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

Author: Chloe, ChainCatcher

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

Her judgment comes from a Polymarket post: “Mark Zuckerberg’s Meta is gradually giving up its metaverse vision after burning through $80 billion.” Although Meta’s blueprint does not explicitly involve blockchain or crypto assets, its strategy overlaps heavily with the future once portrayed by Web3 chain games over the past few years: virtual worlds, digital asset ownership, and immersive online economic systems.

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

### 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 sounded like a confession to the market: its full-chain pirate RPG 《Pirate Nation》 would shut down within 30 days. Two dedicated blockchains went offline, token rewards hit zero, and community players could only burn their assets to obtain a so-called “certificate.” That certificate might be useful someday, but most likely it might not—and meanwhile, this game studio raised $33 million two years earlier, vowing to build the future of on-chain games.

After the announcement, the PIRATE token crashed 92% within days. Co-founder Adam Fern admitted: “Shutting down Pirate Nation was one of the hardest decisions I’ve ever made. But the truth is that it could never become a truly breakthrough mainstream product.”

Pirate Nation is not an isolated case; it’s only a small snapshot of the massive chain gaming collapse in 2025.

Unfold the list of last year’s blockchain games that announced shutdowns one by one. 《Ember Sword》, an Ethereum game that attracted $203 million through NFT land purchases, announced it would close last May, with developer Bright Star Studios saying it lacked funding.

The third-person shooter battle royale 《Nyan Heroes》, built on Solana, was once on the wish list of more than 250,000 PC players—yet it also ended operations last May due to a funding breakdown, and its token NYAN plunged more than 99% from its peak. 《Symbiogenesis》, the Ethereum chain game by Square Enix, the creator of 《Final Fantasy》, also came to an end in July.

In addition, Gala Games’ officially licensed 《The Walking Dead》 MMORPG was also shut down in July. NFT-based mechanized combat game 《MetalCore》 went silent after closing its servers in March, and the developer quietly shifted to launching a brand-new game on Steam with no relation to blockchain.

What has recently drawn the most sighs from the market is 《Wildcard》. After its TGE in March this year, the project’s market cap reached a high of only $1.1 million. The community broadly questioned the project’s irresponsibility and accused it of a soft rug pull. According to crypto asset data platform RootData, Wildcard had raised $46 million in funding, led by Paradigm.

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Its founder, Paul Bettner, previously worked on well-known games like 《Words With Friends》 and 《Lucky’s Tale》. Yet even with endorsement from top VCs and veteran game people running the show, it still couldn’t stop the collapse of the entire chain gaming sector.

Besides that, there are 《Deadrop》, 《Blast Royale》, 《Mojo Melee》, 《Tokyo Beast》, 《OpenSeason》, 《Captain Tsubasa Rivals》—behind each project are investments of millions or even tens of millions of dollars, countless hours of game users’ accumulation, and ultimately promises that dissolved into nothing.

### Web2 players want a good game; Web3 players only want returns

Most founders have real game development backgrounds, and the vision for on-chain games during fundraising is not entirely empty talk. So why, in the end, do things still lead to project shutdowns—or a return to Web2?

“Web3 games, before validating player needs, have 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 inside the game are not the same group from the very beginning.

When, during development, it’s discovered that the on-chain player base is smaller than expected and leans more toward short-term arbitrage, with tokens continuing to fall and development costs rising endlessly, studios are left with only two choices: shut down or abandon their blockchain identity and switch to traditional markets. No matter which path they take, early Web3 investors and NFT holders are always the final ones paying the bill.

《Moonfrost》, a farming simulation game, is a textbook 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—without any NFTs, tokens, or blockchain.

And just the day before the announcement, CEO Ric Moore was publicly discussing how to build a “slow but meaningful Web3 game.” The reason given was: “Web3 players want to make money; Web2 players just want a good game.” They spent three years and millions of dollars to finally see the real 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, down dramatically from $4 billion in 2021 and the peak of $10 billion in 2022. DWF Labs describes the current stage as a “necessary reset.” And perhaps the biggest lasting damage left by this sector’s failure is a broader crisis of credibility for all of chain gaming.

The BGA report shows that 36% of respondents list “scams, fraud, or rug pulls” as the biggest threat to the industry. Even though most project shutdowns are not intentional scams, 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 want to play—both are indispensable.”

### Infrastructure and market conditions become advantages; stablecoins and AI bring new opportunities

The collapse of the blockchain gaming narrative does not mean the end of consumer-facing applications in crypto. The BGA report shows that 65.8% of industry practitioners still feel optimistic about the next 12 months, and this optimism is built on deliverable products and sustainable revenue models. At the same time, large-scale transfer volumes handled by stablecoins, plus AI tools compressing game development costs to a fraction of what they used to be, show that infrastructure and market conditions have never disappeared. Even from many developers’ viewpoints, several possible paths are emerging.

When talking about its 《MapleStory Universe》, NEXPACE CEO Sunyoung Hwang proposed a core principle: for most players, wallets, Gas fees, and tokenomics are obstacles—not value add-ons. The blockchain layer should do meaningful work in the background—such as enabling true asset ownership and driving open economies—while players only need to focus 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, on the other hand, believe that retention rate is the only real truth. D1, D7, D30 retention data has been crucial in the console era, it was crucial in the mobile gaming era—and it remains so in the crypto industry. Macedo pointed out that in mobile games, the standard benchmarks are D1 retention of 35–45%, D7 of 15–25%, and D30 of 5–10%, while most Web3 games fail to reach even these baseline healthy indicators.

Yield Guild Games co-founder Gabby Dizon believes the industry’s failure is because “it took too long to measure the wrong things,” including outdated metrics like VC funding amounts, token prices, and NFT sales. 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 states that more than a quarter of respondents view stablecoins as key to the industry’s success. Compared with game tokens that are highly volatile, stablecoins are more friendly to new users and easier to understand. They are increasingly being used for tournament prizes, in-game rewards, and cross-border payments. Sequence further notes that smart game developers are paying attention to stablecoin payments—for on-chain assets or other scenarios—because lower fees, instant settlement, and simpler revenue sharing offer significant advantages in many use cases.

And AI is changing the cost structure. 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 likewise believes that in 2026, sustainability will hinge on AI-driven or AI-assisted development practices, which will fundamentally change the economics of producing high-quality game content.

### Blockchain games aren’t dead yet; is this phase a necessary reset?

The core contradiction of the previous blockchain gaming cycle has never changed: investor-driven capital structures stay ahead of player-demand validation. When retention can’t support token economies, and development costs swallow up fundraising numbers, the project endgame is reduced to shutting down or de-blockchaining—and the ones ultimately paying are always early holders.

But this reshuffle has also produced a more pragmatic consensus among game developers: make blockchain 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 is this: first make a game that can pass traditional market metrics, and then let blockchain play its true role at the underlying level.

Blockchain games may not be “dead” the way Lily Liu said—but the market is indeed bidding farewell to that old loop in which token-driven user growth eventually burns through development funds, leaving only a return to Web2.