Original Title: Gaming Tokens Are Disappearing From Crypto’s Top 100—What Happened?

Original author: Ryan S. Gladwin

Original compilation: Deep Tide TechFlow

According to CoinGecko, after Immutable (IMX) fell out of the rankings on Monday, there are currently no game tokens among the top 100 cryptocurrencies by market cap. While CoinMarketCap still has a few game tokens lingering at the bottom of the list, the conclusion is almost the same: the performance of top game tokens remains sluggish.

Although crypto games reached a peak in the mainstream market and among player communities over the past year, related tokens have quickly faded, and newly issued tokens find it difficult to gain attention.

According to data from the Wayback Machine, just a year ago, there were 6 game tokens among the top 100 cryptocurrencies by market capitalization. At that time, the total market cap of the game token category on CoinGecko was $29.3 billion. However, despite more tokens being launched during this period, this figure has plummeted by 68%, now standing at only $9.24 billion.

The Ethereum gaming platform Immutable was once the last bastion, but its token IMX has seen a significant decline over the past year.

According to CoinGecko data, in December 2023, IMX was the 31st largest cryptocurrency by market capitalization in the world. At that time, the investment company VanEck expressed strong confidence in Immutable, predicting that IMX would enter the top 25 in 2024. Even a year ago today, IMX was still ranked 34th.

However, since then, IMX has plummeted 87% in the past year, due to factors including the overall cooling of the crypto gaming market and an investigation by the U.S. Securities and Exchange Commission (SEC) (Immutable recently stated that this investigation has concluded).

In just the past week, IMX has dropped by 29%, while Bitcoin’s decline was only about 10%. IMX became the token with the largest drop in the top 100 list on CoinGecko that week, until it slid out of the rankings and is currently ranked 103.

Other major gaming tokens that once made it into the top 100 have also experienced severe declines over the past year. For example, Gala Games (GALA) fell by 80% (with a drop of 19% this week), while The Sandbox (SAND) dropped by 64% during the same period (with a decline of 16% in the past 7 days).

The once glorious old gaming tokens have seen a significant decline since their peak in 2021. Even the recently launched large gaming tokens have not escaped this predicament. The Pixels (PIXEL) token launched last year has plummeted by 98% from its peak, Notcoin (NOT) has dropped by 94%, and Hamster Kombat (HMSTR) has also declined by 68%.

Last week, Gunzilla Games’ popular game “Off the Grid” and its GUNZ network based on Avalanche L1 launched the GUN token, marking the largest game token issuance in months. However, even though “Off the Grid” has not yet integrated GUN into the game, the token has dropped 62% from its peak.

Superior games are rising.

“Off the Grid” was rated by Decrypt as the Best Blockchain Game of 2024 (GG Game of the Year). The game shone brightly last autumn and boosted the market’s positive outlook on the quality of current crypto games.

This stands in stark contrast to the “Play-to-Earn” craze of 2021, epitomized by the simple gameplay monster battle game “Axie Infinity.”

“The cryptocurrency gaming market in 2021 can be said to be completely narrative-driven, with almost no real products, except for a few exceptions like ‘Axie,’” said the Treeverse game founder, known as Loopify, to Decrypt. “And now, a few years later, there are indeed more products, but they still need time and have not really entered the mainstream market.”

At that time, “Axie Infinity” was riding high, but its in-game economy, token value, and player base suffered a heavy blow in early 2022. Now, a batch of higher quality games has emerged in the market, some of which have attracted millions of players—although popularity and reputation do not always go hand in hand.

For example, “Hamster Kombat” attracted 300 million players last summer through its “Tap-to-Earn” Telegram game, despite the simple and repetitive gameplay. However, since the token launched in September, players have been leaving due to price issues, and the development team has been slow to release subsequent seasons.

“Off the Grid” became one of the rare success stories last October, with its public release becoming one of the most successful in the blockchain gaming sector, even reaching the top of the Epic Games Store’s free games chart, surpassing “Fortnite”. Additionally, the farming simulation game “Pixels” and the card battle game “Parallel” received positive reviews from players and attracted a growing audience, while the survival game “Crypto: The Game” became a niche hit thanks to its viral spread.

“I actually think the current state of crypto games is quite solid,” said Jaxie, the community manager of the crypto game team GIA, to Decrypt. “We now have some excellent games starting to go live, and these games could bring millions of players into the crypto ecosystem.”

But there are also mistakes

Creating an excellent game takes time—just look at Rockstar Games, which has spent 7 years developing Grand Theft Auto 6, backed by a large team and financial support. This also explains why, despite the surge in crypto gaming a few years ago, we are only now starting to see some results.

