ChainPlay reported today that 93% of GameFi projects (the fusion of gaming and decentralized finance, or Web3 games) are dead.
But that doesn’t mean that the industry is kaput. Rather, a more complex narrative shows a rollercoaster of growth and setbacks that are common to over-hyped startup/finance bubbles.
GameFi was the hottest trend during the 2022 crypto bull run, attracting billions of dollars of investment and money poured into speculative tokens. We’re in a similar bull run now with Bitcoin rising above $100,000 per coin.
However, the reality of its sustainability tells a much more shocking story, said ChainPlay. In a collaboration with Storible, the team analyzed over 3,200 GameFi projects to reveal the true picture of the GameFi field.
Key Insights and methodology
The study shows that 93% of GameFi projects are dead. On average, GameFi projects have dropped 95% from their all-time high prices. GameFi projects last only four months on average. And 58% of VCs who invested in GameFi lost between 2.5% and 99%.
ChainPlay analyzed a total of 3,279 projects in its database. It decided a project is deemed “dead” if its price has declined by over 90% from its all-time high (ATH) price and if it has fewer than 100 daily active users. Price information is sourced from Dune Analytics, while user data is obtained from DappRadar.
The creation date of a project’s token and the date it began to meet the aforementioned criteria determine its lifespan. The return on investment for venture capital, and annual fundraising data is derived from ChainPlay’s internal database, which is curated from multiple sources such as CryptoRank, ChainBroker. The data was collected in November 2024.
GameFi’s current state
The GameFi sector is marked by a high rate of failure, ChainPlay said. On average, 316 new projects launch each year, but 262 projects disappear, indicating that a significant number struggle to stay afloat for more than a few months.
The 93% failure rate reveals the brutal reality of GameFi—the majority of projects simply do not make it, highlighting the immense challenges in keeping investors and players engaged. Short-lived ventures and dashed hopes now plague what was once the darling of the 2022 bull run, ChainPlay said.
About 88% of projects saw a token price drop of over 90% from their all-time highs (ATH). This steep decline emphasizes the volatility and speculative nature of the sector, painting a dire picture of how far the hype has fallen.
On average, token prices of GameFi projects have declined by 95% from ATH. This significant decline reflects the overall failure of the sector. The initial excitement quickly turned into disappointment for most investors and participants, ChainPlay said.
The average lifespan of a GameFi project is just four months. This shockingly short-lived existence underscores the immense difficulties in building sustainable gaming ecosystems in such a speculative environment. Compared to other crypto projects, such as memecoins with an average lifespan of one year and typical crypto projects with an average lifespan of three years, GameFi projects have an even shorter lifespan, highlighting their heightened instability and inability to sustain momentum. This makes GameFi one of the riskiest and most transient areas of the crypto world, ChainPlay said.
ChainPlay said these statistics paint a grim picture of the GameFi world, where projects often fall short of delivering the long-term experiences that players and investors crave. The hottest trend of 2022 has quickly turned into a harsh reminder of the speculative risks inherent in this space, ChainPlay said.
Profitability insights
While GameFi’s high failure rate is undeniable, profitability metrics reveal two distinct realities for retail investors and venture capitalists (VCs).
Retail investors in initial decentralized offerings (IDOs) have managed an average profit of 15%, according to ChainBroker. However, risks associated with IDOs for retail investors include locked tokens, which can limit their ability to sell and realize profits, especially during periods of high token value.
Given that so many GameFi projects have gone defunct and prices have dropped by 95% from ATHs, the average 15% profit might not be enough to cover these risks, particularly when locked tokens become illiquid assets amidst plummeting values. For many, the aspiration of achieving financial success with GameFi has transformed into a terrifying reality due to the illiquid assets and rapidly declining values, ChainPlay said.
Venture capital returns
For VCs, the returns have been more polarized. Average VC profits are at 66%, suggesting that strategic bets can pay off despite broader market difficulties, ChainPlay said.
And 42% of VCs are profitable, with returns ranging from 0.05% to 1950%. However, 58% of VCs suffer losses ranging from -2.5% to -98.8%.
The top-performing VCs include Alameda Research: 713.15% ROI; Jump Capital: 519.11% ROI; Delphi Digital: 490.50% ROI; Binance Labs: 338.52% ROI; and 3Commas: 267.29% ROI. These top performers are also top-tier backers of the crypto market. This suggests that careful VC investments can still yield profits, ChainPlay said.
On the flip side, Golden Shovel Capital (-97.4% ROI) and Infinity Capital (-97.1% ROI) are the worst performers, ChainPlay said. The volatility that once promised immense upside potential has now proven to be a double-edged sword, cutting down many who dared to believe in the hype.
GameFi’s future
The hype surrounding GameFi has cooled, but there are still signs of enduring interest. Investment patterns reflect a more selective approach as the sector matures, ChainPlay said.
Fundraising trends are below peaks but still strong. In 2024, venture capital funding for GameFi projects totaled $859 million, reflecting a 13% decrease from 2023 and a significant 84.6% drop from the 2022 peak of $5.56 billion. This decline indicates a more cautious investment approach, with a focus on high-potential projects, ChainPlay said.
In 2024 so far, the GameFi sector has seen 221 fundraising rounds, marking a 44% increase from the previous year. However, this number remains far below the 358 rounds recorded in 2022, indicating a tempered enthusiasm compared to the peak of the 2022 crypto bull run. This trend suggests that while interest in GameFi persists, investors are adopting a more selective approach, focusing on projects with higher potential, ChainPlay said.
Conclusion
While the GameFi bubble has deflated, VCs continue to place strategic bets on promising projects. Success in the coming years will likely depend on delivering solid gameplay experiences and building lasting, value-driven ecosystems, ChainPlay said. It’s worth noting that numerous projects now have millions of players, from Pirate Nation to Hamster Kombat on Telegram.
Compared to other crypto projects, which have an average lifespan of three years, GameFi’s evolution from speculative hype to sustainable growth will require significant improvements to extend the life cycle of its projects and retain both players and investors, ChainPlay said.
GameFi’s path to maturity remains uncertain but promising—the sector must evolve beyond the fleeting excitement of 2022 if it hopes to build something lasting and meaningful.
