When there are no game tokens in the top 100 by market capitalization, it’s time to rethink the narrative

Author: Ryan S. Gladwin Compiler: TechFlow

According to CoinGecko data, after Immutable (IMX) fell out of the rankings on Monday, there are no game tokens in the current top 100 cryptocurrencies by market value. Although CoinMarketCap's rankings still have a few game tokens hovering at the bottom of the list, the conclusion is almost the same: the performance of top game tokens continues to be sluggish.

Although crypto games have reached a peak in the mainstream market and player groups in the past year, related tokens have quickly receded, and newly issued tokens have also found it difficult to gain attention.

According to data from the Wayback Machine, only a year ago, there were 6 game tokens in the top 100 cryptocurrencies by market value. At that time, the total market value of CoinGecko's game token category was $29.3 billion. However, that number has now plummeted 68% to just $9.24 billion, despite more token launches in the intervening period.

Ethereum gaming platform Immutable was once the last holdout, but its token IMX has fallen sharply over the past year.

In December 2023, IMX was the 31st largest cryptocurrency in the world by market cap, according to CoinGecko. At the time, investment firm VanEck expressed strong confidence in Immutable, predicting that IMX would be among the top 25 by 2024. Even a year ago today, IMX was ranked 34th.

However, since then, IMX has plummeted 87% over 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), which Immutable recently said was closed.

In the past week alone, IMX has fallen 29%, compared to Bitcoin’s drop of nearly 10%. IMX became the biggest weekly loser in the CoinGecko Top 100 until it slipped off the list, currently ranked 103rd.

Other major gaming tokens that were once in the top 100 have also suffered heavy losses in the past year. For example, Gala Games (GALA) is down 80% (including 19% this week), and The Sandbox (SAND) is down 64% in the same period (16% in the past 7 days).

Those once-glorious old-line gaming tokens have fallen sharply since their 2021 peak. And even the recently launched big game tokens have not escaped the plight. Pixels (PIXEL), launched last year, has plunged 98% from its peak, Notcoin (NOT) is down 94%, and Hamster Kombat (HMSTR) is down 68%.

Last week, Gunzilla Games' hit game Off the Grid and its Avalanche L1-based GUNZ network launched the GUN token, the largest game token offering in months. However, even though Off the Grid has not yet integrated GUN into the game, the token has fallen 62% from its peak.

Better games are on the rise

Off the Grid, named the 2024 GG Game of the Year by Decrypt, made a splash last fall, boosting the market's positive view of the quality of current crypto games.

This is in stark contrast to the "Play-to-Earn" craze in 2021, which was represented by the simple monster-battling game "Axie Infinity."

"The crypto game market in 2021 can be said to be completely narrative-driven, with almost no real products, with a few exceptions like "Axie," the founder of Treeverse Games, who goes by the pseudonym Loopify, told 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 far ahead of the others, but its in-game economic system, token value, and player base suffered a heavy blow in early 2022. Now, a batch of higher-quality games have emerged on the market, some of which have attracted millions of players - although popularity and word of mouth do not always go hand in hand.

For example, Hamster Kombat attracted 300 million players last summer with its “tap-to-earn” Telegram game, despite simple, repetitive gameplay. But after launching its token in September, players left due to price issues, and the development team was slow to launch subsequent seasons.

Off the Grid became a rare success story last October, with its public launch becoming one of the most successful in the blockchain gaming field and topping the Epic Games Store’s free games list, even surpassing Fortnite. In addition, farming game Pixels and card battle game Parallel have also received positive reviews from players and attracted growing audiences, while survival game Crypto: The Game has become a niche hit due to virality.

“I actually think the crypto gaming landscape is pretty solid,” Jaxie, a community manager for crypto gaming team GIA, told Decrypt. “We have some great games coming online right now that could potentially introduce millions of players to the crypto ecosystem.”

But there are also missteps

Making a great game takes time — just look at Rockstar Games, which has spent seven years developing Grand Theft Auto 6, with a massive team and funding behind it. This explains why, despite the crypto gaming craze having started a few years ago, we’re only now starting to see some results.

However, crypto games that rush to success often end up failing. The Illuvium series is a prime example. According to CoinGecko data, Illuvium's token (ILV) was first launched in 2021 and quickly soared to a peak of $1,749, which triggered huge market expectations for the project. However, when the team launched three interconnected games in July 2024, the results failed to meet expectations.

