The Shattered Dream of Blockchain Gaming: A Mismatched Game Between Capital and Players

Recently, Solana Foundation President Lily Liu posted on X, stating that “games on blockchain will not make a comeback” and declared that blockchain gaming is dead.

Her judgment stems from a Polymarket post: “After burning through $80 billion, Mark Zuckerberg’s Meta is gradually abandoning its metaverse vision.” Although Meta’s blueprint did not explicitly involve blockchain or kripto assets, its strategy highly overlaps with the future painted by Web3 blockchain games in recent years: virtual worlds, digital asset ownership, and immersive online economies.

Even the wealthiest player has quit. Once touted as the kripto industry’s most promising “breakout” narrative, has blockchain gaming reached its twilight today?

The Collapse of the Entire Track: Are Blockchain Game Projects Shutting Down One After Another?

In August last year, Proof of Play released an announcement that seemed like a confession to the market, stating that its fully on-chain pirate RPG “Pirate Nation” would shut down within 30 days. Two dedicated blockchains went offline, token rewards were zeroed out, and community players could only burn their assets in exchange for so-called “certificates” that might be useful someday, but most likely not. This game studio had raised $33 million two years prior, vowing to build the future of on-chain gaming.

After the announcement, the PIRATE token plummeted 92% within days. Co-founder Adam Fern admitted: “Shutting down Pirate Nation was one of the toughest decisions I’ve ever been part of. But the reality is, it was never going to be a breakthrough mass-market title.”

Pirate Nation is not an isolated case; it’s just a small snapshot of the great blockchain gaming rout of 2025.

Let’s lay out last year’s list of announced blockchain game shutdowns. The Ethereum game “Ember Sword,” which attracted $203 million through NFT land sales, announced its closure in May last year, with developer Bright Star Studios citing a lack of funds.

The Solana-based third-person shooter battle royale game “Nyan Heroes,” once on the wishlists of over 250,000 PC platform players, also ended operations in May last year due to a funding rupture. Its token NYAN plunged over 99% from its peak. “Symbiogenesis,” an Ethereum-based game from “Final Fantasy” creator Square Enix, also reached its end in July.

There’s also the MMORPG with official “The Walking Dead” licensing under Gala Games, which went offline in July. The NFT-based mechanized combat game “MetalCore” went radio silent after shutting down servers in March, with the developer quietly pivoting to launch a new game on Steam with no blockchain connection whatsoever.

Recently, the most lamented case in the market is “Wildcard.” After its TGE in March this year, its market cap peaked at only $1.1 million, with the community widely questioning the project’s irresponsibility and soft rug. According to crypto asset data platform RootData, Wildcard had raised $46 million in funding, led by Paradigm.

Its founder, Paul Bettner, had previously worked on well-known games like “Words With Friends” and “Lucky’s Tale.” But now, even with top-tier VC backing and veteran game developers at the helm, it couldn’t withstand the collapse of the entire blockchain gaming track.

Beyond these, there are “Deadrop,” “Blast Royale,” “Mojo Melee,” “Tokyo Beast,” “OpenSeason,” “Captain Tsubasa Rivals.” Behind each project lies millions or even tens of millions of dollars in investment, the accumulation of countless game users, and ultimately, promises reduced to nothing.

Web2 Players Want a Good Game, Web3 Players Only Want Profits

Most founders have genuine game development backgrounds, and their visions for on-chain gaming during fundraising weren’t entirely empty talk. So why did they still end up shutting down or reverting to Web2?

“Web3 games built an entire investor-driven capital structure through tokens and NFT before validating player demand.” In other words, the people funding these games and the people who ultimately need to stay in the games were never the same group from the start.

When development revealed that the on-chain player base was smaller and more short-term profit-oriented than expected, with tokens continuously falling and development costs constantly rising, studios were left with only two choices: shut down or abandon the blockchain identity and pivot to the traditional market. Whichever path they chose, early Web3 investors and NFT holders ended up footing the bill.

The farming simulation game “Moonfrost” is a typical case. Developer Oxalis Games raised $6.5 million, ran a Play-to-tetesan udara campaign for over a year, and sold 1,833 NFT boxes at $150 each. Then, in November 2025, the team announced leaving Web3, relaunching on Steam as a paid PC game with no NFT, tokens, or blockchain.

