The Web3 blockchain game “MapleStory N,” adapted from the classic IP “MapleStory” by the South Korean gaming giant Nexon, has recently officially launched. With the strong performance of its NXPC token, the long-silent Web3 gaming sector has regained widespread attention. Many are starting to envision a revival of GameFi awards.

However, one side is heaven, and the other side is hell.

Since 2025, there has been a large-scale project halt phenomenon in the Web3 (blockchain) gaming sector. Many projects that were once highly favored by the market have successively “died.”

Including blockchain ARPG Tatsumeeko, NFT game Nyan Heroes, blockchain FPS Blast Royale, and Rumble Kong League backed by NBA star Stephen Curry, all have announced the termination of development one after another. Even the highly anticipated MMORPG project Ember Sword suddenly shut down after raising over $200 million, shocking the player community.

Why is it difficult for Web3 games to sustain?

“We explored all possible paths forward. But in today’s market environment, even some of the most promising projects have been shut down, and we cannot find a way to continue development.” On May 21, Bright Star Studios, the developer of the social sandbox game Ember Sword, announced the shutdown of the game. Besides the usual PR rhetoric, the clearest explanation given was, “We ultimately could not secure the funding needed to continue development,” which is also the reason provided by almost all developers who have paused their games.

Ember Sword Official Homepage

Among the recently announced game projects that will be shut down, the most surprising is undoubtedly the cat-themed shooting game Nyan Heroes. This well-known game in the Solana ecosystem attracted over one million players during four rounds of game testing, with over 250,000 players adding it to their wishlists on Epic Games Store and Steam. “Despite achieving these milestones and discussing publishing, new investments, grants, and acquisitions, we still have not been able to secure the funding needed to complete the game,” stated 9 Lives Interactive, the game developer of Nyan Heroes, in a post on X on May 17, expressing regret that Nyan Heroes will unfortunately be closing down due to the current difficult situation in the industry.

“The past few months have been tough, and we are currently exploring the acquisition of studios and IPs. Some discussions are underway, but I estimate that the final decision might take some time.” said Max Fu, CEO and Creative Director of 9 Lives, expressing some hope for the future of Nyan Heroes, but stating that it’s unlikely to achieve any results in the short term.

Among the games that were shut down this week is the fantasy MMORPG Tatsumeeko: Lumina Fates, which was also highly anticipated. Its developer, Tatsu Works, completed a $7.5 million funding round in 2022, with notable investors including Binance Labs, BITKRAFT Ventures, Delphi Digital, and Animoca Brands.

The Tatsumeeko development team expressed themselves relatively tactfully in the official announcement, claiming that the project’s scale became overly complex during development and did not meet their internal standards for sustainability. Therefore, they were forced to return to a lightweight, community-based experience. Tatsu Works hopes to shift their focus to a new project called “Project: Wander,” which will integrate gameplay directly into digital “third spaces” such as Discord servers, abandoning the large-scale game development of Tatsumeeko.

According to PANews’ report “Overview of 17 Web3 Games Ceasing Operations in 2025: The Funding Crisis and Confidence Crisis Behind the Great Retreat of Blockchain Games,” 17 Web3 games have ceased operations by 2025. Overall, in addition to the reasons for insufficient funding mentioned by the project parties, factors such as “deteriorating market conditions” and “player attrition making it difficult to maintain operations” are also significant reasons that have led to the collapse of various blockchain game projects.

The high mortality rate has always been a persistent problem in the gaming industry.

Several well-known blockchain games have recently “died suddenly,” making it seem like Web3 games have entered a death cycle. However, this is more likely due to the impressive notoriety of these projects. In fact, the high death rate of Web3 games has never been a surprising thing.

CoinGecko published a report on Web3 games in December 2023, which found that since the emergence of GameFi in 2017, the failure rate in this field has been quite high. CoinGecko’s research evaluated 2,817 Web3 games launched between 2018 and 2023 and identified active projects as of November 27, 2023, based on observations from the blockchain data platform Footprint Analytics. The study found that approximately 2,127 Web3 games launched during this period failed, with an average annual failure rate of up to 80.8%.

The research report released by ChainPlay at the end of 2024 is even more shocking. ChainPlay analyzed a total of 3,279 projects in its database and defined projects that have fallen over 90% from their historical peak token prices and have daily active users of less than 100 as “dead.” According to the agency’s statistics, 93% of Web3 games are already dead, and it points out that GameFi projects can only sustain an average of four months.

In fact, the failure rate of projects in the gaming industry has always been extremely high, and this is not a phenomenon or problem unique to the blockchain gaming sector.

According to a study published by the independent research and consulting agency ICT Institute in 2022, after analyzing 100 successfully funded video game projects, they found that only 25% of the projects were completed and delivered on time or within an acceptable delay range, while 40% of the projects failed to deliver any promised content.

The competition in the mobile game market is fierce, and the elimination rate is extremely high. According to a study released by the game-focused business analysis company SuperScale in November 2023, the mortality rate of mobile games reaches as high as 83% within three years. In a study of 500 game developers, SuperScale also found that 43% of games even fail during the development stage.

