When there are no more gaming tokens among the top 100 by market cap, it's time to rethink the narrative
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When there are no more gaming tokens among the top 100 by market cap, it's time to rethink the narrative
The core issue of crypto gaming: the game or the token?
Navigating Web3 tides with focused insightsAuthor: Ryan S. Gladwin
Translation: TechFlow
According to CoinGecko data, after Immutable (IMX) dropped out of the rankings on Monday, there are now no gaming tokens among the top 100 cryptocurrencies by market cap. While CoinMarketCap's list still includes a few gaming tokens lingering near the bottom, the conclusion is nearly identical: top gaming tokens continue to underperform.
Despite reaching mainstream attention and player adoption peaks over the past year, related tokens have rapidly declined, and newly launched tokens struggle to gain traction.
Data from the Wayback Machine shows that just one year ago, six gaming tokens were included in the top 100 cryptocurrencies by market cap. At that time, CoinGecko's gaming token category had a total market capitalization of $29.3 billion. However, despite more tokens being launched since then, this figure has plummeted 68%, dropping to just $9.24 billion today.
Ethereum-based gaming platform Immutable was once the last holdout, but its token IMX has sharply declined over the past year.
According to CoinGecko, in December 2023, IMX ranked as the world’s 31st largest cryptocurrency by market cap. Back then, investment firm VanEck expressed strong confidence in Immutable, predicting IMX would enter the top 25 in 2024. Even as recently as a year ago today, IMX still ranked 34th.
Since then, however, IMX has plunged 87% over the past year, due to an overall cooling of the crypto gaming market and an investigation by the U.S. Securities and Exchange Commission (SEC)—which Immutable recently stated has concluded.
In just the past week alone, IMX dropped 29%, compared to Bitcoin’s decline of nearly 10%. IMX became the worst-performing token in CoinGecko’s top 100 for the week before falling off the list entirely; it currently ranks 103rd.
Other major gaming tokens that once made the top 100 have also suffered steep declines over the past year. For example, Gala Games (GALA) has fallen 80% (with a 19% drop this week), while The Sandbox (SAND) has declined 64% over the same period (down 16% in the past seven days).
Long-standing gaming tokens that peaked in 2021 have seen massive drops since then. Even large-scale gaming tokens launched more recently have failed to escape the downturn. Pixels (PIXEL), launched last year, has crashed 98% from its peak, Notcoin (NOT) is down 94%, and Hamster Kombat (HMSTR) has slid 68%.
Last week, Gunzilla Games launched its highly anticipated game Off the Grid along with the GUN token on the Avalanche L1-based GUNZ network—a significant token launch after months of anticipation. Yet even though Off the Grid hasn't yet integrated GUN into gameplay, the token has already dropped 62% from its peak.
Better Games Are Emerging
Off the Grid was named Game of the Year 2024 by Decrypt and made waves last fall, helping shift perceptions about the current quality of crypto games.
This stands in stark contrast to the 2021 "play-to-earn" (P2E) craze, epitomized by simple monster-battling games like Axie Infinity.
"The crypto gaming market in 2021 was almost entirely narrative-driven, with very little actual product—except for rare exceptions like Axie," said Loopify, founder of game studio Treeverse, speaking to Decrypt. "Now, years later, there are actually more products, but they still need time and haven’t truly entered the mainstream."
Back then, Axie Infinity stood far ahead of the pack, but its in-game economy, token value, and player base were severely damaged in early 2022. Today, a new wave of higher-quality games has emerged, some attracting millions of players—even if popularity doesn't always align with critical acclaim.
For instance, Hamster Kombat drew 300 million players last summer through its simplistic "tap-to-earn" Telegram game, despite repetitive gameplay. But after launching its token in September, players began leaving due to pricing concerns, and the development team moved slowly on launching follow-up seasons.
Off the Grid was one of the few breakout successes last October, with its public launch becoming one of the most successful in blockchain gaming history and briefly topping the Epic Games Store free games chart, surpassing even Fortnite. Meanwhile, farming game Pixels and card-battling title Parallel have earned positive player feedback and growing audiences, while survival game Crypto: The Game gained niche popularity through viral appeal.
"I actually think the state of crypto gaming is quite solid right now," said Jaxie, pseudonym for GIA, a crypto gaming clan community manager, told Decrypt. "We’re starting to see some really good games launch that could bring millions of players into the crypto ecosystem."
