Blockchain games are defeated by 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 will not return,” and stated that blockchain gaming is dead.

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

Even the wealthiest players have moved on—blockchain gaming was once the crypto industry’s most promising “breakthrough into the mainstream” narrative. Is the industry now truly heading toward its sunset?

The collapse of the whole track: Are chain game projects shutting down one after another?

Last August, Proof of Play released an announcement that seemed like it was confessing to the market. Its full-chain pirate RPG, 《Pirate Nation》, would be shut down within 30 days. Two dedicated blockchain networks went offline, token rewards became zero, and community players could only burn their assets in exchange for so-called “certificates.” Those certificates may be useful someday, but most likely—maybe they won’t be. And this game studio had raised $33 million two years earlier, vowing to build the future of on-chain games.

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

Pirate Nation is not an isolated case; it is only a small snapshot of the widespread collapse of chain games in 2025.

Line by line, here is the shutdown list from last year’s blockchain game announcements. 《Ember Sword》, an Ethereum game that attracted $203 million through NFT land purchases, announced its closure in May last year. The developer, Bright Star Studios, directly said it lacked funding.

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, yet it also ended operations last May due to a funding breakdown. Its token, NYAN, fell by more than 99% from its peak. 《Symbiogenesis》, an Ethereum-based on-chain game by Square Enix, the creators of 《Final Fantasy》, also reached its end in July.

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

What has recently made the market the most rueful 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’s irresponsibility, calling it a soft rug pull. According to the crypto data platform RootData, Wildcard previously raised $46 million in funding, led by Paradigm.

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Its founder, Paul Bettner, had previously participated in developing well-known games such as 《Words With Friends》 and 《Lucky’s Tale》. Yet even with top VC backing and an experienced gaming veteran at the helm, nothing could stop the collapse of the entire chain game track.

In addition, there are 《Deadrop》, 《Blast Royale》, 《Mojo Melee》, 《Tokyo Beast》, 《OpenSeason》, 《Captain Tsubasa Rivals》—behind each project are investments totaling millions or even tens of millions of dollars, years of accumulation of countless game users, and ultimately promises that turned to nothing.

Web2 players want a good game, while Web3 players only want profit

Most founders have real game development backgrounds, and when raising funds, their vision for on-chain games was not entirely empty talk. So why did it still ultimately end with the project being shut down or reverting to Web2?

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

When, during development, it becomes clear that the on-chain player base is smaller than expected and leans more toward short-term arbitrage, and tokens keep falling while development costs keep rising, the studio’s choices are reduced to only shutting down or abandoning its blockchain identity and shifting to traditional markets. No matter which path it takes, the early Web3 investors and NFT holders are always the final party paying the bill.

The farm simulation game 《Moonfrost》 is a typical example. Developer Oxalis Games raised $6.5 million, ran a Play-to-Airdrop activity for more than a year, and sold 1,833 NFT boxes at $150 each. Then in November 2025, the team announced it would leave Web3 and relaunch on Steam as a paid PC game, with no NFTs, tokens, or blockchain.

And just one day before the announcement, CEO Ric Moore was still publicly discussing how to build a “slow and meaningful Web3 game.” The reason given by the team was: “Web3 players want to make money, while Web2 players only want a good game.” It took them three years and millions of dollars of real money before they finally understood the real rules.

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

The BGA report shows that 36% of respondents list “scams, fraud, or rug pull” 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 shutdown” is almost impossible to distinguish from a rug pull. “This industry needs genuine game developers and genuine users who actually 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 the end of consumer-grade applications in crypto. 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, large-scale transfer volumes handled by stablecoins, and AI tools compressing game development costs to just a fraction of what they used to be, show that infrastructure and market conditions have never disappeared. From the perspective of many developers, several possible paths can already be seen.

NEXPACE CEO Sunyoung Hwang proposed a core principle when discussing its 《MapleStory Universe》: wallets, gas fees, and token economics are barriers for most players—not value-adds. The blockchain layer should do meaningful work in the background, such as enabling true asset ownership and driving open economies, while players can focus only on the game itself. “If infrastructure operations permeate into the game experience, then game design has failed.”

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

Yield Guild Games co-founder Gabby Dizon believes the industry’s failure is due to “spending too long measuring the wrong things,” including outdated metrics such as VC funding amounts, token prices, and NFT sales figures. 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 one-quarter of respondents consider stablecoins to be key to industry success. Compared with highly volatile game tokens, stablecoins are more user-friendly and easier to understand. They have increasingly been used for tournament prizes, in-game rewards, and cross-border payments. Sequence also further notes that smart game developers are focusing on stablecoin payments—whether for on-chain assets or other scenarios—because there are major advantages such as lower fees, instant settlement, and simpler revenue sharing.

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

Are blockchain games not dead yet—does this phase require a necessary reset?

The core contradiction of the previous cycle of blockchain gaming has never changed: the investor-driven capital structure has always been ahead of player demand validation. When retention can’t support token economics, and development costs swallow up the funding numbers, the endgame for project teams is only shutting down or going “off-chain,” and the people who always pay are the early holders.

But this reshuffle has also brought more pragmatic consensus among game developers: make blockchain invisible, measure success by retention rather than token prices, replace high-volatility tokens with stablecoins as the payment layer, and use AI to rebuild development costs. The common point among these directions is: first, make a game that can pass the test of traditional market metrics, and then let blockchain play its true value at the underlying layer.

Blockchain games might not be as dead as Lily Liu says, but the market is indeed bidding farewell to that old cycle where token-driven user growth goes on until development funds are exhausted, and the outcome is finally to loop back to Web2.