March 26, 2026
By Mao Weining, Zhao Rui, Chen Qi, Huang Cailong, Hong Chen, Hong Kong Baptist University Journalism Students
Gaming’s Struggle for Survival
Billions were raised, and billions were lost. Years after the Play-to-Earn crash, the Web3 gaming industry is discovering that its biggest enemy is not the market — it is itself. Following the frenzy of 2021, the GameFi sector slid into a prolonged winter by 2025 and is still digging out from under it in early 2026, with funding down, players gone, and the once‑celebrated “Play-to-Earn” model now widely seen as an unsustainable, Ponzi-like illusion.
Yet the true believers in the technology have not left the building. Through in-depth interviews with industry builders, a stark reality emerges: Web3 gaming’s greatest enemy is not external regulation or market cycles, but the “walled gardens” it has built for itself. An industry that promised openness has become fragmented, closed, and hard for normal players to navigate.
In 2021, Play-to-Earn exploded in popularity alongside a roaring crypto market, but the model unraveled within just a few years. According to a 2024 report by GameLook, more than 93 percent of P2E projects have failed; their tokens dropped by more than 90 percent, most have fewer than 100 daily active users, and the average lifetime of a project is only four months.
The failure of Axie Infinity, a famous P2E game launched in 2018, shows serious problems in this model. Philippine-based Renz Chong, co-founder and chief executive officer of Sovrun, a Web3 gaming and on-chain infrastructure firm, said, “Play-to-Earn is a concept proven unsustainable.” P2E operated as a financial tool: Axie Infinity used a multi-tiered structure in which players needed to purchase characters and obtain Smooth Love Potion (SLP) tokens, earned through gameplay and used to breed new digital creatures, while new players needed to invest just to earn back their costs.
This system broke when there were more token farmers than new investors. According to 2026 data from Coinpaprika, SLP’s price has dropped more than 99 percent from its 2021 peak, creating a vicious cycle of price decline, player exit, and collapsing demand. Some groups used bots to earn tokens at scale, breaking the game economy and making it impossible for ordinary players to earn money.
The collapse does not mean the end of earning while playing. “Play-to-earn is not dead. The idea that everyone can get a safe weekly income from crypto games is dead,” Chong added. Traditional games such as “EVE Online,” launched in 2003, give rewards based on gameplay, but P2E put money first, not game experience, and only attracted speculators.
Hong Kong-based Yu Lap Fung, new media marketing manager of Techub News, said, “Most P2E games did not have strong anti-cheating systems.” Bots and farming groups destroyed their economies, while many developers cared more about tokens than game quality. As P2E projects failed and the market adjusted, a reset began for Web3 gaming, warning capital and developers that financial experiments without compelling game experiences will be rejected.
The Innovation Paradox — When “Openness” Becomes “Walled Gardens”
If the Play-to-Earn frenzy of 2021 was a “digital gold rush,” the industry now finds itself in an awkward position: a technology that was supposed to break down barriers has instead built new walls. This constitutes the deepest structural predicament facing Web3 gaming.
In traditional online games, all data is stored on the company’s central servers — player accounts, items, and skins are just strings of code over which the company holds absolute control. Blockchain games claim to change this: by putting assets on-chain, players can “own” them and even use them across different games. The ideal is appealing, but reality is harsh.
Most Web3 games today run on their own chosen blockchain: some choose Ethereum, some BNB Chain, and some build their own proprietary chains. These chains are not interoperable. Imagine working hard in Game A to earn a legendary sword that truly belongs to you on-chain, only to find you cannot use it in Game B because the games run on different chains and the asset is locked in its own system. To play across titles, players juggle multiple wallets, buy different gas tokens, and manage various private keys. The promised “openness” and “freedom” becomes, in practice, a fragmented and frustrating user experience.
Renz Chong uses a vivid metaphor to describe this situation. In his view, the current Web3 gaming ecosystem is like exploring many unrelated new “planets.” Each planet has its own rules and resources, but “lacks a unified unit to anchor that particular planet.” Developers build on their respective planets, while players struggle to navigate between them.​
More ironic, many game developers do not actually need blockchain. Traditional game engines can define rules and verify assets perfectly well, raising the question of why blockchain is added at all. The only plausible explanation is that some developers care less about the technology itself than about its financial attributes — token issuance, speculation, and profiting from secondary markets.​
This creates a paradox: Web3 games, which claim to pursue “decentralization,” can end up more centralized than traditional games in their business logic. Traditional games at least strive to be fun; many Web3 games focus on designing economic models to maintain token prices. To control economic lifelines and prevent asset outflows, developers willingly sacrifice interoperability, turning their games into independent “walled gardens.”
The truly valuable application scenario for blockchain should be to serve as a public foundation for the entire industry. But before that day arrives, what we see instead are more islands built on short-term interests, with players trapped inside and still waiting for a truly open world.
The Return to Fundamentals and New Challenges
As the illusion of easy profit from pure financial incentives has faded, Web3 gaming has been forced to reconsider what makes games valuable and sustainable. This shift has pushed developers back toward fundamentals: the creative power of intellectual property and the promise of real ownership for players.
Developers are focusing more on building compelling worlds and offering players genuine asset rights, believing this can nurture long-term engagement. Yet without the binding force of financial rewards, many communities have struggled to maintain active governance and constructive participation. At the same time, as IP and digital assets are shared more openly across games and platforms, new risks are emerging — from IP abuse and unauthorized copying to disputes over digital property. Balancing an open ecosystem with proper protection for creators, while fostering healthy communities, has become the next major test.
A New Hope: From Play to Earn to Play to Own
Players have largely lost trust in Play-to-Earn Web3 games. The industry is at a turning point and needs to change. The fix is not just a new token plan, but a return to the core: make gameplay fun and let players truly own assets in the game — the core idea of Play-to-Own (P2O).
Yat Siu, the co-founder and executive chairman of Animoca Brands, talked about this shift in an interview with Foresight News. He said the P2O model moves away from the short-term mindset of P2E: it does not try to bring in players by always issuing new tokens, but instead focuses on letting players truly own digital assets and making that ownership verifiable, while setting fair rules for how assets are used and spent in-game. This helps the game economy stay healthy for a long time.
Yat Siu also thinks games are key to growing Web3. Gamers are natural Web3 users, especially in Asia, where players already have a clear understanding of who owns virtual items like skins and gear. Games sit at the center of youth digital culture and help new digital technologies reach the mainstream — a pattern he expects to continue in the Web3 era, making the Play-to-Own idea of owning in‑game assets intuitive for many gamers.
Blockchain brings clear benefits to P2O. Because blockchain data cannot be changed, in-game gear, cards and other items can carry unique proofs of ownership, fixing a major Web2 problem where players had only the right to use items, not to own them. This also creates a strong base for putting big IP assets on-chain; for example, putting Pokémon cards on-chain or turning “Wuhun” assets into tokens could realistically happen.
The shift from P2E to P2O brings Web3 games back to what games should be, linking the value of ownership with the fun of play and turning players’ time and effort into assets they can truly own, while avoiding pure financial speculation at its root. As this model rolls out and matures, it could help Web3 games leave their recent slump — and push the wider crypto industry toward a healthier, more inclusive path.
About the Editor
Joe Pan teaches Asia’s first Master of Journalism course on “Covering Cryptocurrency and Blockchain” at Hong Kong Baptist University. He is a contributing editor at Blockwind News. An early adopter of blockchain technology, he has covered major crypto conferences globally since 2019 and moderated Web3 events across Asia.Â
