Web3 Gaming’s Great Collapse: Scams, Ghosts, and the Death of a Dream
From Hype to Ashes: Web3 Gaming Boom and Bust
Not long ago, Web3 gaming – the fusion of blockchain, NFTs, and video games – was touted as the next big revolution. In 2021 and 2022, NFT-fueled play-to-earn games grabbed headlines with promises of ownership and profit. Players were told they could “play and earn” a living by gaming, and investors poured billions into speculative game tokens. At the peak of the frenzy, NFT collections sold for millions and play-to-earn user counts surged. But fast forward to 2024-2025, and the entire castle has crumbled. The NFT market has flatlined – a staggering 96% of over 5,000 NFT collections are now effectively dead (no sales for weeks and silence on social media) medium.com. What was hyped as a new era has decisively become a cautionary tale. The “end of an era” for NFTs is here medium.com, and nowhere is this more visible than in the ruins of Web3 gaming.
The collapse has been spectacular. Games that once boasted thriving communities have become ghost towns. The hype bubble burst as token values tanked and players fled. In early 2022, at the height of the boom, success stories like Axie Infinity enticed millions – Axie’s developer even raised $160 million and hit 2.7M daily users at one point creatoreconomy.so. But by mid-2023, Axie’s play-to-earn economy had imploded: its token lost over 95% of value blockworks.co and most players quit when their earnings fell below minimum wage creatoreconomy.so. This rise-and-fall pattern repeated across the industry. Today, over 90% of GameFi projects have failed, and the few remaining are “on life support” gamestarter.com. Web3 gaming didn’t just fizzle out – it crashed and burned, leaving behind broken projects, worthless NFTs, and betrayed communities.
Dead Projects and Ghost Communities
Remember AstroMust? In mid-2022, this ambitious Web3 game startup splashed onto the scene with bold claims of a “revolutionary multiplayer, multi-genre experience”. The AstroMust team touted stats like 40,000+ downloads and 25,000 active users in one month medium.com, and they pushed an entire ecosystem complete with NFT character skins and a $MUST crypto token. For a while, AstroMust’s marketing made it sound like the rising star of blockchain gaming, even securing about $540,000 in fundraising and joining an accelerator programmedium.com. Fast forward to today, and AstroMust is effectively dead in the water. The game’s community is nearly non-existent and activity has dried up. How bad is it? According to app data, AstroMust has a total of ~42k downloads historically, but in a recent 30-day period it garnered only 36 new downloads – basically zero growth appbrain.com. The last update to its app was in mid-2024 play.google.com, and since then the developers have gone mostly silent. The once-hyped AstroMust Discord and social feeds have become quiet ghost towns, with users left wondering if the project has been abandoned. It’s a far cry from the “thriving ecosystem” that was promised – AstroMust today is a zombie project, shambling on with a broken, stagnant product and almost no players.
AstroMust is not alone. The Web3 gaming graveyard is full of projects that soared high and then crashed hard. Many launched amid great fanfare only to wither away as reality set in. Let’s look at a few emblematic examples of this boom-to-bust cycle in action:
- AstroMust (2021–2024): Pitched a multi-genre space adventure with NFTs and tokens. Peaked with ~25k players; now virtually zero active players, last app update July 2024, and only a few dozen downloads in months appbrain.com. Community engagement is dead and promised features (like a full FPS game and token rewards) never materialized.
- Axie Infinity (2021–2022): The poster child of play-to-earn. At its height, over 2 million daily users, mostly chasing token income. By 2023, its SLP token and AXS token had collapsed over 95% in valueblockworks.co, and daily users plummeted >60% creatoreconomy.so. Once the “earn” part dried up, the majority of players vanished almost overnight.
- Star Atlas (2021–ongoing): A Solana-based space MMO that sold expensive NFT ships and raised huge sums. After the crypto crash, Star Atlas’s treasury got hit hard (even losing $15M in the FTX fiasco), its token ATLAS is down 99% from ATH blockworks.co, and in mid-2023 the studio laid off 73% of its team to stay afloat decrypt.co. The project’s roadmap now stretches into the late 2020s (if it ever finishes), and skeptics openly compare it to the notorious Star Citizen vaporware blockworks.co.
