[Last edited: 18 June 2025]
A reflection on three years building in the Web3 gaming space.
Preamble
Having left a Web3 gaming company last year – where I unexpectedly found myself as co-founder and Creative Director – I originally intended this essay to be a 5 minute talk to share crypto gaming insights with traditional game developers. It became a sprawling 19-page draft that sat unfinished for a while. I recently used Claude.ai and ChatGPT to help condense it by about 70% into something more readable.
There’s surprisingly little documentation on this stuff, which is odd for a space that prides itself on transparency and open source ideals. Maybe it’s because the space is so new, or maybe we just didn’t dig deep enough. Either way, I hope this fills a gap for anyone considering jumping into working in crypto gaming. With transparency often being a championed core principle at the company I left, I feel encouraged to share this information that might prove valuable to someone else.
For transparency: I still hold a 10% equity stake in Nifty, which I’d be happy to sell one day – so I’m not entirely neutral and genuinely hope they succeed given all the work we put into it. That said, I’ve sold all my crypto and most of my NFTs, and stepped away from the Web3 space entirely. There’s no hard feelings toward my former company – I believe the two remaining founders to be smart and honest. The experience was an intense crash course that taught me more about crypto and Web3 than I ever could have expected, for which I’m grateful.
What follows is my thoughts on the major obstacles facing Web3 gaming – problems that weren’t unique to us but seem to affect the whole space. If the space wants to be taken seriously, it needs to confront its most glaring issues. At least one prominent NFT project I’m aware of bailed on Web3 gaming early and refocused entirely on community growth, presumably after recognising serious issues before they were in too deep.
These views are my own and don’t reflect anyone else’s. When I mention ‘Web3’ or ‘crypto,’ I’m referring to the same thing – games that use blockchain tech. ‘Web2’ just means regular, traditional gaming.
What is Web3 Gaming?
Simply put: games that use NFTs, cryptocurrency, and/or blockchain technology. Web3 is essentially just another payment method – like using a credit card but often with more complexity, fewer protections when things go wrong, weaker security in many cases, and buzzwords that make basic ideas sound groundbreaking.
Imagine Super Mario Bros where the coins you collect are real cryptocurrency you can cash out, the power-ups are tradable NFTs, and the community votes on game updates using their tokens. Sounds awesome in theory, right?
The reality is far messier.
The Fundamental Problems
The Audience Chasm
The biggest issue: finance is boring, games are fun. These worlds don’t mix well except in gambling, which brings its own problems.
By and large, traditional gamers want to have fun and couldn’t care less about crypto nonsense. Crypto investors want returns and don’t actually play games. So who exactly is the audience? One might find themselves stuck between serving:
- Investors who want mobile-first monetization
- The crypto community pushing for additional Web3 features or seeking to maximize their returns
- Actual gamers who just want good gameplay
There’s likely a sweet spot where all these different goals align, but I don’t think anyone has found it yet.
Play-to-Earn is Fundamentally Broken
The moment real money rewards are introduced, everything changes:
Grifters flood in. People will do anything for money, including manipulating or exploiting the system. This drives away and dilutes the core community, especially those who joined for the right reasons.
Fun becomes work. Players aren’t enjoying your game; they’re extracting maximum value. Any entertaining gameplay just gets in the way of earning. People will mindlessly tap buttons for pennies. Look at games like Hamster Combat – literally one button to “earn” crypto.
Unsustainable economics. The economic models are fundamentally flawed. They either operate as zero-sum gambling systems with house cuts that depend on sustained player engagement, or they burn cash distributing crypto tokens as promotional incentives without viable revenue paths. To maintain the illusion of sustainability, play-to-earn games may evolve into pyramid-like structures requiring constant recruitment of new players. Meanwhile, token values will likely decline as players cash out their earnings, undermining both the game’s credibility and longevity.
Wrong incentives. Players stay for payments, not passion. What happens when the money stops? People leave en masse.
The Community Mirage
Many Web3 projects promise ‘community,’ but the reality is often different. There’ll be members focused above all else on pumping hype for personal profit, and communities that evaporate when the hype cycle ends.
The anonymity that’s supposed to be a feature becomes a bug – scammers everywhere, impossible to collect real user data, and anonymous founders can disappear with funds.
Struggles
The Hype Cycle Reality
The project I was involved with launched perfectly at peak crypto hype when NFT sales were going crazy. Then came crypto winter, which lasted two years. As a colleague who saw the crash coming put it, ‘The music has stopped, and most people are still dancing…’ Many projects folded. The volatility made planning impossible – schedules changed weekly based on token prices, and creative work suffered when I wasn’t sure projects would ever ship. I worked on a lot of cool stuff that will probably never see the light of day.
