A recent report indicates that Web3 games are undergoing a severe industry reshuffle, with 93% of projects having shut down, and an average lifespan of only four months. The report, jointly released by ChainPlay and Storible, analyzed over 3200 GameFi projects (games that integrate gaming with decentralized finance), revealing the reality behind the high volatility in the industry. However, the report also emphasizes that the bursting of the bubble does not equate to the industry cooling off, as such ups and downs are normal for the development of crypto startups.
During the cryptocurrency bull market in 2022, Web3 games once became a focal point of the market, attracting billions of dollars in investment. Although the price of Bitcoin has now been pushed above $100,000, the sustainability of most Web3 games remains a concern. ChainPlay found that 93% of Web3 game projects have seen their prices fall more than 90% from their peaks, while daily active users are less than 100. This has become the standard for judging whether a project is "dead."
The data in the report comes from Dune Analytics (prices) and DappRadar (user data), with the creation time of project tokens and the time when they hit the "death standard" defining their lifecycle. Data on venture capital returns and financing comes from multiple databases integrated by ChainPlay, such as CryptoRank and ChainBroker, with data up to November 2024.
The data shows that since the Web3 gaming craze began, an average of 316 new projects are launched each year, but 262 of them quickly disappear. ChainPlay points out that a 93% failure rate means the industry is extremely unstable, with most projects struggling to maintain player interest and investor confidence, and truly long-lived projects are very rare.
Particularly alarming is that the token prices of these projects have fallen an average of 95% from their peaks, highlighting the market's extreme volatility and speculative nature. The report notes that after a brief excitement, most investors quickly experience a sense of defeat. Compared to other crypto assets, the average lifespan of Web3 games (four months) is much lower than that of meme coins (one year) and traditional crypto projects (three years). This further confirms that Web3 games are among the riskiest and shortest-lived tracks in the entire crypto ecosystem.
The report points out that the Web3 gaming craze of 2022 is now in the past, and the current industry situation indicates that Web3 game projects are still struggling to provide a sustainable long-term experience, with players and investors beginning to recognize the inherent speculative risks.
In terms of profitability, although the failure rate is high, the profit outlook varies for different types of investors. Data from ChainBroker shows that retail investors participating in initial decentralized offerings (IDO) have an average return of 15%. However, due to token lock-up restrictions, many retail investors, even if theoretically profitable, may not be able to cash out in time during market crashes, turning "paper profits" into actual losses. Against the backdrop of most projects falling more than 95%, a 15% average return does not compensate for the risks.
ChainPlay points out that the "financial freedom" originally promised by Web3 games has been shattered by reality, with many investors holding tokens that have become illiquid assets, even approaching zero, turning once dreams into harsh lessons.
The performance of venture capital is even more polarized. Overall, the average return on venture capital is 66%, indicating that top investors can still achieve substantial profits. About 42% of venture projects achieve positive returns, with return rates ranging from 0.05% to 1950%; while 38% of projects experience significant losses, with declines ranging from -2.5% to -98.8%.
The highest returns among venture capital include: Alameda Research (713.15%), Jump Capital (519.11%), Delphi Digital (490.5%), Binance Labs (338.52%), and 3Commas (267.29%). These companies, mostly top capitals in the crypto industry, show that professional venture capital still has a high profit space in selecting projects.
Conversely, the worst-performing institutions, such as Golden Shovel Capital (-97.4%) and Infinity Capital (-97.1%), have not been able to withstand the severe fluctuations in the industry, becoming victims of the bubble burst. The report points out that this polarization phenomenon highlights the high uncertainty of the Web3 game market, where top capitals can seize opportunities in high volatility, while most followers are easily trapped.
Regarding financing trends, the report states that Web3 games still have appeal. Although there is a significant decline from the peak period in 2022, there is still $859 million flowing into the field in 2024, only a 13% decrease from 2023, and about an 85% decrease from the $5.56 billion in 2022. ChainPlay points out that this change reflects investors becoming more cautious, but not completely withdrawing, instead more inclined to bet on high-potential projects.
As of 2024, Web3 games have completed 221 rounds of financing, an increase of 44% from last year, although still lower than the 358 rounds in 2022, but it already shows that the industry heat is gradually warming up. Investors are no longer blindly chasing new concepts, but are more focused on project quality, team capabilities, and the construction of sustainable ecosystems.
In summary, although the Web3 game bubble has burst, the industry has not ended. ChainPlay believes that future opportunities still exist, the key is whether projects can move away from short-term speculative thinking and truly build sustainable game experiences and value-driven ecosystems. Notably, some projects like "Pirate Nation" and "Hamster Kombat" (based on Telegram) still attract millions of users, showing that Web3 games do have a market, but the market is shifting from "quick money thinking" to "patient value."
ChainPlay finally points out that the next phase of Web3 games will depend on whether it can complete the transformation from speculative hype to lasting growth. Unlike meme coins or other crypto assets, games themselves need to build content, gameplay, communities, and other multiple ecosystems, which requires teams to have stronger development capabilities and long-term thinking. Although the future is still full of uncertainties, as long as it can move beyond the false prosperity of 2022, the field is still likely to welcome a rebirth.
