Blockchain games are defeated by reality; Web3 does not 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 comes from a Polymarket post: “Meta led by Mark Zuckerberg is gradually abandoning its metaverse vision after spending 80 billion dollars.” While Meta’s blueprint does not explicitly involve blockchain or crypto assets, its strategy overlaps heavily with the future once depicted by Web3 on-chain game narratives in the past few years: virtual worlds, digital asset ownership, and immersive online economies.

Even the wealthiest players are quitting—blockchain games, which once served as the crypto industry’s most promising “breakout” narrative, have they now reached the end of the day?

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

In August last year, Proof of Play released an announcement that seemed to be like a confession 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 were set to zero, and community players could only destroy their assets to exchange for a so-called “certificate.” That certificate might be useful someday, but probably might not—and yet 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 crashed 92% within days. Co-founder Adam Fern admitted: “Shutting down Pirate Nation is one of the hardest decisions I’ve ever made. But the fact is, it was never going to become a breakthrough mass-market product.”

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

Let’s lay out last year’s on-chain game shutdown announcements one by one. Ember Sword, an Ethereum game that attracted $203 million through NFT land purchases, announced it would shut down in May last year. Developer Bright Star Studios said plainly that it lacked funding.

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

Also shutting down in July was an MMORPG under Gala Games that received official The Walking Dead IP licensing. The NFT-based mechanized combat game MetalCore went silent after shutting down its servers in March; the developer had quietly shifted to launching a brand-new game on Steam with nothing to do with blockchain.

What has most made the market sigh recently is Wildcard. After its TGE in March this year, its market cap peaked at only $1.1 million. The community broadly questioned the project’s irresponsibility and called it a soft rug. According to crypto asset data platform RootData, Wildcard had raised $46 million, led by Paradigm.

Its founder, Paul Bettner, had previously worked on well-known games such as Words With Friends and Lucky’s Tale. Yet today, even with top-tier VC backing and seasoned game veterans running the show, nothing can stop the collapse of the entire on-chain gaming track.

Beyond that, there are Deadrop, Blast Royale, Mojo Melee, Tokyo Beast, OpenSeason, Captain Tsubasa Rivals—behind every one of these projects are investments totaling millions, even tens of millions of dollars, along with the accumulation of countless game users, and in the end, the promises dissolve into nothing.

Web2 players want a good game, but Web3 players only want returns

Most founders have real game development backgrounds, and their on-chain game visions during fundraising are not entirely empty talk. So why, in the end, does it still end up with project shutdowns or a return to Web2?

“Web3 games build an investor-driven capital structure through tokens and NFTs even before player needs are verified.” In other words, from the start, the people providing funding for these games are not the same group as the people who ultimately need to stay in the game.

When it becomes clear during development that the on-chain player base is smaller than expected and more oriented toward short-term arbitrage—while token prices keep falling and development costs keep rising—the studio’s options are reduced to only shutting down or abandoning its blockchain identity to move toward the traditional market. No matter which path it takes, early Web3 investors and NFT holders are always the final payers.

The farming simulation game Moonfrost is a typical case. Developer Oxalis Games raised $6.5 million and ran a Play-to-Airdrop activity 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 relaunched 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 but meaningful Web3 game.” 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 money for them to finally see the true rules.

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

The BGA report shows that 36% of respondents list “fraud, scams, or rug pulls” as the industry’s biggest threat. Even though most project shutdowns are not deliberate scams, from an outside perspective, the repeated cycle of fundraising, token issuance, and collapse is almost indistinguishable from rug pulls. “This industry needs real game developers and real users who genuinely want to play games—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-grade applications in crypto. 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, stablecoins handling large-scale transfer volumes, and AI tools compressing game development costs to a fraction of what they used to be—these infrastructure and market conditions have never disappeared. From many developers’ perspectives, you can even see several possible paths forward.

When discussing its MapleStory Universe, NEXPACE CEO Sunyoung Hwang proposed a core principle: wallets, gas fees, and token economics are obstacles for most players, not value-adds. The blockchain layer should do meaningful work behind the scenes—such as enabling real asset ownership and driving open economies—while players can focus solely on the game itself. “If infrastructure operations penetrate into the gaming experience, then game design is a failure.”

Animoca Brands CEO Robby Yung and PLAY Network CEO Christina Macedo, meanwhile, believe that retention rate is the only true truth. D1, D7, and D30 retention data—this has been true in the console era, and it has been true in the mobile game era, and it remains true in the crypto industry. Macedo noted that the standard benchmarks for mobile games are 35–45% for D1 retention, 15–25% for D7, and 5–10% for D30. Yet most Web3 games do not even reach these baseline healthy indicators.

Yield Guild Games co-founder Gabby Dizon believes the industry’s failure stems from “taking too long to measure the wrong things,” including outdated metrics such as 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 gaming 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 industry success. Compared with highly volatile game tokens, stablecoins are more friendly for new users and easier to understand, and they’ve increasingly been used for tournament prizes, in-game rewards, and cross-border payments. Sequence also points out that smart game developers are paying attention to stablecoin payments, whether for on-chain assets or other scenarios. The advantages include lower fees, instant settlement, and easier revenue sharing—opening up significant use cases.

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

Blockchain games are not dead yet—does the current stage call for a necessary reset?

The core contradiction in the previous cycle of blockchain gaming has never changed: investor-driven capital structures stayed ahead of player-demand verification. When retention can’t support token economies, and development costs swallow up funding, the project’s endgame is only shutdown or moving away from the blockchain—while the ones footing the bill are always the early holders.

But this reshuffle has also led game developers to form a more pragmatic consensus: making blockchain invisible, measuring success by retention rather than token prices, using stablecoins to replace highly volatile tokens as the payment layer, and leveraging AI to rebuild development costs. The common point across these directions is: 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 as Lily Liu said—but the market is indeed saying goodbye to that old loop where token-driven user growth runs until development funds are exhausted, and the only outcome left is to loop back to Web2.