In recent years, the web3 gaming industry has seen explosive growth, particularly among web3 casinos. The allure of web3 gaming for players is that blockchain technology offers enhanced transparency. Some blockchain-based casinos use smart contracts to ensure game logic and reward distributions are publicly auditable, allowing players to verify fairness. Others operate on their own servers but incorporate crypto payments to enhance player convenience and trust. Given blockchain’s transparency, there’s a wealth of player insights hidden within on-chain data that web3 gaming businesses can leverage to attract and retain more customers.
As seen in the chart above, between January 2020 and July 2024, inflows have steadily risen to web3 casino and gambling sites. In the last four years, these platforms have received $78.7 billion in crypto.
While these platforms are experiencing rapid growth, some could also be a vector for money laundering. Web3 gaming companies can mitigate risk by implementing AML and KYC measures and the Chainalysis Crypto Compliance solution offers a suite of capabilities to help platforms protect themselves from illicit activity while keeping pace with growth. Web3 gaming company Yolo Group uses Chainalysis in its compliance and investigations programs to better detect and prevent fraud.
The data shared in this blog focuses on performance and trends within web3 casinos and gambling platforms specifically, which generate revenue at a higher margin per dollar, positioning the industry as an attractive business opportunity within the broader on-chain gaming ecosystem.
Navigating the challenges of web3 gaming
Despite its promise, web3 gaming businesses face hurdles in personalization, player growth, monetization, and user experience:
- User acquisition and onboarding: According to the Blockchain Game Alliance (BGA) 2023 report, which surveyed over 320 companies including major players like The Sandbox, Yield Guild Games, and Polygon, as well as senior leaders and experienced professionals from gaming studios, esports, and other blockchain-based gaming contributors, 55.1% of respondents highlighted onboarding and accessibility as major concerns, a trend that has persisted since 2021. With easier access to on-chain data insights, companies can identify effective acquisition channels and optimize onboarding flows.
- Player retention: With countless gaming options vying for players’ attention, businesses must go beyond surface-level metrics to uncover the true drivers of engagement and forge lasting connections with gamers. On-chain insights into player preferences and activity can drive personalized retention strategies.
- Effective monetization strategies: Integrating blockchain elements such as in-game asset purchases, token economies, and non-fungible tokens (NFTs) adds complexity. On-chain data reveals spending patterns and helps balance revenue generation with a positive user experience.
- User experience: Issues like cumbersome onboarding processes and complex wallet management can deter new players and frustrate existing ones, hindering user retention. Analyzing on-chain friction points guides UX improvements.
- Data fragmentation: Player information scattered across different blockchains and platforms creates silos, but unified on-chain analytics provide a comprehensive view of player activity for more data-driven decision-making.
The pivotal role of player insights
Web3 presents opportunities for forward-thinking, player-focused businesses. By tapping into on-chain data to deeply understand players’ wants and needs, businesses can strengthen player relationships, improve their strategic positions, and establish themselves as leaders within the gaming ecosystem.
- Improving player relationships: By analyzing the intricate activities within players’ non-custodial wallets, businesses create more personalized experiences. Insights into spending habits and asset holdings help tailor promotions and content, making interactions more engaging and relevant.
- Strengthening competitive position: Detailed analytics on players’ wallet interactions for gaming provide businesses with critical insights for developing finely tuned marketing strategies and product offerings that resonate more effectively with various player segments, surpassing competitors who lack this depth of insight.
- Securing ecosystem leadership: Businesses that align their product development and marketing strategies with the clear preferences and activities of their players set industry benchmarks. They drive innovation that anticipates future market trends and meets emerging player needs, securing leadership in the industry.
Personal wallets: The main source and destination of gaming funds
Players predominantly use personal wallets to interact with gaming platforms. Businesses gain rich insights by analyzing these wallet activities, uncovering data about player holdings, spending habits, and engagement across blockchain platforms. With this information, businesses benefit from more accurate segmentation, tailored strategies, and a holistic view of off-platform activities crucial for engaging users. Below we see that the majority of users of casinos and gambling platforms cash in and out of their accounts using personal wallets, although many also send and receive funds from exchange accounts.
Player Ethereum wallet segmentation by age
Segmenting Ethereum gaming wallets by age reveals distinct activity patterns. The graph below shows twice as many younger wallets (less than 1 year old).
When analyzing Ethereum wallets that have interacted with a web3 casino at least once in the last year, we found that younger wallets tend to retain funds, whereas older wallets hold higher balances and have spent more on gaming. Insights like these inform targeted marketing and product development.
Simplified on-chain player insights
Teams responsible for growing the businesses’ player base such as marketing, strategy, and user VIP teams often struggle to extract value from complex on-chain data. An ideal solution should translate player activity across wallets and blockchains into simple, user-friendly dashboards and workflows. With easy access to players’ on-chain activity patterns, motivations, and trends, teams can strategize more effectively, optimize resource allocation, and cultivate better user relationships.
