenges Facing Web3 Gaming

Social Metrics Are Misleading but Still Influential

While follower counts and social media metrics may lack meaningful correlation with game quality or community health, Buxton pointed out that these metrics still carry significant weight among decision-makers. In many cases, those with financial influence in the space rely heavily on surface-level indicators, despite having limited understanding of game development or product quality.

Delays in Token Generation Events Reflect Financial Constraints

Many web3 gaming projects delay their Token Generation Events (TGEs) not due to strategic planning but because they cannot afford the associated costs. Buxton explained that funding limitations are a key factor in these delays, even though reaching a TGE remains a major milestone for most teams and backers.

Key Challenges Facing Web3 Gaming

TGE Remains a Central Focus for Backers

The emphasis on TGE reflects the broader funding environment in web3 gaming, where milestones are often evaluated based on token-related progress rather than product readiness or user metrics. For many backers, the TGE itself is viewed as the primary objective, shaping both project timelines and resource allocation.

On-Chain Interactions Are Prioritized Over Player Numbers

Despite frequent references to user growth and player engagement, Buxton noted that venture capital firms and other investors tend to evaluate projects based on on-chain activity. These metrics, such as wallet interactions or token transactions, are often used as stand-ins for user engagement, even though they may not accurately represent player retention or satisfaction.

Key Challenges Facing Web3 Gaming

An Industry Still Finding Its Direction

Matthew Buxton’s insights offer a revealing snapshot of the current state of web3 gaming—one where financial incentives, token milestones, and surface-level metrics often overshadow core gameplay and sustainable development. As more teams enter the space, particularly from non-gaming backgrounds or traditional web2 companies, the pressure to meet investor expectations continues to shape how projects evolve. While the potential of web3 gaming remains significant, Buxton’s breakdown makes it clear that meaningful progress will require a shift in focus—from short-term gains and optics to long-term value and player experience.