Web3 gaming faces collapse as 300 projects shut down
Crypto gaming investment drops sharply, but big studios stay committed
Investments in crypto games dropped to a two-year low, yet major gaming companies like Sega, Ubisoft, and FIFA continue to back Web3 projects.
According to DappRadar, Q2 2025 was difficult for blockchain games: daily active users declined by 17%, and over 300 gaming dApps shut down.
DappRadar analyst Sara Gergelas reported that only $73 million was raised in the second quarter—a 93% drop year-over-year—with most of the funding going into infrastructure rather than games.
Notable examples include:
- Ultra, which raised $12M for its publishing platform expansion,
- MagicBlock, with $7.5M for a real-time game engine on Solana,
- Cooking.City, which secured $7M for a culinary play-to-earn game.
“Dozens of Web3 games have shut down. From overhyped MMORPGs to play-to-earn titles, many couldn’t survive the harsh market—be it due to investor fatigue, poor retention, or unsustainable tokenomics,” Gergelas noted.
Industry dominance percent by UAW in the dApp ecosystem. Source: DappRadar
This downturn surprised many. A late 2024 Binance survey had shown that nearly half of users expected AI tokens and memecoins to lead in 2025—but many of those sectors have become oversaturated or hype-driven without real adoption. The same applied to Web3 gaming, where early play-to-earn models collapsed or stalled.
Major Game Closures in Q2:
- Ember Sword, canceled after failing to secure launch funding
- Nyan Heroes, collapsed after its token lost most of its value
- Realms of Alurya, paused after a key grant was revoked
- Mojo Melee, pivoted to building AI tools for filmmaking
- The Walking Dead: Empires, playable only until end of July
But it's not over yet
Behind the scenes, momentum still builds. In February, Immutable co-founder Robbie Ferguson stated that multiple billion-dollar gaming firms are now considering launching their own tokens.
Ferguson believes that 2025 is compressing years of development into months. He expects this shift to result in higher-quality blockchain games and more sustainable token economies that genuinely benefit players.
Some positive trends also emerged in Q2:
While daily activity dropped to 4.8 million users—the lowest since early 2023—several blockchains and games showed growth.
- opBNB led in active wallets,
- WAX led in total transactions, signaling deeper engagement.
- Newer chains like Aptos, Sei, and SKALE showed traffic gains.
Off the Grid, still in testing on GUNZ (Avalanche subnet), began attracting real users on its mainnet.
As we wrote, Web3 shooter Off the Grid to launch on Steam despite blockchain game ban
