Why Most Web3 Games Fail: Broken Loops, Weak Tokenomics, and No Lore That Matter

[dimtiks]

Why Most Web3 Games Fail: Broken Loops, Weak Tokenomics & Disposable Lore

Most GameFi projects don’t die loudly. They bleed out quietly:
players leave, token value drifts, events flop, and nobody knows why.

After working across 40+ game projects (Web3 + mobile/F2P), I keep seeing the same root problems:

• No real retention system – grind walls, no return triggers, no cadence.
• Weak / inflationary tokenomics – faucets > sinks, reward spam, dead price signals.
• LiveOps as “random events,” not a structured engagement calendar.
• Lore disconnected from systems – pretty words that don’t move behavior.
• UX friction – onboarding drop-offs, unclear goals, economy hidden behind confusion.

We help teams fix the system layer that actually drives retention and value.

What we do:

• Tokenomics & In-Game Economy – multi-currency models, sinks/sources, emission pacing, price stability logic.
• Retention & Engagement Loops – meta progression, dailies/weeklies, social & clan incentives.
• LiveOps & Event Design – modular events, scalable reward tables, lifecycle calendars.
• Lore That Matters – narrative hooks tied to mechanics, missions that reinforce systems, not just flavor text.
• UX / Flow Audits – friction mapping, onboarding clarity, reward surfacing, player path instrumentation.
• System-Level QA – we test logic, incentives, economy health… not just bugs.

Who should reach out?

• Teams building a Web3 / crypto-native game and worried about sustainability.
• Mobile / F2P teams adding tokens, NFTs, or on-chain layers.
• Studios with retention or revenue drop-offs after launch / Season 1.
• Projects with whitepaper economics that haven’t been pressure-tested in live behavior.

Engagement Options:

• One-time systems audit (economy + UX + retention check).
• Co-design of tokenomics + LiveOps rollout plan.
• Ongoing advisory during pre-launch / post-launch scaling.

Contact 
Telegram: @dmitriy_dimtiks 
Portfolio & examples: dimtiks.com

Players don’t leave because they hate your art. They leave because the system gives them no reason to stay.

[markm]

If you really have the skills you imply you should be able to thrive amazingly in the Galactic Milieu, maybe even running a whole alliance or conglomerate of Civilisations, Corps, Guilds, Clans, Associations etc etc etc


-MarkM-

[Cointxz]

You forgot the most important thing which every web3 games have which is the source of income outside the game itself that they can use to fund the rewards to every players.

Team just use the existing token supply as rewards while they continuously drain the liquidity on exchange by dumping team tokens and “marketing/operation” tokens using holders liquidity that result to continuously dumping of the price.

A real web3 games will be sustainable if they have other source of income for the rewards that is not from the token supply.

[markm]

You forgot the most important thing which every web3 games have which is the source of income outside the game itself that they can use to fund the rewards to every players.

Team just use the existing token supply as rewards while they continuously drain the liquidity on exchange by dumping team tokens and “marketing/operation” tokens using holders liquidity that result to continuously dumping of the price.

A real web3 games will be sustainable if they have other source of income for the rewards that is not from the token supply.

Exactly!

A great and ancient example if one does insist on using player funds initially to create that outside source of income is the thing called Premium Bonds in the United Kingdom.

Basically a premium bond is a never-expiring lottery ticket, that until you sell/redeem it keeps on being part of the regular prize draws.

It is like a post office savings account in that the money paid for the tickets gets somehow or other "invested" but instead of everyone earning interest on what they put in all the interest gets put into the prize pot for the lottery-type drawings, so large prizes are available thanks to that pooling.

An entirely outside source of initial capital to build the outside source of income would be even better for players of course but the age-old example of the "premium bond" does show how it can be done from initial input of capital from the players without needing to keep "dinging" the players for more input of funds...

Of course in crypto interest rates far higher than those typical of post office savings accounts can be feasible...

And unlike premium bonds a play to earn game need not enter any "tickets" into the "drawings" for players who fail to actually play, instead the prizes can be things like monster loot drops...

The hard part still though is probably the finding of reliable things to use as the outside source of income...


-MarkM-

[dimtiks]

You forgot the most important thing which every web3 games have which is the source of income outside the game itself that they can use to fund the rewards to every players.

