Chain Game "Dream Shattered": A Mismatch Between Capital and Player Battles

Original author: Chloe, ChainCatcher

Recently, Lily Liu, President of the Solana Foundation, posted on X saying, “Games on the blockchain will not return,” and added that blockchain gaming is dead.

Her judgment is based on a Polymarket post: “After Mark Zuckerberg’s Meta spent $80 billion, it is gradually giving up its vision for the metaverse.” Although Meta’s blueprint does not explicitly involve blockchain or crypto assets, its strategy overlaps heavily with the future once envisioned by Web3 chain games over the past few years: virtual worlds, digital asset ownership, and immersive online economies.

Even the richest players are moving on—blockchain gaming, which once served as the crypto industry’s most promising “breakout” narrative, has it already reached the end of its road?

The collapse of the entire track: chain game projects shut down one after another?

In August last year, Proof of Play released an announcement that sounded like an apology to the market. Its fully on-chain pirate RPG, “Pirate Nation,” would shut down within 30 days. Two dedicated blockchain networks were taken offline, token rewards went to zero, and community players could only burn their assets to obtain so-called “certificates.” Those certificates may be useful someday, but most likely maybe they won’t—and two years earlier, this game studio raised $33 million, vowing to build the future of on-chain games.

After the announcement, the PIRATE token plunged 92% over the course of a few days. Co-founder Adam Fern conceded: “Shutting down Pirate Nation was one of the hardest decisions I’ve ever been part of. But the fact is, it could never become a breakthrough mainstream-market product.”

Pirate Nation is not an isolated case; it’s just a small snapshot of the massive wipeout of chain games in 2025.

Here is the shutdown list of blockchain games announced last year, laid out one by one. “Ember Sword,” an Ethereum game that raised $203 million by attracting funding through NFT land purchases, announced it would shut down in May last year; developer Bright Star Studios said plainly that it lacked funding.

The third-person shooter battle royale game “Nyan Heroes,” built on Solana, was once on the wish list of more than 250,000 PC platform players, but it also ended operations last May due to a funding breakdown. Its token NYAN fell more than 99% from its peak. “Symbiogenesis,” the Ethereum chain game by Square Enix, the creator of Final Fantasy, also reached its end in July.

Even a Gala Games MMORPG with official “The Walking Dead” IP was taken offline in July. The NFT-based mech combat game “MetalCore” went silent after closing its servers in March; the developer quietly shifted to launching a new game on Steam that has nothing to do with blockchain.

Most striking to the market recently was “Wildcard.” After its TGE in March this year, its market cap reached only about $1.1 million at its highest. The community generally questioned the project for being irresponsible and engaging in a soft rug. According to RootData, a crypto asset data platform, Wildcard previously raised $46 million in funding led by Paradigm.

Its founder, Paul Bettner, had worked on well-known games such as Words With Friends and Lucky’s Tale. But now, even with top VC backing plus a veteran game veteran running the show, it can’t stop the collapse of the entire chain game track.

Besides that, there are also “Deadrop,” “Blast Royale,” “Mojo Melee,” “Tokyo Beast,” “OpenSeason,” and “Captain Tsubasa Rivals.” Behind each project were investments of several million to even tens of millions of dollars, countless accumulations of game users, and ultimately promises that turned into nothing.

Web2 players want a good game; Web3 players only want profit

Most founders have real game development backgrounds, and their vision for on-chain games during fundraising was not entirely empty talk. So why did things still ultimately end with either projects shutting down or returning to Web2?

“Before Web3 games have even validated player needs, they already built a whole investor-driven capital structure through tokens and NFTs.” In other words, the people providing funding for these games and the people who ultimately need to stay in the game from the beginning are not the same group.

When, during development, it turns out that the on-chain player base is smaller than expected and more oriented toward short-term arbitrage—when tokens keep falling and development costs keep rising—studio options shrink to either shutting down or abandoning the blockchain identity to pivot to the traditional market. Regardless of which path they take, the early Web3 investors and NFT holders are always the final payers.

