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

Original author: Chloe, ChainCatcher

Recently, Lily Liu, President of the Solana Foundation, wrote on X that “games on the blockchain will not come back,” adding that blockchain gaming is dead.

Her assessment comes from a Polymarket post: “After Mark Zuckerberg’s Meta spent $80 billion, it is gradually giving up on its metaverse vision.” Although Meta’s blueprint does not explicitly involve blockchain or crypto assets, its strategy overlaps highly with the future portrayed by Web3 on-chain games in recent years: virtual worlds, digital asset ownership, and immersive online economic systems.

Even the richest players are exiting their positions—blockchain gaming, which once served as the crypto industry’s most promising “breakout into the mainstream” narrative, has it already reached the end of its day?

The collapse of the entire track: are on-chain gaming projects shutting down one after another?

In August last year, Proof of Play released an announcement that looked like it was confessing to the market. Its full-on on-chain pirate RPG,《Pirate Nation》, would be shut down within 30 days. Two dedicated on-chain blockchains went offline; token rewards went to zero. Community players could only burn their assets in exchange for so-called “certificates.” Those certificates might be useful someday, but probably might not—and two years earlier, this game studio had raised $33 million, vowing to build the future of on-chain games.

After the announcement, the PIRATE token plummeted by 92% within a few days. Co-founder Adam Fern admitted: “Shutting down Pirate Nation is one of the most difficult decisions I’ve ever been involved in. But the fact is: it can never become a breakout mainstream product.”

Pirate Nation is not an exception; it is just a small snapshot of the massive on-chain gaming collapse in 2025.

One by one, lay out the shutdown list of blockchain games from last year. The Ethereum game《Ember Sword》, which attracted $203 million through NFT land purchases, announced it would close last May, and the developer Bright Star Studios said directly 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 dropped by more than 99% from its peak.《Symbiogenesis》, an Ethereum on-chain game by Square Enix, the creator of《Final Fantasy》, also reached its end in July.

Even Gala Games’ MMORPG with the official《The Walking Dead》license was taken offline in July. The NFT-based mechanized combat game《MetalCore》went silent after shutting down its servers in March, and the developer has quietly shifted to launching a new game on Steam that has nothing to do with blockchain.

More recently, the most talked-about project by the market is《Wildcard》. After its TGE in March this year, its market cap peaked at just $1.1 million. The community widely questioned the project for being irresponsible and a soft rug. According to crypto asset data platform RootData, Wildcard had raised $46 million in funding led by Paradigm.

Its founder, Paul Bettner, previously helped develop well-known games such as《Words With Friends》and《Lucky’s Tale》, but now, even with endorsement from top VCs and hands-on operation by experienced game people, it still cannot stop the collapse of the entire on-chain gaming track.

In addition, there are《Deadrop》、《Blast Royale》、《Mojo Melee》、《Tokyo Beast》、《OpenSeason》、《Captain Tsubasa Rivals》—behind every project are investments of several million, even tens of millions of dollars; countless accumulations of game users; and ultimately broken promises that turn out to be empty.

Web2 players want a good game—Web3 players only want returns

Most founders have real game development backgrounds, and during fundraising, the vision for on-chain games was not entirely just empty talk. So why, in the end, does it still land on the outcome of projects shutting down or returning to Web2?

“Before Web3 games verify player needs, they already build an entire investor-driven capital structure through tokens and NFTs.” In other words, the people providing funding for these games are not the same group as the people who will ultimately need to stay in the game.

When, during development, they discover that the on-chain player base is smaller than expected and more inclined toward short-term arbitrage—when tokens keep falling and development costs keep rising—the studio’s options are reduced to either shutting down or abandoning their blockchain identity and shifting to the traditional market. No matter which path they take, early Web3 investors and NFT holders are always the final buyers.

《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 that 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, CEO Ric Moore was still talking publicly about how to build “slow and meaningful Web3 games.” The reason the team gave was: “Web3 players want to make money; Web2 players only want a good game.” They spent three years and millions of real dollars to finally see the real rules.

The 2025 Blockchain Game Alliance (BGA) industry report also confirms the retreat of on-chain games: annual investments in blockchain games fell to about $293 million, compared with $4 billion in 2021 and a peak of $10 billion in 2022—a staggering drop. DWF Labs describes the current phase as a “necessary reset.” And the biggest aftereffect left by failures in this track may be the entire on-chain gaming industry’s credibility crisis.

The BGA report shows that 36% of respondents list “scams, fraud, or rug pulls” as the biggest threat to the industry. Even though most projects shutting down is not an intentional scam, from an outsider’s perspective, the repeated cycle of “fundraising, token issuance, and collapse” is almost indistinguishable from a rug pull. “This industry needs real game developers and real users who genuinely want to play games—both are indispensable.”

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

The collapse of the on-chain gaming narrative does not mean the crypto industry’s consumer-grade applications have come to an end. The BGA report shows that 65.8% of industry practitioners remain optimistic about the next 12 months. This optimism is based on deliverable products and sustainable revenue models. At the same time, stablecoin handling of large-scale transfer volumes, and AI tools compressing game development costs to a fraction of what they used to be, are examples that infrastructure and market conditions never disappeared. Even from many developers’ perspectives, you can see several possible paths.

NEXPACE CEO Sunyoung Hwang proposed a core principle when talking about its《MapleStory Universe》: for most players, the wallet, gas fees, and token economics are obstacles—not value-add. The blockchain layer should do meaningful work behind the scenes, such as enabling true asset ownership and driving open economies, while players should simply focus on the game itself. “If infrastructure operations penetrate the game experience, then game design is a failure.”

Animoca Brands CEO Robby Yung and PLAY Network CEO Christina Macedo believe retention rate is the only true truth. D1, D7, and D30 retention data hold true in the console era, and in the mobile game era—and they still hold in crypto. Macedo pointed out that in mobile games, the standard benchmarks are 35–45% D1 retention, 15–25% D7, and 5–10% D30, while most Web3 games do not even reach these healthy baseline indicators.

Yield Guild Games co-founder Gabby Dizon believes the industry’s failure is because it “spent too long measuring the wrong things,” including outdated metrics like VC funding amounts, token prices, and NFT sales. The real metrics only need what players are willing to pay for—because they see value in the game experience.

Finally, it is the opportunities brought by stablecoins and AI.

The BGA report notes that more than a quarter of respondents see stablecoins as the key to success in the industry. Compared with game tokens that are highly volatile, stablecoins are friendlier to new users, easier to understand, and are increasingly being used for tournament prizes, in-game rewards, and cross-border payments. Sequence also further points out that smart game developers are focusing on stablecoin payments, whether for on-chain assets or other scenarios. The lower fees, instant settlement, and simpler revenue sharing provide substantial scenario advantages.

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

Blockchain games aren’t dead yet—at this stage, is it a necessary reset?

The core contradiction of the last on-chain gaming cycle has always been the same: an investor-driven capital structure running ahead of player-need validation. When retention rate cannot support token economics, when development costs devour the fundraising numbers, the endgame for project teams leaves only shutting down or going fully off-chain, and the ones always paying are the early holders.

But this shakeout has also given game developers a more practical consensus: make blockchain invisible, judge success by retention rates rather than token prices; replace highly volatile tokens with stablecoins as the payment layer; and use AI to rebuild development costs. The common thread behind these directions is: first make a game that can pass traditional market metric tests, and then let the blockchain layer play its true role at the bottom.

Blockchain games may not be dead like Lily Liu said, but the market is indeed saying goodbye to that old cycle—one driven by tokens to grow user counts until development funds are drained, and the only way left is to recycle back into Web2.