- Pixelmon (2022): An NFT game that infamously rug-pulled its community. Pixelmon raised a whopping $71.4 million by selling NFTs on promises of a Pokémon-like metaverse, only to reveal comically low-quality art and assets. The NFT values crashed ~88% immediately cryptobriefing.com, and the creator was accused of pulling the rug and misusing funds to buy himself blue-chip NFTscryptobriefing.com. Pixelmon’s “Kevin” character (more on this below) became a meme symbolizing Web3 game failure.
- Logan Paul’s CryptoZoo (2021–2023): A high-profile NFT game project led by an influencer. Sold millions worth of NFT “eggs” on the promise of a fun earning game that never fully launched. Investors ended up filing a class-action alleging it was a “rug pull” scam decrypt.co. Logan Paul himself faced intense backlash and is embroiled in lawsuits after an investigator called CryptoZoo out as fraudulent. The game remains unfinished and its token is essentially worthless – a textbook example of hype with zero substance.
And even as these examples underline a systemic collapse, new would-be players keep showing up to the table (perhaps with a hefty dose of delusion). As late as February 2025, a studio ironically named Dead Astronauts announced it had raised over $4 million in seed funding to develop its first game venturebeat.com. Dead Astronauts promises an “open-world action-adventure” built in Unreal Engine 5 – buzzwords we’ve all heard before – and talks about “pushing game-changing technology” and “immense opportunities” despite the bleak market venturebeat.com. The founders, coming from established studios, insist they’ll defy the odds. Maybe they will – but given Web3 gaming’s track record, many observers greeted the news with eye-rolls. Money is still being thrown at Web3 game startups, but experience shows that grand visions and millions in funding often fizzle to nothing in this space.
Ponzi Economics: Play-to-Earn Promises Unravel
At the heart of Web3 gaming’s failure is a simple ugly truth: most of these games resembled Ponzi schemes more than actual sustainable games. The play-to-earn model was fundamentally flawed. It lured people with the false promise that “everyone would be able to earn a living simply by participating in game economies” blockworks.co. Early adopters could indeed make outrageous money – some Axie Infinity players in 2021 were earning several times the local minimum wage in tokens. But this was only possible as long as new suckers – er, players – kept pouring in to buy inflated NFTs and tokens, propping up the economy. The moment growth stalled, the pyramid began collapsing. As one analyst bluntly put it, “Play-to-earn is a Ponzi scheme. The in-game items you earn have no intrinsic value. The only way to profit is to sell to unsuspecting new players before demand falls off.” creatoreconomy.so This is exactly what happened across the board.
The Ponzi-like structure meant that when the music stopped, latecomers got left holding the bag. Axie Infinity’s “scholarship” system, for example, was basically a pyramid: new players had to buy or rent Axie NFTs from earlier investors creatoreconomy.socreatoreconomy.so, funneling money upward. It worked while hype was red-hot and new players flooded in. But by early 2022, Axie’s growth hit a ceiling and its hyperinflationary token model imploded. “If people are playing to make money, they will quit the minute the money stops,” an Axie report noted – and that’s exactly what happenedcreatoreconomy.socreatoreconomy.so. When Axie’s token prices cratered by 86%+ in a matter of months creatoreconomy.socreatoreconomy.so, the vast majority of players bailed. Other play-to-earn games like STEPΝ (the “move-to-earn” running app) followed the same fate: initial boom, then bust as their token economies spiraled downward creatoreconomy.socreatoreconomy.so. The “earn” part was a mirage – only early insiders and clever speculators made money, while the masses of normal players inevitably lost out. It was Musical Chairs, and when the token music stopped, these games had nothing else to offer.