But There Have Also Been Missteps
Creating a great game takes time—as evidenced by Rockstar Games, which has spent seven years developing Grand Theft Auto 6 with massive teams and funding. This helps explain why, despite the crypto gaming hype emerging years ago, we're only now beginning to see tangible results.
Yet rushed crypto games often end in failure. The Illuvium series is a prime example. According to CoinGecko, Illuvium’s token (ILV) launched in 2021 and quickly surged to a peak of $1,749, fueling immense market expectations. But when the team released three interconnected games in July 2024, the reception fell short.
The actual execution disappointed, and co-founder Kieran Warwick admitted in February this year that criticism of the gameplay was "fair," announcing plans for a full overhaul. Today, ILV trades at just $10.60, down 99.4% from its all-time high.
The Core Problem: Game or Token?
"99% of crypto games aren’t fun," said Munnopoly, a member of the crypto gaming meme coin team MLG, speaking to Decrypt. "They look like tokens first, games second. I think they’ve struggled to bridge the gap with Web2 gamers."
The repeated failures across the crypto gaming industry show that building high-quality games requires time and patience. Projects rushed to market without depth inevitably disappoint players and cause their tokens to collapse.
Deadrop, once hailed as a potential bridge between traditional gamers and Web3, attracted mainstream attention. Developed by former creators of Call of Duty and Halo, alongside popular streamer Dr. Disrespect, the game generated excitement. But following a fallout over allegations that Dr. Disrespect engaged in inappropriate conversations with minors, the studio ran out of funds and shut down in January.
"I think Deadrop’s cancellation was a huge blow to the space," said content creator MayorReynolds. "It was one of the few projects with the potential to stand on its own as a great game while integrating Web3 features in a way players could understand."
However, studios shutting down due to funding issues is not uncommon. Recently, blockchain gaming ecosystem Treasure announced major restructuring and layoffs due to financial difficulties. And according to Blockworks last week, Neon Machine, developer of Shrapnel, is also facing cash shortages.
The team behind Ethereum game The Mystery Society paused development of the social deduction game in February, with co-founder Chris Heatherly candidly stating that destructive behavior plagues the blockchain gaming industry.
"Greed and stupidity are killing nearly every participant here before they can prove themselves," Heatherly told Decrypt. "We need to focus on building sustainable on-chain business models instead of perpetuating the 'token launch equals Ponzi' myth. Every Web3 gaming founder I know feels frustrated and exhausted—they're just trying to survive now, and real belief is fading."
Rewriting the Narrative: Shifting Investor Focus
According to Loopify, part of the recent problem with gaming tokens is that investor attention has shifted toward other crypto assets perceived as faster paths to profit. Since the last gaming token bull run, investor interest has cycled through meme coins, SocialFi, and most recently, artificial intelligence.
With each wave of investment moving to new asset classes, gaming tokens receive less attention. These tokens remain highly volatile, but recent sell-offs have been especially severe.
"The narrative around crypto gaming has disappeared, and so have the investors willing to buy in, because the crypto industry inherently follows trends," Loopify told Decrypt. "Even if these games are better and offer low-cost investment opportunities via NFTs, tokens, or equity, the market can't price them effectively overnight. It takes time to reflect."
Jaxie raised a more fundamental question: Do crypto games even need their own tokens? He argues players mainly care about owning skins via blockchain—not game-specific tokens. While such tokens may drive initial speculation, their collapse can damage communities and create unrealistic expectations.
"Most games shouldn’t have their own token at all," he said. "Launching a token feels more like a marketing tool or a way to reward existing fans—I’ll happily farm airdrops too—but it’s not a genuinely useful in-game utility token."
Recently, tap-to-earn games sparked a wave of token launches, each relying on token incentives to keep players tapping. But post-launch, these tokens often lack real utility, causing their value to crash quickly. From Hamster Kombat to Catizen and Zoo, similar stories repeat.
Additionally, last year’s popular “play-to-airdrop” (play-to-airdrop trend) model again distributed tokens to players, but offered little incentive for long-term holding. Like the earlier play-to-earn boom, this model initially attracted massive attention and enthusiasm—but the eventual crash was painful for both projects and players alike.
"Most Web3 players are really just speculators looking to make money," Jaxie said bluntly. "Most crypto games only have a 90-day lifespan before player counts significantly drop—so why contribute to an economy you know will shrink dramatically in three months?"
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