And just one day before the announcement, CEO Ric Moore was publicly discussing how to build “slow and meaningful Web3 games.” The team’s reasoning: “Web3 players want to make money, Web2 players just want a good game.” It took them three years and millions in real money to see the real rules clearly.

The 2025 Blockchain Game Alliance (BGA) industry report also confirmed the ebb tide of blockchain gaming: annual investment in blockchain games dropped to approximately $293 million, a staggering decline compared to $4 billion in 2021 and the peak of $10 billion in 2022. DWF Labs described the current phase as a “necessary reset.” Perhaps the biggest lingering effect of the track’s failures is a crisis of credibility for the entire blockchain gaming sector.

The BGA report shows that 36% of respondents listed “scams, fraud, or rug pulls” as the industry’s biggest threat. Even though most project shutdowns weren’t intentional scams, from an external perspective, the repeated cycle of “fundraising, token launch, shutdown” is almost indistinguishable from a rug pull. “This industry needs real game developers and real users who want to play games. Both are indispensable.”

Infrastructure and Pasar Conditions as Advantages, Stablecoins and AI Bring New Opportunities

The collapse of the blockchain gaming narrative doesn’t mean consumer-facing applications in the crypto industry have reached a dead end. The BGA report shows 65.8% of industry practitioners remain optimistic about the next 12 months. This optimism is built on deliverable products and sustainable revenue models. Meanwhile, stablecoins processing massive transaction volumes, AI tools compressing game development costs to a fraction of the past, etc. — infrastructure and market conditions have never disappeared. From the perspectives of many developers, several possible paths can be seen.

NEXPACE CEO Sunyoung Hwang, discussing their “MapleStory Universe,” proposed a core principle: wallets, gas fees, tokenomics are obstacles, not value-adds, for most players. The blockchain layer should do meaningful work behind the scenes, such as enabling true asset ownership, driving an open economy, etc., while players should just focus on the game itself. “If the operation of the infrastructure permeates the gaming experience, the game design has failed.”

Animoca Brands CEO Robby Yung and PLAY Network CEO Christina Macedo believe retention rate is the only truth. D1, D7, D30 retention data held true in the console era, the mobile gaming era, and still holds true in the crypto industry. Macedo pointed out that the standard benchmark for mobile games is 35-45% D1 retention, 15-25% D7, and 5-10% D30, while most Web3 games simply don’t meet these basic health metrics.

Yield Guild Games co-founder Gabby Dizon believes the industry’s failure stems from “spending too long measuring the wrong things,” including outdated metrics like VC funding amounts, token prices, NFT sales volumes. The only real metric needed is whether players are willing to pay because they see value in the gaming experience.

Finally, there are the opportunities brought by stablecoins and AI.

The BGA report indicates that over a quarter of respondents view stablecoins as key to the industry’s success. Compared to highly volatile game tokens, stablecoins are more user-friendly and easier to understand for new users and are increasingly used for tournament prizes, in-game rewards, and cross-border payments. Sequence further points out that smart game developers are focusing on stablecoin payments, whether for on-chain assets or other scenarios, due to significant advantages like lower fees, instant settlement, and easier profit-sharing.

And AI is changing the cost structure. Mighty Bear Games’ Simon Davis notes that AI-native teams are surpassing the output of traditional studios with a fraction of the cost and manpower. Animoca Brands also believes that the key to sustainability in 2026 lies in AI-driven or AI-assisted development practices, which will fundamentally change the economic model of producing quality game content.

Blockchain Gaming Isn’t Dead Yet, Is the Current Phase a Necessary Reset?

The core contradiction of the past blockchain gaming cycle has never changed: the investor-driven capital structure ran ahead of validating player demand. When retention rates couldn’t support the token economy, when development costs devoured funding figures, the only outcomes for projects were shutdown or de-blockchainization, with early holders always left holding the bag.

But this shakeout has also led to more pragmatic consensus among game developers: make the blockchain invisible, measure success by retention rates rather than token prices, use stablecoins instead of highly volatile tokens as the payment layer, leverage AI to restructure development costs. The common thread in these directions is: first, create a game that can withstand the scrutiny of traditional market metrics, then let the blockchain deliver its true value at the underlying layer.

Blockchain gaming might not be dead as Lily Liu declared, but the market is indeed bidding farewell to the old cycle of token-driven user acquisition until development funds are exhausted, ultimately forcing a return to Web2.

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