However, the eager-to-succeed crypto games often end in failure. The Illuvium series is a typical example. According to data from CoinGecko, the token of Illuvium (ILV) was launched in 2021 and quickly soared to a peak of $1749, which generated huge expectations in the market for the project. However, when the team launched three interconnected games in July 2024, the results failed to meet expectations.

The actual performance of Illuvium has been disappointing, and its co-founder Kieran Warwick admitted in February this year that the criticisms regarding the gameplay are “justified,” and plans to overhaul the game. Now, the price of the ILV token has plummeted by 99.4% from its historical peak, currently sitting at just $10.60.

The Core Problem of Crypto Games: Game or Token?

“99% of crypto games are not fun,” said a member of the MLG team, known by the pseudonym Munnopoly, in an interview with Decrypt. “They seem more like tokens first, and then games. I think they have been trying to bridge the gap with Web2 players.”

The various failure cases in the crypto gaming industry indicate that the development of high-quality games requires time and patience, while projects that are rushed to launch and lack depth will only disappoint players and lead to a plummeting token value.

Once highly anticipated, “Deadrop” seems poised to bridge the gap between traditional gamers and Web3. Developed by former developers of “Call of Duty” and “Halo” along with well-known streamer Dr. Disrespect, the game attracted the attention of mainstream players. However, due to a fallout between the development team and Dr. Disrespect over allegations of inappropriate conversations with minors, the studio announced its closure after running out of funds in January of this year.

“I believe the cancellation of ‘Deadrop’ is a significant setback for the field,” content creator MayorReynolds stated. “This game is one of the few projects that has the potential to stand on its own purely as a game, and integrate Web3 features in a way that players can understand.”

However, it is not uncommon for gaming projects to cease operations due to depleted funds. Recently, the blockchain gaming ecosystem Treasure announced a large-scale reorganization and layoffs due to financial issues. According to a report from Blockworks last week, the developer of Shrapnel, Neon Machine, is also facing a funding crisis.

The development team of the Ethereum game “The Mystery Society” suspended the development of this social deduction game in February this year, with co-founder Chris Heatherly candidly stating that the blockchain gaming industry is rife with destructive behavior.

“Greed and stupidity are killing the industry before almost all participants can prove themselves,” Heatherly said in an interview with Decrypt. “We need to focus on building healthy on-chain business models instead of continuing this myth of ‘token issuance as a Ponzi scheme.’ Every Web3 game founder I know is feeling frustrated and exhausted; everything they are doing now is just to survive, but the real belief is gradually fading away.”

Reshaping the Narrative: Shifting Investor Attention

According to Loopify, the recent issue with game tokens is that investors’ attention has shifted to crypto assets that are more likely to yield quick profits. He pointed out that since the last bull market for game tokens, investor interest has gone through meme coins, social finance (SocialFi), and recently shifted again towards the field of artificial intelligence.

As each wave of investment trends toward new asset classes, the attention on gaming tokens has gradually declined. These tokens still exhibit high volatility in the market, but the recent drop has been even more severe.

“The narrative of crypto games has long disappeared, and the number of investors willing to pay has also decreased, as the crypto industry essentially follows trends,” Loopify said in an interview with Decrypt. “Even if these games are of higher quality and offer low-cost investment opportunities through NFTs, tokens, or equity, the market cannot immediately price them effectively. It takes time to reflect this.”

Jaxie raised a more fundamental question: Do crypto games really need their own tokens? He believes that what players truly care about is owning their skins through blockchain, rather than a game-specific token. While these tokens can create a speculative frenzy for projects, once the tokens crash, their negative impact can shake the community and create unrealistic expectations.

“Most games shouldn’t be using their own tokens at all,” he stated. “Launching a token is more like a marketing tool or a way to please existing users—don’t get me wrong, I would also go for the airdrop benefits—but it is not a truly useful in-game functional token.”

Recently, “tap-to-earn” games have sparked a wave of token issuance, with each game requiring tokens to incentivize players to keep clicking. However, these tokens often lack practical use after issuance, leading to a rapid decline in value. Similar stories have played out repeatedly from “Hamster Kombat” to “Catizen” and “Zoo”.

In addition, the trendy “play-to-airdrop” model that was all the rage last year once again distributed tokens to players, but players had little incentive to hold these tokens long-term. Similar to the early “Play-to-Earn” craze, this model attracted a lot of attention and enthusiasm in its early stages, but the eventual crash was equally painful for both the projects and the players.

“Most Web3 players are actually just speculators in the crypto space, and their goal is to make money,” Jaxie bluntly stated. “The lifespan of most crypto games is only 90 days, after which the player count significantly declines—so why contribute to an economy that you know will shrink dramatically in three months?”

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