Is Blockchain Gaming Dead?
According to data from CoinGecko, after Immutable (IMX) fell out of the rankings on Monday, there are currently no gaming tokens among the top 100 cryptocurrencies by market capitalization. Although a few gaming tokens still linger at the bottom of the CoinMarketCap rankings, the conclusion is almost unanimous: the performance of top gaming tokens remains sluggish.
Despite the fact that crypto gaming reached a peak in mainstream markets and among players over the past year, the related tokens have quickly receded, and newly issued tokens have struggled to gain attention.
Data from the Wayback Machine shows that just a year ago, there were still six gaming tokens among the top 100 cryptocurrencies by market capitalization. At that time, the total market capitalization of CoinGecko’s gaming token category was $29.3 billion. However, even though more tokens have been released during this period, that figure has plummeted by 68%, leaving only $9.24 billion.
The Ethereum gaming platform Immutable was once the last bastion, but its token IMX has seen a significant decline over the past year.
According to CoinGecko, in December 2023, IMX was the 31st largest cryptocurrency by market capitalization globally. At that time, the investment firm VanEck expressed strong confidence in Immutable, predicting that IMX would enter the top 25 in 2024. Even a year ago today, IMX was still ranked 34th.
However, since then, IMX has plummeted by 87% over the past year, due to reasons including the overall cooling of the crypto gaming market and an investigation by the U.S. Securities and Exchange Commission (SEC) (Immutable recently stated that this investigation has concluded).
In just the past week, IMX dropped by 29%, whereas Bitcoin’s decline was only about 10%. IMX became the token with the largest decline in the CoinGecko top 100 that week, until it slid out of the rankings and is now ranked 103rd.
Other major gaming tokens that once made the top 100 have also faced severe setbacks over the past year. For example, Gala Games (GALA) has dropped by 80% (with a 19% drop this week), and The Sandbox (SAND) has seen a 64% decline during the same period (with a 16% drop in the past 7 days).
Those once-glorious legacy gaming tokens have significantly declined since their peak in 2021. Even recently launched major gaming tokens have not been able to escape the predicament. The Pixels (PIXEL) token launched last year has plummeted by 98% from its peak, Notcoin (NOT) has dropped by 94%, and Hamster Kombat (HMSTR) has also declined by 68%.
Last week, Gunzilla Games’ popular game Off the Grid and its Avalanche L1-based GUNZ network launched the GUN token, marking the largest gaming token issuance in months. However, even though Off the Grid has yet to integrate GUN into the game, the token has already fallen 62% from its peak.
Higher Quality Games Are Emerging
Off the Grid has been rated by Decrypt as the best blockchain game of 2024 (GG Game of the Year), having made a splash in the market last fall and positively influencing the perception of the current quality of crypto games.
This stands in stark contrast to the 2021 “Play-to-Earn” craze, exemplified by the simple monster battle game Axie Infinity.
“The crypto gaming market in 2021 was completely narrative-driven, with almost no real products, aside from a few exceptions like Axie,” said Treeverse game founder Loopify in an interview with Decrypt. “Now, several years later, there are indeed more products, but they still need time and have not truly penetrated the mainstream market.”
At that time, Axie Infinity was riding high, but its in-game economy, token value, and player base suffered severe setbacks in early 2022. Now, a wave of higher-quality games has emerged, some attracting millions of players—even though popularity and reputation do not always align.
For instance, Hamster Kombat attracted 300 million players last summer through its “Tap-to-Earn” Telegram game, despite its simplistic and repetitive gameplay. However, since launching its token in September, players have left due to price issues, and the development team has been slow to release subsequent seasons.
Off the Grid became one of the rare success stories in October of last year, with its public offering becoming one of the most successful in the blockchain gaming space, even topping the Epic Games Store free games list, surpassing Fortnite. Additionally, the farming simulation game Pixels and the card battle game Parallel have received acclaim from players and attracted a growing audience, while the survival game Crypto: The Game has gained niche popularity through viral spread.
“I actually think the current state of crypto gaming is quite solid,” said GIA community manager Jaxie in an interview with Decrypt. “We now have some excellent games starting to launch, which may bring millions of players into the crypto ecosystem.”
But There Are Missteps
Creating an outstanding game takes time—just look at Rockstar Games, which has spent seven years developing Grand Theft Auto 6, backed by a large team and significant funding. This also explains why, despite the crypto gaming craze having emerged years ago, we are only now starting to see some results.