Quality Control Issues
The bar is much lower in Web3 gaming. We got terrible work from supposedly reputable contractors who clearly thought we were just another crypto grift. There’s a massive difference in work ethic between traditional and Web3 contractors. While there were a few exceptions, the level of incompetence I encountered in Web3 was unlike anything I’d experienced before. Top talent frequently avoids crypto entirely, making quality hiring extremely difficult.
The Toxic Positivity Problem
Valid criticism gets labeled as “FUD” (Fear, Uncertainty and Doubt) and swept away. Everything requires magical thinking and “belief” rather than addressing real problems. This creates dangerous blind spots and a house-of-cards feeling where questioning anything threatens the whole structure.
‘Building in the open’ cuts both ways
Having a deeply engaged community following your every move feels great when things are going well. But transparency becomes problematic when you hit rough patches – as the saying goes, ‘anyone who loves the law or sausages should never watch either being made.’ Nobody wants to see the messy reality of work-in-progress, and sharing unpolished updates can frustrate your community and create obstacles.
Small player base
Web3 games face a numbers problem. The group of people who a) use crypto products and b) enjoy gaming and c) play crypto games is relatively small. While I can’t prove this with hard data (getting user data in Web3 is nearly impossible since most people stay anonymous), my experience suggests this overlap is tiny. Building a game that depends on this narrow audience might not work long-term.
Separate worlds
Regular gamers and crypto enthusiasts live in completely different bubbles. Most traditional gamers have never heard of or engaged with Web3 gaming, and most crypto users aren’t necessarily gamers. These two communities rarely interact or discover each other’s interests, making it hard for Web3 games to reach beyond their existing crypto audience.
Downsides of Crypto
A lot of it is not actually decentralised. Power still concentrates with whoever has the most money/tokens.
Gas fees defeat the purpose, sometimes costing more than the transaction itself when the blockchain is busy.
Security is terrible. Make one mistake and lose everything, with no recourse.
Tax implications are a nightmare. I was taxed on the crypto at the time I received it, not when I sold it – despite its value dropping by half before taxes were due. On top of that, I was taxed twice across two countries, which I’m still in the process of resolving. The lack of clear tax and regulatory frameworks for crypto in many countries further complicates matters.
Predatory dynamics. Many crypto projects follow a ‘greater fool’ model, where early participants engage in coordinated promotion to attract new buyers, then exit with profits while latecomers are left with worthless tokens.
Post-truth smoke and mirrors. Truth-seekers will find Web3 incredibly frustrating. Like the AI sector (which absorbed much of the crypto VC funding), the space is flooded with misleading hype and outright lies designed to drive speculation, making it nearly impossible to separate fact from fiction.
Does Web3 Actually Improve Games?
Short answer: No.
Adding blockchain doesn’t magically make games better. Games are good because they’re fun, not because of their payment infrastructure. Traditional games already let players earn and trade items (CS:GO, Diablo) – and Blizzard famously shut down their real-money Diablo 3 auction house because it ruined the game.
Web3 gaming hasn’t produced any mainstream successes. The most popular “games” are barely games at all – just clicking buttons to farm airdrops.
Web3 Red Flags to Watch Out For
Vague buzzwords and overhyped promises – Lots of talk about “revolutionary” technology, but little real substance or deliverables.
Lack of focus. Projects attempting to be everything simultaneously – publisher, developer, and Web2/Web3 hybrid – juggling conflicting priorities while trying to satisfy audiences with completely different expectations.
Anonymous leadership. While not always malicious, anonymity can enable scams and rug pulls with no accountability.
Communities driven by hype over substance. Engagement fuelled more by speculation than genuine interest or value.
Pump-and-dump behaviour. Influencers feigning hacks or damage control as a cover to quietly sell off assets without backlash.
Stress City
Success in Web3 often seems to require a degree of moral compromise, but I’m proud that our team remained committed to healthy core values. The space is filled with short-term thinking and questionable projects, and sometimes having ethical standards can feel like a competitive disadvantage. I’m definitely not built for the kind of moral flexibility that seems to thrive in the Web3 environment.
The relentless pressure of trying to deliver on grandiose promises while pleasing multiple audiences, filtering through constant noise, navigating volatile markets, widespread scams, unsustainable tokenomics, and underwhelming contractors results in half-finished projects and creates cumulative exhaustion that eventually becomes paralysing.
Lessons Learned (The Hard Way)
If you’re still set on pursuing Web3 gaming after all this (consider yourself warned!), here are a few suggestions:
- Stay small and don’t lose money (George Lucas’s advice to Lucasfilm Games).
- Choose your audience decisively – resist the temptation to chase the larger Web2 market if you’re building for Web3. Trying to serve both audiences simultaneously creates an unsatisfying hybrid that appeals to neither traditional gamers nor crypto enthusiasts.
- Know your craft – this principle spans both Web2 and Web3 games. Chasing trends without genuine expertise or passion for the genre rarely succeeds. Constantly chasing the latest shiny object will only leave you scattered and spinning your wheels.
- Spend way more time in concept stage before committing to development.