Team just use the existing token supply as rewards while they continuously drain the liquidity on exchange by dumping team tokens and “marketing/operation” tokens using holders liquidity that result to continuously dumping of the price.

A real web3 games will be sustainable if they have other source of income for the rewards that is not from the token supply.

Thanks for the thoughtful comments — solid points from both of you.

On the “external source of income” — I completely agree. That’s one of the most common gaps we see: projects either overlook it or try to patch it later, when the damage is already done. When the entire rewards model is built around token emissions, it creates a hard ceiling. The more engaged the playerbase, the faster the capital burns. Without any external cashflow — whether fiat-based, partner-driven, NFT services, premium layers, or even off-chain revenue — the token becomes a subsidy, not a functioning part of the economy.

In our work, we try to go deeper: Where exactly is sustainability supposed to come from? What kind of player behavior creates actual value for the ecosystem? Because “external income” doesn’t always mean a separate business. Sometimes it’s about smartly embedded monetization with clear motivation — like paid early access to events, marketplace fees, or clan-based holds with deflationary logic.

And the Premium Bonds example is a great one — especially the idea that only active participants are eligible for the rewards. That’s a core principle of sustainable game economies: rewards tied to action, not just passive holding. We’ve used similar structures in “loot pool” systems — where the prize pool builds up collectively (through activity or staking), but access depends on real-time participation. That adds flexibility and protects the system from “zero-value farming.”

Also, big respect for the way you laid it out — it’s clear you’ve got real perspective and experience. These kinds of discussions are exactly what Web3 game design needs more of — less hype, more systems thinking.

If there’s interest, I’d be happy to share some breakdowns later — how we helped projects stabilize token prices and improve retention through economic loops and external value streams, with real-world data.

Have a great day — enjoyed the exchange 🙌
— Dmitriy | dimtiks.com

[uneng]

Take MIR4 as an example. The game was perfect. It had a decent lore, graphics, vast world, many activities and it was truly addictive, going beyond the financial aspect, although it still died after few months, apparently due to a broken and weak economy.

However, what drove the game downside was another factor: cheaters, bots and toxic players, at same time game's developers didn't do anything to revert those issues.

If there were strong mechanisms to fight cheaters back, the game could have survived for longer, so we could have concluded if that was sustainable or not.  The problem is that every legit players who invest time and money on the game will inevitably get annoyed and discouraged to continue after being abused by bots and nasty players for a while.

I would love to start playing and grinding a game like MIR4 once again, but what game to play, then? I guess there is an open and thriving market available for a company which wishes to invest seriously on this field.

[Xylber]

Many crypto games are just a stacking pool with a game interface, like plants vs undead, or the one with the spaceships (I don't remember the name). People buy the scam token, play the game, and devs are cashing out the USDT. The token lose all its value in a few weeks.

I'm surprised that games like PUBG, CS2, LOL, Valorant are not using some kind of crypto to trade skins, but I guess there must be some legal wall.

[dimtiks]

Great points again — and thanks for bringing up MIR4, Plants vs Undead, and those classic Web3 case studies.

Totally agree that botting, cheaters, and bad actors can ruin even a well-structured game — especially if the team underestimates LiveOps governance and anti-abuse systems. We’ve seen that in both Web3 and traditional mobile/F2P spaces: if the devs can’t actively steer the economy and protect the value of effort, things unravel fast.

It’s also true that many crypto games end up being “wrapped staking dApps with a UI” — no real loops, no systems thinking, just a cash grab with game art. That’s exactly why we focus on connecting **mechanics to motivation** — retention loops, scalable reward logic, anti-sybil mechanics, and clean flow that guides player behavior.

On the legal side: yes, the PUBG/CS2/Valorant world is slow to adopt crypto not because of tech limits — but because of compliance, KYC, gray-market dynamics, and regional regulation. But if/when that door opens, it’ll change the game economy design landscape completely.

What we’re doing with teams is helping them get ready for *that level* — not just play-to-earn 1.0, but games with real systems, real players, and real value.

