2025 Review: Crypto Gaming Collapses Due to Funding Shortage

Source: PortaldoBitcoin Original Title: Retrospective 2025: Cryptocurrency Games Collapse Due to Funding Shortage Original Link:

Funding Shortage Causes Collapse of the Crypto Gaming Industry

2025 has been a year of shattered dreams for many in the crypto gaming space. But this dream didn’t die on its own—it was suffocated by risk investors who no longer believed in it, and more importantly, they stopped investing.

In 2025, many well-known crypto games shut down operations. These closures led to developer layoffs, abandoned player bases, and the entire digital asset collection becoming nearly worthless.

Some games had promised to operate permanently, claiming that the power of blockchain would allow them to run indefinitely—an promise that has clearly been broken.

In recent years, the video game industry has faced broader difficulties, including large-scale layoffs. It’s easy to say that all these game closures are simply because they weren’t good enough.

While we haven’t seen any games of Fortnite’s quality (or scale) shut down this year, we have seen some genuinely promising games cease development permanently. The truth about the crisis in crypto gaming is that risk investors have realized that investing time or money in this area is simply not worth it.

Most crypto games that shut down in 2025 did so because developers claimed a lack of funding to continue development. In other cases, developers said the game had completed its cycle or that the team was migrating to new projects—mainly outside the crypto and gaming sectors.

“My guess is that most of them probably raised funds in 2022, and that’s how long they could sustain,” said the CEO of a leading venture capital firm. “For years, funding for games from venture capital has been scarce.”

Other industry experts also noted that venture capital funding has begun to dry up, leading to multiple game closures.

The founder of a VC fund stated that due to changes in investment terms—such as increasing the total token supply—“all trust between investors and game developers has disappeared.” He said he is now “more cautious” about investing in games.

The Web3 director of a game development company also said that, through conversations with his venture investors and crypto game developer network, he sensed a “general” sentiment that funding has dried up.

“The whole situation is terrible because even if you have a good venture fund, limited partners have this theory that crypto companies should achieve double returns in half the time of traditional funds. So they want absurd returns, no patience,” said a senior industry insider. “By the end of 2023, mid-2023, crypto funds stopped investing and issuing checks.”

Game development is indeed a tough business, even outside the crypto realm, with many large titles canceled this year. Adding cryptocurrency to this already fractured equation attracts profit-hungry investors and exposes your failures to a larger audience—thanks to many crypto game developers opening their games as a way to attract investment and community support.

One developer explained that their game had “one of the largest audiences in Web3,” with strong core metrics like initial player retention. However, he claimed investors didn’t care about any of that and instead told him to increase social media accounts, pay influencers to promote the game, and do other “nonsense.”

He believes investors simply don’t care about the game itself. The game shut down in February due to lack of funding.

The CEO of a leading venture capital firm said that most Web3 investment funds have started prioritizing tokens over seeking equity in games. He explained that traditional VC firms usually invest with a five-year horizon to exit via an IPO. But since this is rare in the gaming industry—let alone in crypto gaming—these funds are eager to see crypto games launch tokens so they can exit their investments.

“For many game developers, this is more of a last-ditch plan, so when the game/community development isn’t mature enough, it accelerates this event,” he said.

However, this approach introduces a series of new challenges because crypto game tokens are facing the same difficulties as game development this year. As of writing, according to CoinGecko, none of the top 150 cryptocurrencies are gaming tokens, and only two are in the top 200.

A token from a blockchain platform ranked in the top 100 cryptocurrencies earlier this year, but its value has fallen over 85% in the past 12 months. Despite one successful game with a passionate fan base, the token of a certain game studio has dropped 89% from its all-time high in March, as of December 15.

“Tokens are simply not good investments. People don’t trust them. And for good reason,” said an analyst. “Returns from venture capital come from tokens. The public no longer values tokens—even projects that previously had a market valuation of hundreds of millions of dollars or any decent applications or games.”

“Investing venture capital into any minimally credible team with an initial valuation of $20-50 million (which is quite common) is a guaranteed success,” he added. “Now, the probability of loss is 90%.”

Similarly, this token-centric approach has put unnecessary pressure on developers.

A co-founder of a closed game said adding tokens to the equation is a “real nightmare.” He claimed it distracted the team from focusing on game development and maintaining token prices, all while dealing with pressure from players and retail investors.

Additionally, a crypto platform has completely changed the token landscape, as more short-term profit opportunities flood the market, causing investor attention to decline. An industry veteran said that both venture funds and retail investors have lost interest in long-term crypto game tokens; they just want the next thing that shows daily profits.

Now that the crypto boom has subsided, funds are flowing into new narratives. A manager at a gaming company believes that artificial intelligence and real-world assets are the two asset classes currently shifting attention and capital away from crypto gaming. This can also be seen in multiple crypto game studios migrating to AI projects—one of which cited funding issues as the reason for the switch.

Ultimately, both venture investors and individual investors are tired of the downturn in crypto gaming investments and are choosing to put their money elsewhere. As a result, crypto gaming is collapsing under its own weight, leaving players abandoned.

The creator of a collectible card game established a crypto gaming recovery fund to help abandoned players recover some value from their now-worthless crypto assets. The project invested $500,000 worth of tokens and crypto assets into the fund and invited other projects to participate. However, no major projects joined.

Other games have made it difficult for players to get refunds easily. Fortunately, some community members managed to get refunds from their banks for NFT purchases, claiming that the studios did not deliver promised content at the time of sale.

Economic losses are one thing, but some crypto gamers bought these assets to participate in development and join expanding communities. For some, it’s like a one-sided rupture that destroys their sense of belonging and routine. Everything is lost.

“Many people use video games as an escape, and when you find a game or universe to immerse yourself in, you do so out of passion,” said a content creator. “When that game or story ends, you not only lose the game but often also the friends and community built through it.”

“It leaves a void in your life, far beyond simply no longer having a game to play,” he added. “In many ways, it’s like losing a part of your daily life.”