Regarding why game projects have such a high failure rate, an academic paper on the gaming industry on the DiVA Portal points out that in the creative industry, the failure rate of games is higher than that of other software projects. The gaming industry, due to the need for continuous innovation and high-quality delivery, is more prone to issues such as development delays and budget overruns, ultimately leading to project failures.

Stage financing model encounters a deteriorating external environment.

Game development often adopts a “staged financing” model, which means obtaining seed or angel round financing in the early stages of the project. As development progresses, more game content is continuously showcased, leading to subsequent financing rounds such as Series A and Series B.

For example, the highly popular “Black Myth: Wukong” quickly attracted a lot of attention after the release of its first gameplay demonstration video in August 2020, laying the foundation for subsequent financing and talent recruitment, which later led to Tencent becoming a strategic investor in 2021.

This model relies on the hard power of the project, requiring sufficient progress and potential to be demonstrated at each stage to attract new investments. However, in the field of blockchain games, this model shows to be ineffective at present: according to statistics from ChainPlay, the average token price of GameFi projects has dropped by 95% compared to its historical peak, and among the venture capital firms investing in GameFi, 58% have losses ranging from 2.5% to 99%.

In the current Web3 gaming sector, airdrops and token incentives have become fundamental means of attracting users. Especially in the early stages of a project, by promising future incentives to players, project teams can quickly expand their user base and enhance community engagement. However, this strategy often struggles to maintain long-term user retention. Once the tokens are issued and airdropped, players tend to leave in large numbers due to reduced expectations of future rewards, leading to a rapid decline in game activity, making sustainable development a primary challenge. As users leave and token prices drop, a negative spiral ensues, raising more doubts in the market about the sustainability of the “Play to Earn” model for related games, further exacerbating token price fluctuations and undermining investor confidence.

For investment institutions with reduced risk appetite, slower investment pace, and a wait-and-see approach, poorly performing blockchain game projects are not an ideal choice. According to a report by DappRadar, in the first quarter of 2025, Web3 game projects raised approximately $91 million, a decrease of 68% compared to the same period in 2024, and a 71% decrease from the previous quarter. This decline indicates a waning enthusiasm among investors for the sector, partly due to increased focus on artificial intelligence and real-world assets (RWA), which has diverted interest from investing in Web3 games.

The number of users and attractiveness of a project directly affect its ability to obtain funding and resource support. If user growth is sluggish or market response is tepid, even a strong development team may run out of time and funds before the final product is delivered. In recent years, this situation has likely been seen in several game projects that have been shut down.

Money grabbing, running away, and “garbage” creators

The abundance and efficiency of funds raised for failed projects is not simply a matter of “lack of money” or “too much money,” but rather an issue of capital allocation and usage efficiency.

Among a large number of shut-down games, there are a few projects that are lamentable. Their developers at least showed sincerity while creating the game, and perhaps due to bad luck, they were unable to produce a complete and better product. On the other hand, there are some development teams that entered the industry with the intention of hype and making money, so it’s no surprise that they ran away after producing “cyber garbage.”

Among them, Ember Sword is the most typical, and the level of negligence from its development team is astonishing.

In 2021, Ember Sword, riding the wave of the metaverse, began to gain recognition among more people. During this craze, Ember Sword attracted 35,000 players and sold them virtual land NFTs worth a total of $203 million. At that time, Ember Sword also completed multiple rounds of financing, with investors including video game streamer Dr. Disrespect, The Sandbox co-founder Sebastien Borget, and Twitch co-founder Kevin Lin.

In July last year, Ember Sword announced its entry into closed testing and showcased gameplay videos. However, the simplicity, roughness, and cheap feel of the graphics disappointed players greatly, with some commenting, “If this thing had come out in 1995, 11-year-old me would have been excited.” Other players angrily labeled the game a scam, claiming its graphics are even worse than the MMORPG RuneScape, which was released back in 2001. The inevitable shutdown of Ember Sword had already planted the seeds of its downfall at that time.

Ember Sword game test screen

With Ember Sword permanently shutting down, the servers offline, and Discord access restricted, the game’s EMBER tokens have plummeted to nearly worthless, with a market cap of only $80,000. The developers grandiosely stated, “This is not the ending any of us wanted”—of course it isn’t, as many community members have called Ember Sword a “scam.” The game’s player YouTuber CAGYJAN claimed on X that he lost at least $30,000 on the project between 2021 and 2025, and many users shared similar experiences in the comments below his post.

The Disillusionment of Player Ownership Commitment

Along with the shutdown of these Web3 games, there is also the fading illusion of truly owning game assets.

Web3 games that tout the banner of “the future of gaming” often claimed in their promotional language that they would “allow players to truly own game assets.” Theoretically, when characters, items, land, and other game assets adopt NFT technology, players become the true owners of these assets—these assets exist on the blockchain, independent of the game developers’ servers, and even if the game ceases operations, players can still retain and trade these assets.