It’s now abundantly clear that play-to-earn was a lie Web3 sold to gamers. “GameFi told us everyone could earn a living playing games… but it relied on unsustainable, inflationary token distribution, and once liquidity dried up, the collapse began.”blockworks.co In other words, it was built to collapse. No game can indefinitely pay players more than the fresh money coming in – that’s basically the definition of a Ponzi scheme. And unlike a legitimate game company that makes money from selling a fun experience, these crypto games were making money solely from financial speculation on their in-game assets. The gameplay was an afterthought (often shallow or downright boring), just a thin wrapper over a DeFi scheme. As one critic quipped, “the play-to-earn games I’ve tried feel more like DeFi protocols with a game UI than actual games” creatoreconomy.so. Fun was optional; extraction was the goal. Little wonder then that when the speculative fervor faded, nothing remained – no playerbase, no community, no value. Web3 games imploded under the weight of their own bogus economics.
Fraudsters and “Wannabe Hackers” at the Helm
The downfall of Web3 gaming was not just about economic models, but also about the people running these projects. In traditional gaming, successful studios are led by experienced game developers, designers, and visionaries who understand the craft. In the Web3 gaming gold rush, however, a swarm of inexperienced opportunists, grifters, and outright fraudsters rushed in to stake their claim. It turns out many of the folks in charge of these NFT game startups had no background in game development at all – and it showed. As one observer noted, if you looked up the teams behind a lot of hyped NFT games, “the people involved almost always come from outside the games industry… previous experience in banking or finance rather than video games, or a founder whose last gig was selling WordPress templates” reddit.com. Actual gamers or veteran devs were rare on these teams reddit.com. Instead, we got crypto bros and get-rich-quick schemers LARPing as game studios. These wannabe tech “CEOs” loved to talk a big game about “metaverses” and “changing the gaming landscape,” but most couldn’t design a compelling game if their life depended on it. The result? Web3 games were led by people who excelled at marketing tokens, not making games.
Pixelmon’s infamous “Kevin” character – a crudely rendered voxel goblin revealed after the project’s $70M NFT sale – became the poster child for Web3 gaming incompetence. The substandard art and blatant cash-grab of Pixelmon enraged buyers and turned “Kevin” into a meme symbolizing the entire play-to-earn fiasco cryptobriefing.comcryptobriefing.com.
It would be funny if it weren’t so tragic. Consider Pixelmon, referenced above. Here was a project that raised $70 million from naive NFT buyers, led by a pseudonymous founder who claimed to have AAA developers on board. But when they finally unveiled the game art, it was a joke – the 3D models were laughably bad, so much that the green blocky character “Kevin” instantly went viral as an embodiment of scammy mediocrity. Pixelmon’s founder, far from being a visionary, turned out to be dubious and possibly dishonest (he reportedly spent investor funds on other NFTs for himself) cryptobriefing.com. The low-effort art and dubious founder should have sent buyers running – in hindsight, all the red flags were there cryptobriefing.com. But during the hype, critical thinking was scarce. Pixelmon’s collapse showed how unqualified and unethical many Web3 game leaders were. They were great at spinning up Discord hype and minting NFTs, but when it came time to actually build a quality game, they were either incapable or simply uninterested. Why bother making a good game when you can cash in and vanish?
AstroMust’s leadership followed a similar template. Its founder, Vincent Porquet, was an entrepreneur from hospitality/real-estate – a businessman, not a game developer theblox.co. He was excellent at networking and pitching the “potential to earn” in AstroMust theblox.co, but the project never had the technical muscle or design talent to back up the grand concept. Insiders from AstroMust have alleged that the team basically cobbled together off-the-shelf Unity assets (at one point they even talked about integrating other studios’ scrapped games into their ecosystem medium.com). That’s not innovation, that’s desperation. It’s emblematic of the “asset flip” culture that permeated Web3 gaming – as one commenter put it, “a lot of Web3 is asset flip grifting, churning something out as quick as possible” just to sell NFTsreddit.com. Many Web3 game founders behaved less like game creators and more like con artists trying to stay one step ahead of the law.