Appreciate the examples — keep them coming. Always good to compare scars with folks who’ve seen the same battles 😄

— Dmitriy | dimtiks.com

[markm]

Humans are basically just naturally occurring bots that happen to be organically implemented, so banning bots seems a technically doomed endeavor thus it makes more sense to me to just go with it and recognise that human beings are not the only life-forms in the multiverse, maybe even go so far as to try to prevent the kind of racism/hate that one might term humanism, the corrosive bias of certain organically implemented naturally-occurring bots versus other implementations of bots aka lifeforms...

A child can learn to spell and to play text-based "MUD" (Multi-User Dungeon) games even before their manual dexterity has been practiced enough to write with pens or pencils, since keyboards form the letters and align them into straight legible lines for them, so humans can grow up learning to more and more automate characters from a very early age; by the time they can comfortably write with pens and pencils at a decent speed they can already have one or more player-accounts populated not only with an adventuring team for when they are "at the keyboard" but also a set of labourers/artisans to leave running when they are not "at the keyboard".

Thus in the Galactic Milieu's scriptable text mode interface, implemented using CoffeeMUD, player-accounts can have up to ten characters up to five of which can be online concurrently.

That allows a team of five artisans who gain "experience" doing tasks like foraging, mining, smithing, construction, shipbuilding and so on and so on and so on plus a team of five "adventurers" who gain experience basically killing monsters or other opponents.

CoffeeMUD has breeding too, so those who wish to get into that aspect can leave some characters-capacity free to accomodate children as they grow up into playable characters.

Obviously these player-accounts are ridiculously lucrative/productive thus the economy would be doomed were there not a mechanism to help limit them, thus the game provides them only to "Civilisations", leaving it to the "Civilisations" to administer their use by others such as their own citizens, members, customers or whatever, and charges them a yearly fee per player-account, shown at https://galaxies.mygamesonline.org/mudgaard.html

Since "Civilisations" necessarily own "shares" of GHC (General Hosting Corp aka Galactic Holding Corp) they have collateral thus their billing can be handled using the same hourly-compounded interest routines used to handle the startup loans of the intergalactic mining Corps, which also provides one of the ways a "treasury" can be depleted since a Civilisation's holdings of GHC "shares" is part of its "treasury". If the debt to GHC exceeds the value of GHC "shares" held one or more of those "shares" can be liquidated to bring the debts down under the remaining total debt or bankrupt the "Civilisation".

Hopefully this system should keep the "Civilisations" from "wasting" valuable player-accounts on players who fail to run the accounts productively enough to help the "Civilisation" continue to renew the accounts.


-MarkM-

[jackpotmaster]

A video game does not need a token and neither do many different types of projects in crypto. It is flawed from the start. Sell equity if you want funding, don't print tokens for free and then sell them.

Many crypto games are just a stacking pool with a game interface, like plants vs undead, or the one with the spaceships (I don't remember the name). People buy the scam token, play the game, and devs are cashing out the USDT. The token lose all its value in a few weeks.

I'm surprised that games like PUBG, CS2, LOL, Valorant are not using some kind of crypto to trade skins, but I guess there must be some legal wall.

They suck and just exist to drain money from naive investors.

[dimtiks]

Humans are basically just naturally occurring bots that happen to be organically implemented, so banning bots seems a technically doomed endeavor thus it makes more sense to me to just go with it and recognise that human beings are not the only life-forms in the multiverse, maybe even go so far as to try to prevent the kind of racism/hate that one might term humanism, the corrosive bias of certain organically implemented naturally-occurring bots versus other implementations of bots aka lifeforms...

A child can learn to spell and to play text-based "MUD" (Multi-User Dungeon) games even before their manual dexterity has been practiced enough to write with pens or pencils, since keyboards form the letters and align them into straight legible lines for them, so humans can grow up learning to more and more automate characters from a very early age; by the time they can comfortably write with pens and pencils at a decent speed they can already have one or more player-accounts populated not only with an adventuring team for when they are "at the keyboard" but also a set of labourers/artisans to leave running when they are not "at the keyboard".

Thus in the Galactic Milieu's scriptable text mode interface, implemented using CoffeeMUD, player-accounts can have up to ten characters up to five of which can be online concurrently.

That allows a team of five artisans who gain "experience" doing tasks like foraging, mining, smithing, construction, shipbuilding and so on and so on and so on plus a team of five "adventurers" who gain experience basically killing monsters or other opponents.

