Author: Chloe, ChainCatcher
Recently, Lily Liu, President of the Solana Foundation, posted on X that “games on the blockchain will not return,” stating that blockchain gaming is dead.
Her judgment stems from a Polymarket post stating, "Mark Zuckerberg's Meta is gradually abandoning its metaverse vision after spending $80 billion." Although Meta's roadmap does not explicitly involve blockchain or crypto assets, its strategy closely aligns with the future envisioned by Web3 blockchain games over the past few years: virtual worlds, digital asset ownership, and immersive online economies.
Even the wealthiest players have quit—has blockchain gaming, once hailed as the most promising narrative to break out into the mainstream for the crypto industry, now reached its twilight?
The collapse of the entire sector: Are blockchain gaming projects shutting down one after another?
In August last year, Proof of Play released an announcement that seemed like a confession to the market: its fully on-chain pirate RPG, Pirate Nation, would shut down within 30 days. The two dedicated blockchains were taken offline, token rewards were reduced to zero, and community players could only burn their assets in exchange for so-called “certificates”—certificates that might one day be useful, but likely never would be. The game studio had raised $33 million two years earlier, vowing to build the future of on-chain gaming.
Following the announcement, the PIRATE token plummeted 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, it could never have become a breakthrough mass-market product."
Pirate Nation is not an isolated case; it is merely a small reflection of the broader collapse of blockchain games in 2025.
Review the list of blockchain games that shut down last year. Ember Sword, an Ethereum game that raised $203 million through NFT land sales, announced its closure in May last year, with developer Bright Star Studios citing a lack of funding.
Nyan Heroes, a third-person shooter battle royale game built on Solana, was once wishlisted by over 250,000 PC players but ceased operations in May last year due to funding issues, with its NYAN token plummeting more than 99% from its peak. Similarly, Square Enix’s Ethereum-based game Symbiogenesis, created by the makers of Final Fantasy, also ended in July.
Also in July, the MMORPG licensed by Gala Games with official authorization from The Walking Dead was shut down. The NFT-based mech combat game MetalCore went silent after shutting down its servers in March, and the developer has quietly shifted focus to launching a new game on Steam that has no connection to blockchain.
The most lamented development in the market recently has been Wildcard. After its TGE in March, the project’s market cap peaked at just $1.1 million, sparking widespread community skepticism over its lack of accountability and a soft rug pull. According to crypto asset data platform RootData, Wildcard raised $46 million in funding, led by Paradigm.
Its founder, Paul Bettner, previously contributed to the development of well-known games such as Words With Friends and Lucky's Tale, but even top-tier VC backing and seasoned game industry leadership cannot halt the collapse of the entire blockchain gaming sector.
In addition, there are projects like Deadrop, Blast Royale, Mojo Melee, Tokyo Beast, OpenSeason, and Captain Tsubasa Rivals—each backed by millions, even tens of millions of dollars in investment, built up over years of user engagement, yet ultimately leaving behind nothing but broken promises.
Web2 players want a great game, but Web3 players only want returns.
Most founders have genuine game development backgrounds, and their vision for on-chain games during fundraising was not entirely hypothetical—so why did so many ultimately end up shutting down projects or reverting to Web2?
Web3 games have built entire investor-driven capital structures around tokens and NFTs before verifying player demand. In other words, the people funding these games were never the same as those needed to sustain them.
When the development team discovered that the on-chain player base was smaller than expected and more focused on short-term arbitrage, leading to sustained token price declines and rising development costs, the studio’s only options were to shut down or abandon its blockchain identity and pivot to the traditional market—and in either case, early Web3 investors and NFT holders ultimately bore the cost.
The farming simulation game Moonfrost is a prime example. Developer Oxalis Games raised $6 million and operated a Play-to-Airdrop campaign for over a year, selling 1,833 NFT boxes at $150 each. Then, in November 2025, the team announced its departure from Web3, relaunching the game on Steam as a paid PC game without NFTs, tokens, or blockchain.
Just one day before the announcement, CEO Ric Moore was publicly discussing how to build “slow and meaningful Web3 games.” The team’s explanation was: “Web3 players want to make money; Web2 players just want a good game.” It took them three years and millions in real money to finally understand the real rules.
