Author: Chloe, ChainCatcher

Recently, Solana Foundation President Lily Liu posted on X, stating that "games on the blockchain will not return," and claimed that blockchain games are dead.

Her judgment comes from a Polymarket post which said, "Mark Zuckerberg's Meta, after spending $80 billion, is gradually abandoning the metaverse vision." Although Meta's blueprint does not explicitly involve blockchain or crypto assets, its strategy significantly overlaps with the future depicted by Web3 chain games over the past few years: virtual worlds, digital asset ownership, and immersive online economies.

Even the wealthiest players are leaving; blockchain games, once touted as the crypto industry's most promising narrative for "breaking through," are they now facing a dead end?

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 confessing to the market, stating that its full-chain pirate RPG "Pirate Nation" would shut down within 30 days. Two dedicated blockchains were taken offline, token rewards went to zero, and community players could only burn their assets in exchange for so-called "certificates," which might one day be useful, but are likely to remain useless; this game studio had raised $33 million two years ago, vowing to create the future of chain games.

After the announcement, the PIRATE token plummeted 92% in a matter of days. Co-founder Adam Fern admitted: "Shutting down Pirate Nation was one of the most difficult decisions I have ever participated in. The fact is, it could never be a breakthrough, mass-market product."

Pirate Nation is not an isolated case; it is just a small part of the massive collapse of chain games expected in 2025.

Let's spread out last year's list of blockchain game shutdowns. The Ethereum game "Ember Sword," which attracted $203 million in funding through NFT land purchases, announced its closure in May last year, with developer Bright Star Studios citing a lack of funds.

The third-person shooter battle royale game "Nyan Heroes," built on Solana and once on the wishlist of over 250,000 PC players, also ended operations last May due to funding collapse, with its NYAN token dropping over 99% from its peak. The Ethereum chain game "Symbiogenesis" by Final Fantasy creator Square Enix also came to an end in July.

Additionally, the MMORPG licensed from "The Walking Dead" by Gala Games was taken offline in July. The NFT-based mechanized battle game "MetalCore" went silent after shutting down its servers in March, with the developer quietly shifting focus to launching a new game on Steam that has nothing to do with blockchain.

Recently, the project "Wildcard" has drawn significant market attention, as it peaked at a market value of only $1.1 million after its TGE in March of this year, with the community widely questioning the project's responsibility and soft rug pull. According to cryptocurrency data platform RootData, Wildcard had previously raised $46 million, led by Paradigm.

Its founder Paul Bettner, who also developed well-known games like "Words With Friends" and "Lucky's Tale," now finds that even with top VC backing and seasoned gaming talent, it cannot prevent the collapse of the entire chain gaming sector.

In addition, there are "Deadrop," "Blast Royale," "Mojo Melee," "Tokyo Beast," "OpenSeason," and "Captain Tsubasa Rivals," each behind which are investments of millions or even tens of millions of dollars, the accumulation of countless game users, and promises that ultimately evaporated.

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

Most founders have a genuine background in game development, and their visions for on-chain games during fundraising were not entirely empty talks. Why, then, did they eventually end up shutting down projects or returning to Web2?

"Web3 games have built a whole investor-driven capital structure through tokens and NFTs before verifying player demand." In other words, the people funding these games are not the same as those who ultimately need to stay in the game.

When the development process reveals that the on-chain player community is smaller and more inclined towards short-term profit-taking than expected, and when tokens continue to drop while development costs rise, studios are left with no choice but to shut down or abandon their blockchain identity and turn back to traditional markets. No matter which path is chosen, early Web3 investors and NFT holders are always the ones left to foot the bill.

Farm simulation game "Moonfrost" is a typical case. Developer Oxalis Games raised $6.5 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 they were leaving Web3 and relaunching on Steam as a paid PC game without NFTs, tokens, or blockchain.

And just the day before the announcement, CEO Ric Moore discussed in public how to create "slow and meaningful Web3 games." The reason given by the team was: "Web3 players want to make money, while Web2 players just want a good game." They spent three years and invested millions to finally understand the real rules.

The Blockchain Game Alliance (BGA) industry report for 2025 also confirms the retreat of chain games: annual investment in blockchain games has dropped to about $293 million, an astonishing decline compared to $4 billion in 2021 and $10 billion at the peak in 2022. DWF Labs described the current stage as a "necessary reset." The greatest lingering effect of the failures in this sector may be the crisis of credibility for the entire blockchain gaming space.

The BGA report shows that 36% of respondents identified "scams, fraud, or rug pulls" as the biggest threats to the industry. Although most project closures are not intentional scams, from an external perspective, the repetitive cycle of "funding, token issuing, closing down" is nearly indistinguishable from a rug pull. "This industry needs real game developers and real users who want to play games; both are indispensable."

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

The collapse of the narrative around chain games does not mean that consumer-level applications in the crypto industry have come to an end. The BGA report shows that 65.8% of industry practitioners remain optimistic about the next 12 months, and this optimism is based on deliverable products and sustainable revenue models. Furthermore, the massive transfer volumes facilitated by stablecoins and AI tools that are compressing game development costs to a fraction of the past have never disappeared from the infrastructure and market conditions, and from the perspective of many developers, several possible paths can be seen.

NEXPACE CEO Sunyoung Hwang emphasized a core principle when discussing their "MapleStory Universe": wallets, gas fees, and token economics are obstacles for most players, not bonuses. The blockchain layer should work meaningfully behind the scenes, such as realizing true asset ownership and driving an open economy, while players should just focus on the game itself. "If the operation of infrastructure seeps into the game experience, the game design is a failure."

Animoca Brands CEO Robby Yung and PLAY Network CEO Christina Macedo argue that retention is the only truth. D1, D7, and D30 retention data have been critical in the console era, in the mobile gaming era, and now in the crypto industry. Macedo points out that the standard benchmarks for mobile games are D1 retention of 35-45%, D7 of 15-25%, and D30 of 5-10%, where most Web3 games have not even reached these basic healthy metrics.

Yield Guild Games co-founder Gabby Dizon believes the industry has failed because "too much time has been spent measuring 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 points out that over a quarter of respondents view stablecoins as the key to success in the industry. Compared to the 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 smart game developers are focusing on stablecoin payments, whether for on-chain assets or other scenarios, as they offer significant advantages such as lower fees, instant settlement, and simpler profit-sharing.

Moreover, AI is changing the cost structure. Simon Davis from Mighty Bear Games points out that AI-native teams are surpassing outputs of traditional studios at a fraction of their cost and manpower. Animoca Brands similarly believes that sustainability in 2026 will hinge on AI-driven or AI-assisted development practices, which will radically change the economic model for producing quality game content.

Blockchain games are not dead yet; is this stage a necessary reset?

The core contradiction of the previous cycle of chain games has not changed: the investor-driven capital structure is ahead of the validation of player demand. When retention rates cannot support the token economy and when development costs consume funding figures, the only outcomes for project parties are closure or depurposing away from blockchain, and it is always the early holders who pay the price.

However, this reshuffle has led game developers to reach a more pragmatic consensus: to make blockchain invisible, to measure success by retention rates instead of token prices, to use stablecoins in place of highly volatile tokens as the payment layer, and to leverage AI to reconstruct development costs. The commonality in these directions is to first create a game that can withstand traditional market metric evaluations, and then let blockchain demonstrate its true value at the underlying level.

Blockchain games may not be dead as Lily Liu stated, but the market is indeed bidding farewell to the old cycle driven by tokens to increase user numbers, until the depletion of development funds leads to a return to Web2.

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