But the reality is that so-called “decentralized assets” are still highly dependent on centralized game servers and the support of developers. When a game project is terminated or the developer withdraws, players’ NFTs and tokens essentially lose their practical use, and their value will immediately plummet. When Nyan Heroes announced its closure, its NYAN token fell by about 40% on that day, with the circulating market cap dropping below $900,000. As of May 23, the current trading price is $0.006, down 98.5% from the historical high of $0.45 reached in May 2024.

Regarding the issues brought about by the centralization of gaming projects, many industry professionals believe that if players cannot use their digital assets across different platforms and games, then they do not truly own these assets. However, even if the Web3 gaming industry establishes a unified standard on a technical level, the so-called “interoperability” still faces a deeper structural dilemma. The significant differences between game types make the cross-platform circulation of assets practically unfeasible.

Imagine a scenario where a game player possesses NFT characters, weapons, or mounts from a certain RPG game. What practical use could these assets have in an FPS shooting game, and how would their value be reflected in a simulation management game? Game assets carry a system of abilities and attributes, but these systems are often designed independently for each game, resulting in almost zero interoperability between games.

Moreover, for game developers, making NFT assets from other games “compatible” with their own game world means exponentially increased development complexity and maintenance costs. They not only have to design entirely new modeling, animations, and UI interactions, but also consider how to ensure that these external assets do not disrupt the existing game balance, which is a completely impossible fantasy. No commercial game developer would willingly take on such a burden for the sake of players’ “ownership.”

Therefore, when we further discuss the issue of asset ownership for players, we must recognize that the core problem of asset ownership in Web3 games is not about so-called certification and on-chain verifiability, but fundamentally whether it can be compatible and bound with a living game ecosystem. From this perspective, current Web3 games are no different from traditional games.

Why do blockchain game investors feel the pain more strongly when it comes to paying for games?

As game supporters provide funding for the ongoing development of projects, it is not unique to the blockchain industry; traditional crowdfunding game models have been in operation for over a decade. Since the early 2010s, crowdfunding platforms for games represented by Kickstarter have provided independent developers with a channel for funding support. In this model, players typically participate by pre-ordering games, obtaining merchandise, or receiving updates from developers.

According to a survey conducted by the University of Cologne, players participating in crowdfunding can be mainly categorized into three types: supporters who wish to help specific developers create games without external constraints, buyers who expect to receive a finished game product, and influencers who hope to impact the gaming industry through crowdfunding. The study points out that the first two types of supporters are more inclined to view their financial contributions as support for the developers rather than purely transactional behavior.

The game known as “the Cult of Selling Ships”, Star Citizen, has been crowdfunding on Kickstarter since October 2012. Over the past thirteen years, its developer, Cloud Imperium Games, has raised over $800 million through various means including paid Alpha testing, subscriptions, merchandise, microtransactions, and selling ships worth hundreds of dollars to players. Although the game has sparked some controversy, the community has rarely collectively protested against paying for game content.

When traditional game crowdfunding fails, the majority of players’ investments usually amount to just the cost of purchasing a game copy or related merchandise, which is relatively small. Even if traditional game projects flop, the financial loss for players is limited, and psychologically they often prefer to view it as supporting the developer rather than a direct monetary investment. Even if the project does not complete as scheduled, supporters often see it as support for the creative idea rather than a speculative failure.

However, in the Web3 model, players and speculators directly use more real money to purchase in-game assets or tokens, facing the real evaporation of funds when projects fail, resulting in a stronger sense of loss and betrayal.

Where should Web3 games go from here?

“What are the best and economically sustainable Web3 games? Currently, the answer to this question is simple—almost none.” Duncan Matthes, a researcher at Delphi Digital, pointed out that game development cycles are long and capital-intensive. Most quality games require more than 2 to 5 years of development time and demand a high level of expertise.

In addition, development budgets range from millions of dollars for mobile games to hundreds of millions for console and PC games—far exceeding the average funding for Web3 games. These factors make it difficult for gaming tokens to steadily grow, primarily driven by attention and ever-changing narratives.

In this context, industry insiders generally believe that Web3 game developers must first ensure the quality and playability of the game itself. Carlos Pereira, a partner at Bitkraft Ventures, recently pointed out in an interview with Blockworks that Web3 game development should prioritize the quality of the game itself rather than prematurely introducing tokens or NFTs for monetization, as the latter sets unrealistic expectations. If studios fail to meet these expectations through exits or adjustments to prior plans, they can find themselves in trouble.

For many Web3 game developers, in their excessive pursuit of the ownership and economic incentives brought by NFTs, they often overlook the core elements of the game, such as characters, narrative, gameplay experience, and community interaction. Shiti Manghani, the COO of Find Satoshi Lab, stated that players care more about whether the game is fun rather than the ownership mechanisms of in-game assets.

Returning to reality, the wave of shutdowns in Web3 game projects is due to multiple factors, including the high failure rate inherent in the gaming industry, difficulties in player retention under the Web3 model, issues with fund allocation and financing models, as well as the deterioration of the macro investment environment.

In the face of difficulties, Web3 games need to return to value-driven and technological essence to break free. They also need to return to their roots and make Web3 games fun first.

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