After a heated run in previous cycles, 2025 saw a massive decline in funding for GameFi projects, forcing many studios to close down as incentives dried up.
Summary
- GameFi funding fell 55% YoY in 2025 as weak token models and poor retention wiped out studios
- Gaming tokens underperformed crypto broadly, with many down 80%+ from recent highs
- Web2.5 games using blockchain quietly, often without tokens, are gaining traction
GameFi’s funding collapse in 2025 exposed broken token models, while a quieter shift toward revenue-first Web2.5 gaming began to take shape.
As per Delphi Digital’s latest report, venture funding fell more than 55% year over year, mirroring the wider crypto slowdown but hitting gaming harder than most sectors.
GameFi’s funding crash exposes structural cracks
After pulling in over $147 million in Q1, funding slid to $73 million in Q2, briefly rebounded to $129 million in Q3, then dried up almost entirely by year-end. The fallout was severe. Dozens of studios ran out of runway as token prices collapsed and treasuries emptied.
CoinGecko data shows the gaming sector’s total market cap near $6.1 billion, with many tokens down 70%–95% from all-time highs. GALA is has fallen 82% year-over-year, Axie Infinity is down 86%, and Enjin has declined 87%.
Poor retention worsened the damage. Many titles saw 60% player drop-off within 30 days, while inflationary play-to-earn models rewarded bots and extractive behavior rather than real players.
In Q2 alone, more than 300 gaming dApps shut down, and DappRadar, an analytics platform, declared it would close after seven years.
Web2.5 games gain ground as tokens lose relevance
The situation isn’t totally dire. While speculative GameFi faded, Web2.5 games quietly gained popularity. These studios use blockchain as infrastructure rather than a selling point, completely foregoing tokens in favor of revenue.
Teams like Fumb Games, Mythical Games, and Wemade/Wemix continue generating meaningful income by using blockchain to improve margins, increase engagement, or add new payment rails. Stablecoin adoption is accelerating this shift, making nano-transactions, global payments, and reward systems easier to deploy without forcing speculation onto players.
Even traditional brands are experimenting carefully. FIFA abandoned Algorand (ALGO) and introduced FIFA Rivals, a mobile and blockchain game powered by Avalanche (AVAX), bringing partners like Adidas to the ecosystem.
Although Web3-native games still make six- to seven-figure profits, their user bases are modest and driven by incentives. As rewards subside, their ecosystems often register waning engagement.
Industry voices now describe 2025 as a necessary reset after the 2021–2022 hype cycle, when billions flowed in with little lasting value. Whether tokens like GALA, AXS, and ENJ recover may depend less on speculation, and more on whether gaming finally delivers products people want to play.