However, hasty crypto games often end in failure. The Illuvium series is a typical example. According to data from CoinGecko, Illuvium’s token (ILV) was launched in 2021 and quickly soared to a peak of $1,749, generating immense market expectations for the project. However, when the team launched three interconnected games in July 2024, the results fell short of expectations.
Illuvium’s actual performance has been disappointing, with co-founder Kieran Warwick admitting in February this year that criticisms regarding gameplay are “valid” and plans to reform the game comprehensively. Today, the price of the ILV token has plummeted by 99.4% from its historical peak, currently sitting at $10.60.
The Core Issue of Crypto Gaming: Game or Token?
“99% of crypto games are not fun,” said a member of the meme coin MLG team, known as Munnopoly, in an interview with Decrypt. “They seem more like tokens first, then games. I feel they have been struggling to bridge the gap with Web2 players.”
The various failures in the crypto gaming industry indicate that developing quality games requires time and patience, while projects eager to launch with a lack of depth will only disappoint players and lead to a plummet in token value.
Once highly anticipated, Deadrop seemed poised to bridge the gap between traditional gamers and Web3. Developed by former creators of Call of Duty and Halo, along with popular streamer Dr. Disrespect, the game attracted mainstream players’ attention. However, after the development team fell out with Dr. Disrespect over allegations of inappropriate conversations with minors, the studio announced its closure after running out of funds in January this year.
“I think the cancellation of Deadrop is a major setback for the field,” content creator MayorReynolds stated. “This game was one of the few with the potential to stand on its own based solely on the game itself and integrate Web3 features in a way players could understand.”
However, projects halting operations due to financial exhaustion are not isolated incidents. Recently, the blockchain gaming ecosystem Treasure announced a massive restructuring and layoffs due to financial issues. According to Blockworks’ report last week, the developer of Shrapnel, Neon Machine, is also facing a funding crisis.
The development team of the Ethereum game The Mystery Society paused development on the social deduction game in February of this year, with co-founder Chris Heatherly candidly stating that the blockchain gaming industry is filled with destructive behavior.
“Greed and stupidity are killing almost all participants before they can prove themselves in this field,” Heatherly told Decrypt. “We need to focus on building healthy on-chain business models instead of continuing this fallacy of ‘token issuance is a Ponzi scheme.’ Every Web3 game founder I know feels frustrated and exhausted; everything they’re doing now is just for survival, and the real belief is fading.”
Reshaping the Narrative: Investors’ Attention Shifts
According to Loopify, the recent issues with gaming tokens partially stem from investors shifting their focus to crypto assets that are more likely to yield quick profits. He noted that since the last bull market for gaming tokens, investors’ interests have gone through meme coins, SocialFi, and recently to the artificial intelligence sector.
As each wave of investment fervor flows toward new asset classes, attention to gaming tokens has gradually declined. These tokens still exhibit high volatility in the market, but the recent declines have been even more pronounced.
“The narrative of crypto gaming has long vanished, and there are fewer investors willing to buy in because the crypto industry inherently follows trends,” Loopify stated in an interview with Decrypt. “Even if these games are of higher quality and offer low-cost investment opportunities through NFTs, tokens, or equity, the market cannot instantly price them effectively. It takes time to reflect.”
Jaxie raised a more fundamental question: do crypto games really need their own tokens? He believes that what players truly care about is owning their skins through blockchain, not a game-specific token. While these tokens can create speculative excitement for a project, once the token crashes, its negative impact can shake the community and create unrealistic expectations.
“Most games shouldn’t even use their own tokens,” he stated. “Launching a token is more like a marketing tool or a means to please existing users—don’t get me wrong, I’ll also go for airdrop farming—but it’s not a truly useful game function token.”
Recently, tap-to-earn games have sparked a wave of token issuance, with each game needing tokens to incentivize players to keep clicking. However, these tokens often lack practical utility after issuance, leading to a rapid decline in value. Similar stories have repeatedly played out, from Hamster Kombat to Catizen and Zoo.
Moreover, the trend of play-to-airdrop last year, which distributed tokens to players, has left players with almost no incentive to hold these tokens long-term. Like the earlier Play-to-Earn craze, this model initially attracted significant attention and enthusiasm, but the eventual collapse was equally painful for both projects and players.
“Most Web3 players are actually just speculators in the crypto realm, with the goal of making money,” Jaxie bluntly stated. “The lifecycle of most crypto games is only 90 days, after which the number of players will significantly decline—so why contribute to an economy you know will shrink dramatically in three months?”
This article is a collaborative reprint from Shen Chao.