The 2025 Industry Report by the Blockchain Game Alliance (BGA) also confirms the decline of blockchain games: annual investment in blockchain gaming has dropped to approximately $293 million, a dramatic decrease from $4 billion in 2021 and the peak of $10 billion in 2022. DWF Labs describes this current phase as a “necessary reset.” The most significant lingering consequence of the sector’s failures may be a crisis of credibility for blockchain gaming as a whole.
The BGA report shows that 36% of respondents identified "scams, fraud, or rug pulls" as the industry's greatest threat—even though most project closures are not intentional scams, from an outsider’s perspective, the recurring cycle of "raising funds, launching tokens, and shutting down" is nearly indistinguishable from a rug pull. "This industry needs genuine game developers and genuine players who want to play—neither can be missing."
Infrastructure and market conditions provide advantages; stablecoins and AI bring new opportunities.
The collapse of blockchain gaming narratives does not mean the end of consumer-grade applications in the crypto industry. The BGA report shows that 65.8% of industry professionals remain optimistic about the next 12 months, with this optimism grounded in deliverable products and sustainable revenue models. Meanwhile, stablecoins are handling massive transaction volumes, and AI tools are reducing game development costs to a fraction of what they once were—infrastructure and market conditions have never disappeared; in fact, from many developers’ perspectives, several viable pathways are already emerging.
NEXPACE CEO Sunyoung Hwang, speaking about the company’s MapleStory Universe, articulated a core principle: wallets, gas fees, and tokenomics are barriers, not advantages, for most players. The blockchain layer should quietly perform meaningful work behind the scenes—such as enabling true asset ownership and powering open economies—while players focus solely on the game itself. “If infrastructure operations intrude into the gameplay experience, the game design has failed.”
Robby Yung, CEO of Animoca Brands, and Christina Macedo, CEO of PLAY Network, believe that retention rate is the only truth. D1, D7, and D30 retention metrics were critical in the console era, remain essential in the mobile gaming era, and are just as vital in the crypto industry. Macedo noted that the standard benchmarks for mobile games are 35–45% D1 retention, 15–25% D7 retention, and 5–10% D30 retention—most Web3 games fail to even reach these basic health indicators.
Yield Guild Games co-founder Gabby Dizon believes the industry failed because it spent too long measuring the wrong things, such as outdated metrics like VC funding amounts, token prices, and NFT sales. The true metric is simply whether players are willing to pay because they see value in the gaming experience.
Finally, there are opportunities presented by stablecoins and AI.
The BGA report indicates that more than a quarter of respondents view stablecoins as critical to the industry's success. Compared to highly volatile game tokens, stablecoins are more user-friendly and easier to understand for new users, and are increasingly being used for tournament prizes, in-game rewards, and cross-border payments. Sequence further notes that savvy game developers are paying attention to stablecoin payments, as lower fees, instant settlement, and simplified revenue sharing offer significant advantages—whether for on-chain assets or other use cases.
AI is also transforming cost structures. Simon Davis of Mighty Bear Games notes that AI-native teams are outproducing traditional studios at a fraction of the cost and manpower. Animoca Brands similarly believes that the key to sustainability by 2026 lies in AI-driven or AI-assisted development practices, which will fundamentally alter the economic model of creating high-quality game content.
Blockchain games aren't dead—could this stage be a necessary reset?
The core contradiction of the previous blockchain gaming cycle has never changed: capital structures driven by investors outpaced the validation of player demand. When retention rates fail to sustain the token economy, and development costs consume raised funds, project teams are left with only two endings—shutting down or removing blockchain elements—while early holders always bear the cost.
But this shakeout has also led developers to reach a more pragmatic consensus: make blockchain invisible, measure success by retention rates rather than token prices, use stablecoins instead of highly volatile tokens as the payment layer, and leverage AI to redefine development costs. The common thread among these approaches is: first build a game that can stand up to traditional market metrics, then let blockchain fulfill its true value beneath the surface.
Blockchain games may not be dead, as Lily Liu suggested, but the market is indeed moving away from the old cycle of using tokens to drive user growth until development funds are exhausted, ultimately reverting to Web2.