The prices of GameFi tokens have experienced a significant surge in recent weeks. Major projects in the sector, such as Immutable and Illuvium, have seen their prices spike by over 130% in the past four weeks. Even Sandbox, with a higher market cap, has posted gains of 56%. This surge in prices is part of a broader recovery trend in the crypto market, which has seen a $360 billion increase in market cap since Grayscale refiled its application to convert its Bitcoin trust into an exchange-traded fund (ETF) on October 19. GameFi tokens have followed suit and experienced a similar price increase.However, despite the booming prices, the funding for the GameFi sector has actually declined in Q3 compared to Q2. In Q3 2023, the blockchain gaming industry received approximately $600 million in funding, a significant drop of 38% from the $973 million raised in Q2 2023. This decline is concerning, especially considering that the investment in Q2 represented a 31% increase from the first quarter of the year. Additionally, the Game7 report highlights that only 5% of projects are fully hosted on-chain, while 85% of games support on-chain assets such as NFTs and fungible tokens.Despite the decline in funding, the number of active users in blockchain gaming has increased. In Q3 2023, there was an average of 786,800 daily Unique Active Wallets (UAW), a 12% increase from the previous quarter. However, the number of unique active wallets has dropped year-over-year. The future of the GameFi sector will depend on various factors, including market conditions, technological advancements, and the ability of projects to attract and retain users. The coming months will be crucial in shaping the trajectory of GameFi.It is worth noting that even with the recent momentum, the GameFi tokens have been heavily impacted by the bear market. Four out of the five largest web3 gaming projects are still trading at a more than 95% discount compared to their all-time highs.