In some cases, the fraud was not just implicit but explicit. Rug pulls – where founders disappear with the money – became distressingly common. We saw projects where anonymous devs would sell NFTs or tokens, then ghost the community and abandon development, effectively stealing funds. Even big names weren’t immune to shady behavior. The CryptoZoo debacle with Logan Paul is a prime example. Here we had a celebrity-backed game that never delivered a playable product, yet millions were made selling the idea. When a YouTuber (Coffeezilla) investigated and labeled CryptoZoo a scam, Logan Paul’s first instinct was not to fix the product or refund users, but to threaten legal action in an attempt to silence the criticism decrypt.co. (Investors, for their part, filed a class-action accusing CryptoZoo of rug pullingdecrypt.co.) This is the caliber of people that led the Web3 gaming charge: thin-skinned influencers and grifters who would rather harass and intimidate whistleblowers than take accountability. The toxic ethos came from the top down.
Stolen Ideas, Toxic Culture, and Unethical Behavior
It wasn’t enough that many Web3 game projects were run by incompetents – on top of that, they were often plagiaristic and unethical in how they operated. Original ideas were scarce; most projects were blatant knock-offs of either popular mainstream games or each other. How many crypto whitepapers have we seen promising “it’s like Pokémon… but on the blockchain” or “it’s World of Warcraft meets NFTs”? AstroMust pitched itself as No Man’s Sky meets metaverse; Pixelmon literally lifted the Pokémon concept; countless others just copied Axie Infinity’s blueprint. Innovation was practically nil. In some cases, teams straight-up stole content – art, code, or lore – to hasten development. (Numerous NFT games were caught using stolen art assets from deviantArt or Unity Store without proper licenses, sparking disputes in those communities.) The Web3 game space became an echo chamber of the same recycled ideas, none of which were executed well. This plagiarism and idea theft was fueled by the mentality of “ship fast, don’t ask permission” – a hallmark of move-fast-and-break-things tech culture, but entirely ill-suited to building lasting games.
Unethical behavior also manifested in how these projects treated their communities and critics. Harassment and deception were common tactics. Whistleblowers and skeptics in project Discords often got banned or attacked by mods for asking basic questions like “When is the game coming out?” or “Where exactly did the funds go?”. Developers and founders frequently made misleading statements to keep the grift alive a little longer. They would string along investors with “big announcements coming soon” (that never came) or claim technical issues for delays when in reality they had no product. In extreme cases, some insiders have alleged that devs orchestrated pump-and-dump schemes – hyping their game’s token to draw in buyers, then secretly selling their own stash before bad news dropped. Basically, market manipulation. All of this eroded any trust that remained.
The community environment around these games grew increasingly toxic. Early enthusiasts who believed in the project’s vision became disillusioned as promises were broken time and again. Some dev teams resorted to scapegoating and infighting – blaming each other or the “market conditions” for failures. There are stories of Web3 game founders bullying their own team members, or ousting people who raised ethical concerns. The entire culture was one where greed trumped honesty at every turn. By the time a project inevitably collapsed, there was usually a wave of ugly accusations: developers accusing each other of stealing funds or ideas, community members accusing devs of lies, everyone accusing “FUDsters” (fearmonger critics) of ruining the vibe. In truth, they did it to themselves. The harassment of critics (like the lawsuit threats in CryptoZoo’s case) and the unethical conduct during development ensured that even if the tech had worked, these projects were rotten to the core. Web3 gaming as a whole garnered a reputation for being scammy and hostile, alienating even would-be genuine players.
Scam Artists Killed the Real Vision
The tragic irony is that Web3 gaming could have been innovative – concepts like true player ownership of assets or decentralized game worlds are intriguing. But those ideas never stood a chance, because the space was overrun by low-effort scammers who poisoned the well. Legitimate game developers largely steered clear of the NFT frenzy (who can blame them, seeing the chaos), and those few who did dip a toe in found themselves tainted by association. Thanks to the rampant scams, gamers at large developed an extreme aversion to anything “NFT” or “crypto” in games. Major gaming platforms outright banned blockchain games (Steam did so in 2021) to protect users from fraud. Reputable publishers like Ubisoft and Square Enix, who once expressed mild interest in NFTs, faced such intense backlash from their communities that they scaled down or spun their blockchain initiatives way under the radar. Honest innovation was drowned out by the noise of rug pulls and cash grabs.