On-chain inflows demonstrate an ultra-competitive gambling industry and provide opportunities for data-driven competitive analysis
Competition among top platforms in this industry segment is intense, and the chart below shows how quickly web3 gaming platforms can overtake their peers. To provide an objective analysis of market trends without encouraging direct comparisons, we’ve used generic labels for the top platforms, allowing readers to focus on overall industry dynamics rather than specific companies.
While Platform 1 led the group with over 70% of inflows in the past year, three second-tier platforms surpassed the competition — a platform previously ranked 7th (not shown in the chart), overtook the ranking for Platform 6. These shifts underscore the importance of continual market analysis, and web3 gaming companies willing to leverage on-chain player insights can unlock new revenue opportunities.
On-chain activities of VIP players with large wallet holdings
VIP players — those with over $100K in digital assets interacting with gambling platforms — represent a priority segment. We’ve identified more than 500 such Ethereum wallets, collectively holding over $400 million and having sent $320 million to gambling platforms in the past year. Understanding their on-chain footprint is essential for tailored acquisition and retention strategies.
On-chain activities of high-frequency players
Beyond VIPs, high-frequency players make an outsized impact on web3 gaming businesses. Despite lower individual wallet balances, these 4,000+ wallets have sent a staggering $5 billion in crypto to gambling platforms, transacting 30 times more frequently than VIPs. Their consistent user engagement drives platform liquidity, boosts daily active user metrics, and is vital for sustained growth and recurring revenue in the web3 gaming ecosystem.
Strategic workflows: Turning insights into action
Let’s explore how businesses can operationalize these on-chain insights.
Workflow 1: Mastering VIP player acquisition
Meet Alex, a marketing manager struggling to acquire VIP players. Alex knows these high-net-worth players are critical to the company’s revenue streams, and using advanced segmentation based on wallet data, Alex monitors on-chain patterns to see funds moving to rival platforms. Competitive intelligence reveals where VIPs are active, informing tailored player engagement campaigns with personalized incentives that help Alex win VIP business. Campaign management capabilities then allow her to continuously optimize retention tactics.
Benefits:
- Early detection and prevention of player migration to competitors
- Focused, data-driven reengagement strategies
- Efficient resource allocation
- Improved player loyalty and lifetime value
Workflow 2: Gaining wallet share and retaining players
Sara, a strategist, aims to maximize wallet share and retain players by understanding their activities across the blockchain. She segments players based on spending patterns, asset holdings, and platform interactions. Through this on-chain analysis, Sara discovers specific pain points such as high transaction fees discouraging frequent play among newer, fee-sensitive wallets.
In response, Sara develops strategies like competitive fee structures, matched deposits, and loyalty programs rewarding high-volume transactions. She even partners with adjacent services for bundled promotions, creating a compelling proposition for both existing and potential players.
Benefits:
- Comprehensive understanding of user segments and activity
- Identification of adoption barriers and friction points
- Refined campaigns to increase spending
- Attraction of new users through targeted value propositions
- Data-driven strategy optimization.
Harness the transformative power of on-chain player insights
As we’ve seen, on-chain data provides previously unseen visibility into player activity, preferences, and pain points. For web3 gaming businesses, this isn’t just about collecting data, it’s about forging deeper, more interactive relationships with players.
From detecting early warning signs of VIP churn to crafting fee structures that resonate with newer player segments, on-chain insights allow a level of personalization and proactive player engagement previously unattainable. They transform obscure blockchain activity into clear, actionable intelligence that drives acquisition, retention, and wallet share.
By fully embracing on-chain analytics, web3 gaming platforms can cultivate and nurture communities that truly put players first. Every decision — whether refining user experience, introducing new games, or adjusting tokenomics — stems from a deep understanding of actual player activity. In web3, where trust is the cornerstone of success, this ability to make thoughtful, data-informed choices becomes a powerful competitive advantage. It’s not just about reacting to player needs, but anticipating them, and creating an environment where players feel genuinely understood and valued.
However, the window for gaining a first-mover advantage is narrowing. As more businesses awaken to the power of on-chain insights, the ones that act swiftly to integrate these capabilities will set the standard for player-centric gaming. The future of web3 gaming belongs to those who not only leverage blockchain’s technical capabilities but also harness its transparency to understand and serve players better than ever before. On-chain data isn’t just a tool — it’s the key to unlocking gaming experiences that resonate, engage, and endure.
In this new era, success isn’t measured solely by token prices or transaction volumes, but by the strength of the connections between platforms and their players. And those connections begin with understanding not just what players do on your platform, but the valuable insights provided by their every on-chain interaction.
The game has changed. The question is: will you be playing by the new rules?
Learn how you can harness on-chain player insights to win more customers and grow your business with Chainalysis.
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