Play-to-earn games lose to reality, Web3 doesn't believe in dreams

Author: Chloe, ChainCatcher

Recently, Lily Liu, President of the Solana Foundation, posted on X saying, “Games on the blockchain won’t return,” and stated that blockchain gaming is dead.

Her judgment is based on a Polymarket post: “Mark Zuckerberg’s Meta, after spending $80 billion, is gradually abandoning its vision for the metaverse.” Although Meta’s blueprint does not explicitly involve blockchain or crypto assets, its strategy overlaps highly with the future that Web3 chain games have depicted over the past few years: virtual worlds, digital asset ownership, and immersive online economic ecosystems.

Even the richest players have already quit—blockchain games once served as the crypto industry’s most promising “mainstream breakthrough” narrative. Has the industry already run out of steam at the end of the day?

The collapse of the entire sector: are chain game projects shutting down one after another?

In August last year, Proof of Play released an announcement that seemed like an apology to the market: its fully on-chain pirate RPG Pirate Nation would close within 30 days. Two dedicated on-chain networks went offline, token rewards went to zero, and community players could only burn their assets to obtain a so-called “certificate.” The certificate may be useful someday, but it probably won’t—and yet the game studio had raised $33 million two years earlier, pledging to build the future of on-chain games.

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

Pirate Nation is not an isolated case; it is only a small snapshot of the massive chain-gaming disaster that unfolded in 2025.

Laying last year’s blockchain game shutdown announcements out one by one, there was the Ethereum game Ember Sword, which had raised $203 million through NFT land purchases; it announced its closure in May, with developer Bright Star Studios citing lack of funds.

The third-person shooter battle royale game Nyan Heroes, built on Solana, was once on the wishlist of more than 250,000 PC platform players—but it ended operations last May as well due to a funding break, and its NYAN token crashed by over 99% from its peak. Square Enix, the creator of Final Fantasy, saw its Ethereum chain game Symbiogenesis end in July as well.

There was also Gala Games’ MMORPG, which had official licensing for The Walking Dead, taken offline in July. The NFT-based mechanized combat game MetalCore disappeared after shutting down its servers in March; the developer had quietly shifted to releasing a new Steam game with nothing to do with blockchain.

Most recently, what has left the market particularly stunned is Wildcard. After its TGE in March this year, its market cap topped out at only $1.1 million. The community widely questioned the project as irresponsible and a “soft rug.” According to crypto data platform RootData, Wildcard had raised $46 million in funding, with Paradigm leading the round.

Its founder Paul Bettner had previously been involved in developing well-known games like Words With Friends and Lucky’s Tale. But now, even with top-tier VC backing and seasoned game professionals running the show, it still couldn’t prevent the collapse of the entire chain gaming track.

Beyond that, there are projects like Deadrop, Blast Royale, Mojo Melee, Tokyo Beast, OpenSeason, and Captain Tsubasa Rivals—behind each one are investments of millions or even tens of millions of dollars, the accumulation of countless game users, and ultimately promises that evaporate into nothing.

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

Most founders have real game development backgrounds, and their fundraising-stage visions for on-chain games were not entirely empty talk. So why did so many still end up with outcomes like shutting down the project or reverting back to Web2?

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

When, during development, it becomes clear that the on-chain player base is smaller than expected and more oriented toward short-term arbitrage—when token prices keep falling and development costs keep rising—then studios have only two choices left: shut down or abandon their blockchain identity and shift to the traditional market. Regardless of which path they take, the early Web3 investors and NFT holders are always the ones ultimately paying the bill.

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

And just one day before the announcement, 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 only want a good game.” It took three years and millions of dollars of real spending before they finally saw the real rules.

A 2025 industry report from the Blockchain Game Alliance (BGA) also confirmed the retreat in chain games: annual investment in blockchain games fell to about $293 million, down dramatically from $4 billion in 2021 and a peak of $10 billion in 2022. DWF Labs described the current stage as a “necessary reset.” And perhaps the biggest lingering fallout from the industry’s failure is a credibility crisis across the entire chain gaming space.

The BGA report shows that 36% of respondents list “scams, fraud, or rug pulls” as the industry’s greatest threat. Even if most project shutdowns are not intentional scams, from an external perspective, the repeated cycle of “fundraising, issuing tokens, and going under” is almost indistinguishable from a rug pull. “This industry needs genuine game developers and real users who genuinely want to play—both are indispensable.”

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

The collapse of the chain gaming narrative does not mean that consumer-grade applications in crypto 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 built on deliverable products and sustainable revenue models. At the same time, large-scale transfers enabled by stablecoins, and AI tools compressing game development costs to a fraction of what they used to be, indicate that infrastructure and market conditions have never disappeared. From many developers’ viewpoints, several possible paths are emerging.

When discussing its MapleStory Universe, NEXPACE CEO Sunyoung Hwang proposed a core principle: wallets, Gas fees, and tokenomics are obstacles for most players, not value-adds. The blockchain layer should do meaningful work in the background—for example, enabling true asset ownership and driving open economies—while players can focus solely on the game itself. “If infrastructure operations seep into the gameplay experience, game design fails.”

Animoca Brands CEO Robby Yung and PLAY Network CEO Christina Macedo believe retention rate is the only truth. D1, D7, and D30 retention data are just as relevant in the console era and the mobile gaming era; they remain so in the crypto industry as well. Macedo pointed out that the standard benchmarks for mobile games are 35–45% for D1 retention, 15–25% for D7, and 5–10% for D30, while most Web3 games do not reach these baseline healthy indicators.

Yield Guild Games co-founder Gabby Dizon believes the industry failed because it “spent too long measuring the wrong things,” including outdated metrics such as VC funding amounts, token prices, NFT sales figures, and so on. The real metric is simply whether players are willing to pay, because they see value in the game experience.

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

The BGA report notes that more than a quarter of respondents view stablecoins as the key to success for the industry. Compared with highly volatile game tokens, stablecoins are more friendly to new users and 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 paying attention to stablecoin payments—whether for on-chain assets or other scenarios—because of significantly lower fees, instant settlement, and simpler revenue sharing arrangements, which provide strong advantages in many use cases.

And AI is changing the cost structure as well. Simon Davis of Mighty Bear Games said that AI-native teams are surpassing traditional studios with only a fraction of the cost and manpower. Animoca Brands also believes that in 2026, sustainability will hinge on AI-driven or AI-assisted development practices, which will fundamentally change the economic model for producing high-quality game content.

Blockchain games aren’t dead yet—does this phase call for a necessary reset?

The core contradiction from the previous chain-gaming cycle has never changed: investor-driven capital structures always ran ahead of player-demand validation. When retention can’t sustain the token economy, and development costs consume the funding figures, project teams have only two endgames left—shutting down or going off-chain—and the ones who always pay are the early holders.

But this reshuffle has also produced a more pragmatic consensus among game developers: making blockchain invisible, measuring success by retention rather than token prices, replacing high-volatility tokens with stablecoins as the payment layer, and using AI to rebuild development costs. The common thread is: first make a game that can pass the test of traditional market metrics, and then let blockchain play its true role in the underlying layer.

Blockchain games may not be “dead” like Lily Liu said, but the market is indeed saying goodbye to that old cycle where token-driven user growth continues until development funds run out—until the only option left is to loop back to Web2.