GG Story of the Year 2025: Crypto Gaming Collapses as Funding Dries Up – Decrypt

This was the year that, for many, the crypto gaming dream died. But that dream didn’t end on its own—it was smothered by venture capitalists who stopped believing in it, and crucially, stopped investing in it.

In 2025, numerous notable crypto games shut down their operations, which Decrypt has tracked throughout the year. These closures left developers unemployed, dedicated player bases abandoned, and entire collections of digital assets rendered practically useless.

Some of these titles even promised to be forever games, claiming the power of the blockchain would keep it running indefinitely—a promise that was evidently broken.

The video game industry has faced broader struggles in recent years, including widespread layoffs, and it’d be easy to say that all of these games closed down because they simply weren’t good enough.

While we didn’t see a game with the quality (or scale) of Fortnite go offline this year, we did see some genuinely promising titles permanently halt development (see: Deadrop). The truth about crypto gaming’s existential epidemic is that venture capitalists have realized it’s simply not worth their time or money.

The majority of crypto games that shut down in 2025 did so as developers pointed to a lack of funding to continue development. Elsewhere, developers stated that games had run their course, or that teams were pivoting to new ventures—mostly those outside of crypto and gaming.

“My guess is that most of them probably raised money in 2022, and this is just how long their runway has lasted,” Robby Yung, CEO of investments at venture capital firm Animoca Brands, as well as CEO of crypto game The Sandbox, told Decrypt. “Venture capital funding in gaming has been dry for years,” he added.

Several other industry experts also told Decrypt that VC funding has started to disappear, resulting in a slew of games shutting down.

Beanie, the pseudonymous founder of GM Capital, said that “all trust is gone” between investors and game makers due to a history of developers changing the terms post-investment—such as increasing the token total supply. Beanie said he’s now “more cautious” when making gaming investments.

Theodore Agranat, director of Web3 at Off the Grid maker Gunzilla Games, also said that speaking to his network of venture capitalists and crypto gaming devs, it feels like an “open” and “universal sentiment” that funding has dried up.

“That whole situation was fucked because even if you had a good VC, their [limited partners] had this… thesis that crypto companies should have twice the return in half the time of a regular fund. So they wanted these redonkulous returns and had no patience,” Chris Heatherly, game industry veteran and former CEO of Great Big Beautiful Tomorrow—developer of the shuttered The Mystery Society—told Decrypt. “Towards the end of 2023, mid-2023, crypto funds stopped deploying and writing checks.”

Game development is indeed a tough business even outside of crypto, with massive games like Wonder Woman, Kingdom Hearts Missing-Link, and a new Titanfall game all getting cancelled this year. When adding crypto to that already fractured equation, you’re also attracting profit-hungry investors and putting your failures on a more public stage—thanks to many crypto developers building in the open as a way to attract investment and community support.

Heatherly explained that The Mystery Society had “one of the bigger audiences in Web3” with strong underlying metrics, such as early player retention. However, he claims that investors did not care about any of this, and rather told him to grow his social media accounts, pay for influencers to promote the game, and other “phony-baloney bullshit.”

Investors did not care about the game, he believes. The Mystery Society shut down in February due to a lack of funding.

Yung told Decrypt that most Web3 investment funds have moved to being “token-first,” rather than wanting equity in the game. Traditional VC firms, he explained, usually invest with a five-year window to exit via an IPO, or initial public offering. However, as this is rare in gaming—let alone crypto gaming—these funds are instead eager to see crypto games launch tokens so they can exit their investment.

“For many game developers, this was further down their roadmap, so it presents an issue of bringing [the token generation event] forward when maybe the game/community development isn’t mature enough yet,” Yung told Decrypt.

This approach offers a new set of challenges, however, as crypto gaming tokens have struggled just as much as game development this year. At the time of writing, there are no gaming tokens in the top 150 coins by market cap, according to CoinGecko, and only two amongst the top 200.

Immutable’s IMX token, which sat in the top 100 coins earlier this year, has plummeted in value by more than 85% over the last 12 months, according to CoinGecko. And despite running a strong game in Off the Grid with a passionate fanbase, Gunzilla Games’ GUN token is down 89% from its all-time high set in March, as of December 15.

“Tokens just aren’t investible. People don’t trust them. And for good reason,” Beanie said. “The VC payback is via tokens. The public isn’t valuing tokens anymore—even from established projects that once had baseline valuations in the hundreds of millions of dollars for any half-decent app or game.”

“VC investing in any semi-credible team at a valuation of $20 million to $50 million seed (pretty standard) was an easy win,” he added. “Now it’s a 90% loss base case.”

Equally, this token-first approach applies unwanted pressure to the developers. 

Krypticrooks, the pseudonymous co-founder of Fractional Uprising Studios, which developed the now-iced game OpenSeason, previously told Decrypt that adding a token into the mix was a “fucking nightmare.” He said that it split the team’s attention between developing the game and supporting the token’s price, all while being shouted at by players and retail investors alike.

Furthermore, meme coin launchpad Pump.fun has completely changed the landscape for tokens, with the attention span of investors dropping as more short-term gain opportunities flooded into the market. Heatherly said that both venture capital funds and retail investors had lost interest in a long-term crypto gaming token; all they wanted was the next “Buttcoin” that would post insane daily gains.

Now that meme coin fervor has cooled down, funds have flowed into new narratives. Agranat from Gunzilla Games believes AI and real-world assets are two asset classes that are currently taking attention and capital away from crypto gaming. This can also be seen with multiple crypto game studios pivoting to AI projects—one of which said it was due to funding issues.

Ultimately, both venture capitalists and retail investors have grown fatigued by poorly performing crypto gaming investments and have opted to put their money elsewhere. In doing this, crypto games have crumbled under their own weight, and gamers have been left in the dust.

The makers of crypto trading card game Splinterlands created the Crypto Gaming Recovery Fund for abandoned players to attempt to claw back some of the value of their now-useless crypto assets. The project assigned $500,000 worth of crypto tokens and assets to the fund, calling upon other projects to join the campaign. However, no major projects joined in.

Other games, such as Deadrop, left players with no easy way for players to be refunded. Fortunately, some community members were able to force their banks to refund their NFT purchases, claiming that the studio didn’t deliver what was promised at the time of sale.

Financial loss is one thing, but some crypto players bought into these assets with the promise of being part of the development process and joining a burgeoning community. For some, it felt like a one-sided break-up, ripping away their feelings of belonging and habit. Everything was lost.

“Many people use video games as a form of escape, and when you find a game or gaming universe to immerse yourself in, you do so out of passion,” a content creator and fan of Deadrop, Mayor Reynolds, told Decrypt. “When that game or story comes to an end, you not only lose the game but, many times, the friends and community that you made through it.”

“It leaves a void in your life beyond just not having your game to play anymore,” he added. “It’s like losing part of your everyday life in so many ways.”