Although the Web3-based game ecosystem has received large investments of up to 15 billion dollars in the last three years, it could not capture the expected interest in the market. According to the current report prepared by Caladan, approximately 93 percent of GameFi projects have ceased to be almost completely active, and the value of tokens in these projects has decreased by an average of 95 percent compared to the 2022 peak. Additionally, it is stated that investments in game studios will decrease by 93 percent by 2025.
Failure in the shadow of speculation
In the grand scheme of things, investors and game studios poured billions of dollars into token and NFT sales first; Before it built its own user base, the focus was on tradable digital items rather than the games themselves. In the subsequent period, capital flowed into different technology areas such as infrastructure and artificial intelligence. As a result, more than 300 Web3 games were withdrawn from the market and the industry was unable to sustain the industry’s rapid growth.
The report emphasized that especially individual and corporate initiatives prioritize financial models that offer future promise over the entertainment element that players are interested in. GameFi, which started with this approach, the model of earning income by playing, failed to keep the majority of those who want to play games on the platforms permanently.
“There was a significant loss of capital at every layer simultaneously; venture capital, individual NFT buyers, gaming unions, and Telegram’s 300 million tap-to-earn stream were negatively affected by this process. Hamster Kombat lost 96 percent of its users within six months of launch. The YGG gamer union token lost 99.6 percent of its value compared to its November 2021 peak.”
Billions donated, projects that fail
The report also includes detailed examples of closed projects. Pixelmon, which collected $ 70 million from NFT sales in 2022, has still not been able to offer a released game even after four years. Ember Sword spent $18 million during its seven-year development process and ceased operations last year without giving a refund to users. The lawsuit filed against one of the co-founders of Gala Games for allegedly transferring $130 million worth of tokens for personal purposes continues. Video game giant Square Enix quietly terminated the Symbiogenesis blockchain project last summer.
Axie Infinity stood out as the most used project in the industry for a while. However, according to DappRadar’s data, the number of daily active users, while it was 2.7 million at its peak, has dropped to 5,500 today. Citing Coda Labs’ survey as a source, Caladan also points out that the rate of those who experience crypto-based games did not exceed 12 percent even during the mania period.
The address of the money has changed, the infrastructure has moved forward
While 62.5 percent of Web3 venture capital investments will go to game projects in 2022, this figure has fallen to single digits by 2025. Investments have shifted to artificial intelligence, tokenization of real-world assets, and new on-chain infrastructures. Animoca Brands, one of the companies that invest the most in the ecosystem, is reducing the portfolio it allocates to game projects to 25 percent and shifting its weight to stablecoins, artificial intelligence and real asset tokens.
In addition, while the project development period lasted three to five years, the relevant tokens were traded instantly in the market. When the teams implemented the project, most tokens had already lost their value sharply. As a result, the rapid growth in the sector caused by an artificial wave of demand retreated at the same pace as the interest faded. According to DappRadar alone, more than 300 blockchain gaming projects have been closed, while the remaining investments are increasingly directed towards infrastructure.
Once presented as the “future of the gaming industry,” Web3 gaming is now viewed as a cautionary example of the potential harms of financial engineering without product and market fit.