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

And just one day before the announcement, the CEO Ric Moore was still publicly talking about how to build “slow and meaningful Web3 games.” The reason the team gave was: “Web3 players want to make money; Web2 players just want a good game.” They spent three years and millions in real money to finally see the true rules.

The 2025 industry report from the Blockchain Game Alliance (BGA) also confirms the retreat of chain games: annual investment in blockchain games fell to about $293 million, compared with $4 billion in 2021 and the 2022 peak of $10 billion—an astonishing decline. DWF Labs describes the current stage as a “necessary reset.” And the biggest lingering aftereffect of failure in this track may be the credibility crisis affecting the entire chain gaming sector.

The BGA report shows that 36% of respondents list “scams, fraud, or rug pulls” as the biggest threat to the industry. Even if most project shutdowns are not intentional scams, from an external perspective, the repeated cycle of “fundraising, token issuing, then collapsing” is almost impossible to distinguish from a rug pull. “This industry needs real game developers and real users who truly want to play games—both are indispensable.”

Infrastructure and market conditions create advantages; stablecoins and AI bring new opportunities

The collapse of the chain-game narrative doesn’t mean the crypto industry’s consumer-grade applications have reached the end. The BGA report shows that 65.8% of industry participants still remain optimistic about the next 12 months. This optimism is built on deliverable products and sustainable revenue models. At the same time, large-scale transfer volumes handled by stablecoins, and AI tools compressing game development costs to a fraction of what it used to be, show that infrastructure and market conditions have never disappeared. Even from many developers’ viewpoints, you can see several possible paths.

When talking about its “MapleStory Universe,” NEXPACE CEO Sunyoung Hwang proposed a core principle: wallets, gas fees, and tokenomics are barriers for most players, not value-add features. The blockchain layer should do meaningful work in the background—such as enabling true asset ownership and driving open economies—while players should focus only on the game itself. “If infrastructure operations permeate the gaming experience, game design is a failure.”

Animoca Brands CEO Robby Yung and PLAY Network CEO Christina Macedo, meanwhile, believe that retention rate is the only truth. D1, D7, and D30 retention data have been the case in the console era, have been the case in the mobile game era, and remain the case in the crypto industry. Macedo points out that the standard benchmarks for mobile games are D1 retention of 35–45%, D7 of 15–25%, and D30 of 5–10%, while most Web3 games don’t even reach these basic healthy indicators.

Yield Guild Games co-founder Gabby Dizon thinks the reason the industry fails is that it “spent too long measuring the wrong things,” including outdated metrics such as VC funding amounts, token prices, NFT sales, and so on. The real metrics only need players to be willing to pay, because they see value in the gameplay experience.

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

The BGA report notes that more than a quarter of respondents consider stablecoins the key to success in the industry. Compared with game tokens that are highly volatile, stablecoins are friendlier and easier to understand for new users, and have been used increasingly for tournament prizes, in-game rewards, and cross-border payments. Sequence further points out that smart game developers are paying attention to stablecoin payments—whether for on-chain assets or other scenarios. Lower fees, instant settlement, and simpler profit-sharing all offer significant advantages in terms of use cases.

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

Blockchain gaming isn’t dead yet—what we’re seeing now is a necessary reset?

The core contradiction in the last round of the chain gaming cycle has never changed: the investor-driven capital structure staying ahead of player-need validation. When retention can’t support token economics, when development costs consume fundraising numbers, the endgame for project teams has only two options left: shutting down or going off-chain. And the ones always paying the bill are the early holders.

But this reshuffle has also given game developers more pragmatic consensus: let blockchain be invisible; measure success by retention rather than token prices; replace highly volatile tokens with stablecoins as the payment layer; and use AI to rebuild development costs. The common thread among these directions is: first make a game that can stand up to traditional market benchmarks, and then let blockchain play its real value in the underlying layer.

Blockchain gaming may not be “dead” the way Lily Liu said—but the market is indeed leaving behind that old cycle where user numbers are driven by tokens until development funds are exhausted and the only way left is to loop back to Web2.