Why Are So Many Web3 Games Shutting Down in 2025?

In 2025, a wave of Web3 game shutdowns has impacted the industry. Projects with years of development and millions in investment have ceased operations, raising doubts about the sector’s future. This article reviews the main causes behind this trend and what may come next.

The Web3 industry faces a critical stage with numerous projects halted

In 2025, a series of Web3 game closures has drawn the attention of developers, players, and investors. According to DappRadar, at least 8% of active projects ceased operations in the second quarter of the year, highlighting a slowdown in a sector once seen as one of blockchain’s great promises.

The rise and fall of the Play-to-Earn model

Much of the initial growth of Web3 games was based on the Play-to-Earn (P2E) model, where players were rewarded with tokens or NFTs. However, the economic structure behind many projects could not be sustained over time.

• Poorly calibrated tokenomics: Many games introduced inflationary systems without clear mechanisms to sustain token value, causing steep price drops.
• Loss of player interest: By focusing on earnings rather than gameplay, user interest declined over time.
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Declining funding

Venture capital investment in Web3 games dropped 93% during the second quarter of the year. This has been a decisive factor for many teams to halt development.

• Lack of funds to continue: Titles like Ember Sword raised millions in early stages but failed to secure enough financing to sustain operations.
• Investor shift: Instead of Web3 gaming, capital has migrated to sectors such as artificial intelligence and memecoins.

Examples of Web3 games that shut down in 2025

The following cases illustrate how lack of funding, low player retention, and digital asset devaluation forced the closure of major projects this year:

• Ember Sword: MMORPG with NFTs and token $EMBER. Shut down after failing to secure funds, despite raising over $7M and $203M in land presales. Engine changes and missing features reduced viability.
• Nyan Heroes: Solana-based shooter with cats and mechs. Despite 1M test players and $13M raised, it couldn’t secure funding or publishing deals.
• The Mystery Society: Social deduction game with Web3 integration suspended after three years due to lack of resources, with plans to relaunch as a traditional game.

• Blast Royale: Mobile battle royale with token $NOOB. Shut down on June 30, 2025. Code was released as open-source.
• Rumble Kong League: NFT project with token $FAME, backed by Steph Curry. Liquidity issues and management changes led to its closure.
• Tatsumeeko: Lumina Fates: RPG backed by Binance Labs and Animoca Brands. Halted due to project complexity and market shifts.

Struggles to attract traditional players

Many Web3 games have failed to connect with audiences outside the crypto niche.

• Speculation-focused design: As John Linden (Mythical Games) noted, the mistake has been prioritizing economic expectations over quality gameplay.
• Entry barriers: The need to purchase NFTs or tokens to play discouraged traditional players and limited retention.

Pressure to sustain tokens

Launching tokens early often conditioned development, forcing teams to balance product building with market demands.

• Developer burnout: Titles like OpenSeason ceased development due to token pressure.
• Public impact of failures: Unlike traditional games, Web3 failures are visible early since communities are involved from the start.

Oversupply and low liquidity

Market saturation has also played a role.

• Fragmented demand: According to Gate.com, player demand is being outpaced by the sheer number of projects.
• Lower capital: With reduced liquidity in crypto, even strong projects face scaling challenges.

Is there room for optimism?

Companies like Netmarble, Ubisoft, Sega, and FIFA continue to invest in Web3 gaming, aiming to combine solid mechanics with decentralized economies. The key lies in moving away from the traditional P2E model and focusing on proposals that integrate classic gaming with blockchain utility.