- Iterate quickly and cheaply to learn lessons without burning cash.
- “There is nothing so useless as doing efficiently that which should not be done at all” – Peter Drucker. Focus on doing the right things, not just doing things right. Perfect execution of the wrong strategy is pointless.
- Token baggage – crypto tokens create unavoidable perception risks where your token’s performance will always be linked to your game’s success in the Web3 audience’s minds, regardless of actual correlation.
- One person needs to own key decisions – groupthink can lead to indecision or diluted results.
- Avoid overpromising for short-term gains – while ambitious claims may generate initial hype and investment, failing to deliver on them causes lasting reputational damage that far outweighs any temporary benefits.
- Involve your community in the decision-making process so they feel like co-creators with a meaningful stake in the project’s success. This doesn’t mean avoiding personal responsibility – there should still be a clear owner for key decisions – but an engaged community can be leveraged to offer valuable insights. Share key strategies and if there’s strong pushback on a direction, be open to re-evaluating your strategy.
- That said, don’t confuse community with stakeholders. Yes, NFT holders have financial interest in your project’s success, but that doesn’t make them actual stakeholders in the business sense. This distinction matters both legally and practically – when everyone believes they’re entitled to strategic input, decision-making becomes impossible. The cacophony of conflicting advice can be deafening.
- Some community relationships work best when they stay informal. Bringing passionate members into official roles can change the dynamic in ways that hurt both the project and the individual.
- Expect overwhelming input and prepare to filter ruthlessly. Every market movement, opinion piece, and comment thread will feel urgent and important. They’re usually not. Your biggest competitive advantage may be your ability to stay focused on what actually moves the needle while the world debates everything else.
- An unwinnable battle. Complete community satisfaction is impossible, regardless of how much value you deliver – especially with Web3 audiences. Accepting this reality from the start may help prevent burnout and disappointment.
- Consider offline alternatives to multiplayer-only designs – this challenge extends beyond Web3 to traditional online games as well. Multiplayer-exclusive games require a sufficient player base to maintain an engaging experience – without it, your game will feel empty and abandoned. Unless you can develop sophisticated AI opponents that convincingly replicate human behaviour, consider incorporating single-player modes or experiences that don’t depend on concurrent human participation to remain functional and enjoyable.
- Count on tasks taking 10x as long. In Web3 where hype often has more weight than practicality, and overconfidence is regularly confused with competence, even fairly straightforward-sounding dev tasks
maywill take 10x as much time and cost 10x as much than originally estimated. Push for accuracy when scoping, or risk losing valuable trust on all sides. - Don’t confuse confidence with competence. The space is filled with overly-confident yet sometimes incompetent-to-varying-degrees individuals; people who spout blatantly false rhetoric with full confidence, dunk on projects far more successful than theirs, and who attribute lucky breaks to superior skill. Additionally, some people may prioritise likability over competence. Choose your collaborators and advisors carefully.
- The only real hack is making a fun game – no amount of development budget, ad spend or blockchain magic can sustainably make up for lack of fun or gameplay.
The Bottom Line
A successful game dev friend once said something – about a different situation – that perfectly captured this beautiful, brutal, and impersonal truth:
✨🦋 “Nobody gives a F*** unless you’re winning.” 🦋✨
Web3 gaming still needs to prove itself. Until there’s proof in the pudding – actual results comparable to traditional gaming rather than endless promises of what might be – it’s mostly just expensive make-believe.
Someone might eventually crack the code and make Web3 gaming work sustainably. Maybe it’ll be a major game company with enough clout to change public perception. But it won’t happen through hype, magical thinking, or ignoring fundamental problems.
The physics of good game design still apply: make it fun first, everything else second.
My personal stance [addition: 18 June 2025]
Fairly straightforward: I now avoid crypto entirely and if asked, generally advise others do the same, unless they’re comfortable with potential losses. The space appears more focused on hypothetical gains than actual results, and I’ve been involved in too many part-finished projects that never reached completion. Though speculators will continue their cycles, I find more value in pursuing concrete achievements – like building and finishing fun games! For those determined to invest, Bitcoin and Ethereum have fairly decent histories and may offer more stability than other tokens, but remember the standard disclaimer: do your own research.
To those still optimistic about Web3 gaming: I sincerely wish you success! The world needs bold thinkers who are willing to take risks and explore new frontiers. Just be sure to move forward with eyes wide open, and not blind faith – and if possible, learn from the missteps of those who came before you.
*Header artwork from my upcoming ‘Bru & Boegie: METEORITE‘ animated short.
[EDIT: 02 June 2025, addition] Discovered this morning that my game Bru & Boegie: Episode 1 – Get da MILK! is #7 in itch.io’s Top 20 Games for April. Bru got used for the thumbnail lol, nice. 😄
Great article!
Hey thanks bud 🙏 Pls don’t let Web3 take up too much space in your head… because Web4 is coming soon, jks.