In the end, the Web3 gaming boom will be remembered as a case study in tech bubble excess. It attracted exactly the wrong kind of people – those interested in a quick buck rather than building something fun and lasting. The result was an influx of shallow, unfinished products marketed with outrageous claims. “Play to earn” devolved into “pay until it all collapses.” The honest truth is that Web3 gaming is now practically dead as a movement. By one 2025 analysis, a Web3 game is considered “officially dead” once its token price is down 90%+ and it has fewer than 100 daily usersgamestarter.com – a bar that most of these projects sadly meet. The collapse of the NFT hype means no greater fools left to recruit, and without that influx of suckers, the entire premise falls apart. A few die-hards and idealists remain, trying to salvage the idea of “gaming on the blockchain” in some form, but they’re fighting an uphill battle against the stink of failure that now blankets the domain.
Conclusion: The Brutal Truth Exposed
The story of AstroMust, Dead Astronauts, and their Web3 gaming ilk serves as a brutal exposé of an industry that largely did it to itself. These projects overpromised, underdelivered, and often operated in bad faith. They claimed to be building the future of gaming, but most couldn’t even build a working game, period. They swore players would “make money having fun”, but delivered broken economies that enriched only the founders and early speculators. They spoke of community and decentralization, yet behaved no better than predatory scammers and high-pressure salesmen. In the process, they shattered the trust of gamers and destroyed the credibility of the very ideas they touted.
Web3 attracted scammers like flies to honey, and those scammers ruined the party for everyone else. They siphoned funds from real innovation to pump their Ponzi schemes. They harassed critics, plagiarized content, and ran projects straight into the ground, all while shouting that “metaverse will change everything!”. Well, it didn’t – at least not how they imagined. Instead, it changed how we spot BS in the gaming world. Gamers are now wiser to these ploys, and investors far more cautious. The collapse of NFT gaming is a cleansing fire that spared almost nothing. And frankly, good riddance. Because until the space is rid of fraudsters and led by people who actually care about making great games (not just making money off players), the concept of Web3 gaming will remain an oxymoron.
The post-mortem is clear: Web3 gaming died from self-inflicted wounds. Greed, scams, and incompetence killed the promise. The movement that once bragged it would decentralize and democratize gaming ended up centralizing money in the hands of crooks and democratizing nothing but losses. Perhaps, in time, truly innovative developers will revisit blockchain tech in games in a responsible way, after the smoke has cleared. But for now, Web3 gaming’s legacy is a graveyard of dead projects, disappointed players, and disillusioned investors. The only people who “earned” from play-to-earn were the con men running the show – and even many of them will face legal repercussions for the mess they made. The collapse wasn’t a mystery; it was inevitable. If there’s one lesson to take away, it’s this: fun and honest gameplay can’t be faked or financially engineered. The Web3 gaming bubble tried to shortcut its way to success with tokens and hype, and it burst in everyone’s face. In the end, all that’s left to do is shake our heads and say “we told you so.”
Sources: The grim statistics on NFT project inactivity medium.com medium.com; analysis of play-to-earn’s unsustainable, pyramid-like economics blockworks.co blockworks.co; commentary on the Ponzi nature of NFT gamescreatoreconomy.socreatoreconomy.so; AstroMust usage data and declineappbrain.com; Axie Infinity’s dramatic downturn blockworks.co creatoreconomy.so; Star Atlas setbacks blockworks.codecrypt.co; Pixelmon’s $70M rug-pull saga cryptobriefing.com cryptobriefing.com; Reddit insights on NFT devs’ lack of experience and asset-flip culture reddit.com reddit.com; and reporting on CryptoZoo’s alleged fraud and legal fallout decrypt.co, among others.
These public sources paint a consistent picture of an industry that promised the moon but delivered dust. The collapse of Web3 gaming is now part of blockchain history – a hard lesson in greed, hype, and hubris that will not be soon forgotten.