Illuvium's actual performance was disappointing, and its co-founder Kieran Warwick admitted in February that the criticism about the gameplay was "justified" and planned to overhaul the game. Today, the price of the ILV token has plummeted 99.4% from its historical peak and is currently only $10.60.

The core question of crypto games: games or tokens?

"99% of crypto games are not fun," said a member of the crypto game meme coin MLG team who goes by the pseudonym Munnopoly in an interview with Decrypt. "They look more like tokens first, then games. I feel like they've been struggling to bridge the gap with Web2 players."

The various failures in the crypto game industry show that the development of high-quality games takes time and patience, and those projects that are rushed and lack depth will only disappoint players and cause the value of tokens to plummet.

Deadrop, which was once highly anticipated, seemed to be expected to bridge the gap between traditional gamers and Web3. Developed by former developers of Call of Duty and Halo and well-known anchor Dr. Disrespect, the game attracted the attention of mainstream players. However, due to a falling out between the development team and Dr. Disrespect over allegations of inappropriate conversations with minors, the studio announced its closure in January this year after running out of funds.

"I think the cancellation of Deaddrop is a major setback for the field," said content creator Mayor Reynolds. "This game is one of the few projects that has the potential to stand on its own and integrate Web3 features in a way that players can understand."

However, it is not uncommon for gaming projects to stop operating due to running out of funds. Recently, blockchain gaming ecosystem Treasure announced a large-scale restructuring and layoffs due to financial problems. And as Blockworks reported last week, Neon Machine, the developer of "Shrapnel", is also facing the dilemma of running out of funds.

The development team of Ethereum game "The Mystery Society" suspended the development of this social deduction game in February this year, and its co-founder Chris Heatherly bluntly stated that the blockchain game industry is full of destructive behavior.

"Greed and stupidity are killing almost all players in this field before they can prove themselves," Heatherly said in an interview with Decrypt. "We need to focus on building healthy on-chain business models, not continuing this fallacy of 'token issuance is a Ponzi scheme.' Every Web3 game founder I know is frustrated, exhausted, and doing everything they can to survive, but the real belief is fading."

Reshaping the narrative: Investor attention shifts

According to Loopify, part of the problem with recent game tokens is that investors' attention has shifted to crypto assets that are more likely to make quick profits. He pointed out that since the last game token bull run, investor interest has gone through meme coins, social finance (SocialFi), and most recently, artificial intelligence.

With each wave of investment enthusiasm rushing to new asset classes, the attention of game tokens has gradually declined. These tokens still show high volatility in the market, but the recent decline has been more severe.

"The narrative of crypto games has long disappeared, and there are fewer investors willing to pay for it, because the crypto industry essentially follows trends," Loopify said in an interview with Decrypt. "Even if these games are of higher quality and provide low-priced investment opportunities in the form of NFTs, tokens or equity, the market cannot effectively price them immediately. This takes time to reflect."

Jaxie raised a more fundamental question: Do crypto games really need their own tokens? He believes that what players really care about is owning their own skins through the blockchain, not game-specific tokens. Although these tokens can bring speculative enthusiasm to the project, once the token collapses, the negative impact is enough to shake the community and create expectations that are difficult to achieve.

"Most games should not use their own tokens at all," he said. "It's more of a marketing tool or a way to please existing users - don't get me wrong, I'll take advantage of airdrops - but it's not a real useful game utility token."

Recently, there has been a wave of token issuance for tap-to-earn games, where each game needs to incentivize players to keep clicking through tokens. However, these tokens often lack practical use after issuance, causing their value to fall rapidly. From Hamster Kombat to Catizen and Zoo, similar stories have been repeated.

In addition, the play-to-airdrop trend that was popular last year once again distributed tokens to players, but players had little incentive to hold these tokens for the long term. Like the early Play-to-Earn craze, this model attracted a lot of attention and enthusiasm in the early stages, but the final collapse was equally painful for the project and players.

"Most Web3 players are just speculators in the crypto space, and their goal is to make money," Jaxie said bluntly. "Most crypto games have a life cycle of only 90 days, after which the number of players will drop significantly - so why contribute to an economy that you know will shrink significantly in three months?"