The decline of Web3 games becomes evident: the end of 17 titles in 2025 and a turning point for the industry

Once praised as the future of interactive entertainment, the web3 gaming industry in Japan is now facing a real test. The closure of 17 web3 games throughout 2025 reflects not just individual project failures but highlights the structural challenges faced by the entire blockchain gaming sector. Funding shortages, technical vulnerabilities, and market devaluation—these issues have struck the industry simultaneously, causing the once optimistic vision to retreat significantly.

Chain of Closures in Web3 Games Triggered by Funding Shortages

Anterris, Nyan Heroes, Kryptomon, Valeria: these web3 games have halted development or been indefinitely postponed due to the exhaustion of their developers’ funds.

Anterris saw its developer Battlebounds forced to shut down after four years of development, citing funding shortages and “extremely challenging market conditions.” Despite attracting attention as a Pokémon-style creature collection RPG, the project was ultimately frozen due to an inability to secure new funding. This was driven by a decline in overall market investment enthusiasm.

Nyan Heroes also faced difficulties in securing funds. Despite conducting four pre-alpha tests on Epic Games and Steam platforms, and attracting over one million players, developer 9 Lives Interactive struggled with fundraising and announced the project’s end. The game, supported by celebrity endorsements and NFT launches, was rendered powerless by the market downturn.

Kryptomon functioned as an NFT breeding RPG but was put on hold due to funding shortages. Its attempt to build a rental marketplace through collaboration with Playdex also failed to overcome financial issues.

Valeria similarly suspended mobile game and trading card game development and support due to funding depletion. Currently, it continues operations while seeking investors and potential buyers.

Technical Vulnerabilities and Security Risks Exposed in Web3 Games

The advantages of blockchain technology promoted by web3 games also entail significant risks. RoboKiden exemplifies this vulnerability.

On December 25, 2024, a security flaw was discovered in RoboKiden’s smart contract on Avalanche, allowing attackers to steal 38.7 million $KIDEN tokens. The lack of ownership verification was a security lapse that threatened the entire project’s existence. Some of the stolen tokens were traded at low prices, causing further damage. This incident revealed the fragility of security systems in the industry. Following the hack, RoboKiden effectively halted updates.

Blade of God X also faced trust issues. A former chief marketing officer accused the project of abandoning its Web3 roadmap, delaying team salaries, and ignoring NFT-related benefits promised to players. Allegations also emerged that a Web2 team used internal accounts to conduct misconduct, exposing a contradiction where the project claimed to be Web3 but was essentially operating as Web2.

Strategic Shifts and Management Decisions Leading to Cancellations and Suspensions

Some web3 games were discontinued not due to funding issues but because of strategic decisions by their companies.

Champions Ascension, a fighting game developed jointly by Rough House Games and Overworld, won the 2024 Gam3 “Best Fighting Game” award but was temporarily suspended to focus development resources on a new project, “REACH.” This was a strategic choice prioritizing other business opportunities rather than a failure in the web3 space.

Jungle shifted from a Web3 “play-to-earn” model to fully off-chain, free mobile game development. After a year of community engagement, the project prioritized sustainability and decided to completely abandon Web3 integration.

Loot Legends was targeted for closure by parent company HYCHAIN’s management. Despite having over 25,000 active players as a Web2 game, the company chose to concentrate resources on its platform “HYTOPIA,” leading to its end.

Tatsumeeko was also canceled despite multiple playtests and strong community involvement, citing a lack of confidence in its core concept and progress. Concerns over sustainability led to the halt of its development in the web3 space.

Multiple Closures of Web3 Games: Other Major Cases

Derby Stars/Derby Race ended due to long-term funding difficulties following the Terra crash. Attempts to migrate from Polygon to Immutable were made, but failed to attract investment or users, leading to closure.

Blast Royale discontinued development and shut down servers on June 30, 2025. However, the game was open-sourced, allowing community members to continue development.

Mystery Society paused development due to funding difficulties. The team is considering re-releasing a version without Web3 elements on Steam.

Goombles launched in 2024 with only 339 players and was unable to support further development, leading to its discontinuation.

MetalCore has no official statement but is believed to be effectively closed due to halted updates and server shutdowns.

Rumble Kong League received support from NFT launches and celebrities like Stephen Curry but failed to meet expectations, leading to team departures. There are reports of a potential sale to a Brazilian company.

The Walking Dead: Empires is scheduled to end on July 31, 2025, due to Gala Games’ strategic restructuring. NFT holders in the game will be offered alternative NFTs, but details remain uncertain.

Investment Plummets by 71%: The Reality of the Web3 Gaming Industry

The failures of these individual projects are rooted in the deteriorating investment environment across the industry. According to DappRadar, investment in web3 games in Q1 2025 declined by 71% year-over-year, falling to just $91 million. The user base also decreased by 6% month-over-month, with daily active wallets shrinking to 5.8 million.

Footprint Analytics’ research reveals an even more severe situation. While the overall cryptocurrency market remains strong, the web3 gaming sector experienced a sharp decline in January 2025. Market capitalization dropped by 19.3% to $22.3 billion, and trading volume decreased by 12.4%. Factors such as platform consolidations, waning investor interest, and competition among chains like Wax, opBNB, and Aptos have collectively pressured the web3 gaming market.

The Real Reasons Why Investors Are Leaving Web3 Games

The sharp decline in investment is not just market fluctuation but indicates a strategic shift of funds. Investors are redirecting capital from web3 games toward AI technologies and real-world assets (RWA). This reflects a de facto vote of no confidence in blockchain gaming’s ability to generate expected profits or market size.

The fundamental value proposition of “play-to-earn” web3 games has become obsolete in the face of token price declines and tightening regulations. Many players prioritized rewards over gameplay, and as economic models deteriorated, projects entered a vicious cycle of decline.

Conditions for the Survival of Web3 Games

Despite the end of 17 titles, the web3 gaming industry has not disappeared entirely. Instead, this dramatic淘汰 process is an essential step toward industry maturity.

The conditions for surviving web3 games are clear. First, excellent core gameplay. Web3 elements and NFTs should be supplementary features; the fundamental fun of the game must be compelling. Second, a realistic and sustainable economic model that does not rely solely on token prices, providing healthy gameplay value. Third, rigorous security and compliance measures to prevent hacking and misconduct.

From 2025 to 2026, the web3 gaming industry is at a turning point. The era supported by massive funding and excessive expectations is ending, giving way to a “true era of competition” where only titles with genuine strength will survive.