The crisis of the Web3 gaming industry in 2025: The closure of 17 titles reveals the "essence of decline"

In 2025, the web3 gaming industry was hit by an unprecedented “wave of mass closures.” Seventeen titles that once symbolized the future of blockchain gaming, including Anterris, Blade of God X, and Blast Royale, all announced service shutdowns one after another. These facility closures are not merely individual corporate crises but reflect a structural crisis facing the entire web3 gaming industry. Industry data shows that investments in web3 games in Q1 2025 plummeted by 71% year-over-year to $91 million, with user numbers decreasing by 6% month-over-month, and market capitalization shrinking by 19.3% to $22.3 billion.

The Chain Reaction of Development Freezes Caused by Capital Shortages

The majority of closures in the web3 gaming industry share a common reason—funding shortages.

Anterris, developed by Battlebound, was put on indefinite hiatus due to capital exhaustion after four years of development. The development team explicitly cited “extremely challenging market conditions” and expressed that without successful new fundraising, restarting development was impossible, leading to a desperate situation. Similar fates befell horse racing games Derby Stars and Derby Race. Ham Sung-woo, CEO of HypeDream, revealed that since the Terra crash in 2022, the team suffered a fatal blow, losing a large amount of seed funding.

Even more tragic is Nyan Heroes. Despite attracting over one million players during pre-alpha tests on Epic Games and Steam, it was forced to end due to difficulties in raising funds. The developers at 9 Lives Interactive explored negotiations with publishers and potential acquisitions but ultimately announced to the community that “they could not secure the necessary funds to complete the game.”

Similarly, Kryptomon, Valeria, and Mystery Society paused development due to capital shortages. These titles, despite receiving support from investors, declared activity stoppages as market conditions worsened and their user bases failed to grow.

From web3 to web2: A Major Shift in Development Strategy

An interesting phenomenon is that some web3 game developers are choosing to completely abandon blockchain features.

The example of Jungle is emblematic. Once regarded as a pioneer in web3 gaming, this company actively engaged with the community through game nights and NFT sales during 2024. However, ultimately, under the pretext of “prioritizing project sustainability,” they separated all web3 integrations and shifted entirely to off-chain, free mobile game development.

A more serious breach of trust occurred with Blade of God X, where former executives accused Void Labs’ development team of abandoning web3 after raising $6 million from crypto investors. Former Chief Marketing Officer Amber Bella pointed out that the team canceled the roadmap, delayed salaries, ignored NFT benefits, and even falsely billed players for cash rewards.

Mystery Society is also considering re-releasing a version of the game on Steam without web3 elements. The developer described this as “considering the challenges currently faced by the web3 gaming industry,” effectively signaling a retreat from web3.

Security Breaches and Management Crises

Some web3 games are facing issues beyond mere funding shortages—security breaches and project management failures.

RoboKiden suffered a serious incident on December 25, 2024, when its smart contract on Avalanche was attacked, resulting in the theft of 38.7 million KIDEN tokens. Attackers exploited vulnerabilities to convert stolen tokens into WAVAX and transferred them to their wallets. Subsequently, three buyers who purchased at low prices moved the tokens to MEXC, making recovery even more difficult. The sharp decline in token prices caused severe damage to the team’s resources, ultimately leading to a halt in project updates.

Rumble Kong League’s development team announced they would “start from zero,” and now the project is effectively abandoned. Despite support from NFT launches and endorsements from celebrities like Stephen Curry, the situation has worsened to the point where the development team has stopped payments to the community, and a sale to a Brazilian company is anticipated.

Strategic Reorganization and Resource Consolidation

Some web3 games have been temporarily halted as a result of strategic management decisions.

Rough House Games, which operates Champions Ascension, temporarily closed servers for Champions—including features like Imperial Expeditions and Dudo—to focus all resources on the new project REACH, a blockchain distribution platform. The team stated, “REACH is a major new step and has the potential to redefine how game distribution is done,” justifying the temporary suspension of existing projects.

Similarly, The Walking Dead: Empires was scheduled to shut down on July 31, 2025, as part of Gala Games’ strategic reorganization. Existing players will be offered “equivalent alternative NFTs,” but since detailed information has not been disclosed, questions remain about the fairness of compensation.

Investor Sentiment Shift: Toward AI and Real Assets

The fundamental cause of the decline in the web3 gaming industry is a dramatic shift in investor psychology.

According to the latest industry analysis, while the overall cryptocurrency market remains strong, the web3 gaming sector is rapidly declining. A report from Footprint Analytics in January 2025 pointed out that investor interest has shifted toward AI and real-world assets. This phenomenon marks the end of the era when web3 games attracted intense enthusiasm from crypto investors.

Furthermore, increased competition within the industry is also a serious issue. Competition among multiple blockchains such as Wax, opBNB, and Aptos has led to user dispersion, making it difficult for individual projects to secure a user base. The number of active independent wallets per day has fallen to 5.8 million, with a 6% monthly decrease, indicating that the entire web3 gaming industry faces structural challenges.

Rapid Market Contraction and Industry Reorganization

The historic low of $91 million in web3 game investments in Q1 2025, a 71% decrease, vividly illustrates the industry’s severity. Trading volume also declined by 12.4%, and market capitalization shrank to $22.3 billion, down significantly from early 2024 levels.

A series of mass closures signals not a “healthy adjustment” but a warning of fundamental loss of investor confidence and business model collapse. As fundraising becomes more difficult and investments in existing projects are pulled back, many web3 gaming companies are following a common route: “funding depletion → development halt → service termination.”

The Future of the web3 Gaming Industry: Is a Path to Revival Visible?

The mass closures of 2025 demonstrate that the web3 gaming industry is facing not just a “market cycle” but a fundamental market restructuring. As investors shift their focus to AI and real assets, and projects abandon web3 integration, a significant amount of time will be needed for the industry to recover.

However, some developers are exploring survival strategies through strategic business pivots. Approaches include Jungle’s shift to free-to-play to prioritize sustainability, and REACH’s expansion into areas outside of web3 gaming. Different survival strategies are being tested.

Overall, unless the industry’s core issues—fundraising difficulties, lack of investor confidence, and insufficient user bases—are addressed, similar closure events are likely to continue. At the same time, the industry is moving toward a phase of rebuilding by surviving projects and development companies.