CoffeeMUD has breeding too, so those who wish to get into that aspect can leave some characters-capacity free to accomodate children as they grow up into playable characters.

Obviously these player-accounts are ridiculously lucrative/productive thus the economy would be doomed were there not a mechanism to help limit them, thus the game provides them only to "Civilisations", leaving it to the "Civilisations" to administer their use by others such as their own citizens, members, customers or whatever, and charges them a yearly fee per player-account, shown at https://galaxies.mygamesonline.org/mudgaard.html

Since "Civilisations" necessarily own "shares" of GHC (General Hosting Corp aka Galactic Holding Corp) they have collateral thus their billing can be handled using the same hourly-compounded interest routines used to handle the startup loans of the intergalactic mining Corps, which also provides one of the ways a "treasury" can be depleted since a Civilisation's holdings of GHC "shares" is part of its "treasury". If the debt to GHC exceeds the value of GHC "shares" held one or more of those "shares" can be liquidated to bring the debts down under the remaining total debt or bankrupt the "Civilisation".

Hopefully this system should keep the "Civilisations" from "wasting" valuable player-accounts on players who fail to run the accounts productively enough to help the "Civilisation" continue to renew the accounts.


-MarkM-

Fascinating worldbuilding, MarkM — thanks for sharing more about the Galactic Milieu and how you’re handling scale, automation, and economic governance through Civilisations and CoffeeMUD mechanics. It’s clear you’ve put a lot of thought into systemic checks and balances — especially how player-account access ties into larger economic flows and productivity.

The parallel you draw between organic and non-organic “bots” is a fun angle too — especially in the context of automation, delegation, and early learning through MUDs. It highlights how player behavior (even from childhood) is naturally inclined toward optimizing systems and multitasking across roles.

In the projects we’ve been supporting, the design challenges are often more constrained — mobile/Web3 hybrids, retention-first mechanics, legal limitations on delegation or automation. But the underlying principles still resonate: how do we create systems that scale without imploding, that reward effort but protect the economy, and that can be governed in a sustainable way?

Appreciate the depth and creativity — love seeing how different models approach these same core tensions. And who knows — maybe someday we’ll help a project navigate the transition from traditional game loops to a full-blown “civilisation” layer like yours 😄

— Dmitriy | dimtiks.com

[dimtiks]

A video game does not need a token and neither do many different types of projects in crypto. It is flawed from the start. Sell equity if you want funding, don't print tokens for free and then sell them.

Many crypto games are just a stacking pool with a game interface, like plants vs undead, or the one with the spaceships (I don't remember the name). People buy the scam token, play the game, and devs are cashing out the USDT. The token lose all its value in a few weeks.

I'm surprised that games like PUBG, CS2, LOL, Valorant are not using some kind of crypto to trade skins, but I guess there must be some legal wall.

They suck and just exist to drain money from naive investors.

Valid take — and I’ve heard the same frustration from many teams, especially after watching project after project burn through hype cycles with no underlying product or system.

You're absolutely right: not every game needs a token, and in some cases, tokenizing too early (or for the wrong reasons) does more harm than good. If there’s no gameplay utility, no economic loops to sustain it, and no governance role – it’s just another vehicle to extract value and disappear.

That said, tokens can work – but only when they’re tied deeply into the systems layer. Not just a currency, but part of how players interact, compete, trade, and progress. We’ve worked with teams that approached it more like designing an in-game resource economy – with emissions, sinks, sinks that evolve, and even hybrid monetization that doesn’t rely on token sales.

Equity and traditional funding absolutely still make sense, especially when the token has no real utility yet. But if a team is going the Web3 route, they need to treat the token not as a shortcut, but as a system design challenge – no less serious than progression or matchmaking logic.

Appreciate the candid view – conversations like this help push the space toward more mature and grounded thinking.

— Dmitriy | dimtiks.com

[jackpotmaster]

A video game does not need a token and neither do many different types of projects in crypto. It is flawed from the start. Sell equity if you want funding, don't print tokens for free and then sell them.

Many crypto games are just a stacking pool with a game interface, like plants vs undead, or the one with the spaceships (I don't remember the name). People buy the scam token, play the game, and devs are cashing out the USDT. The token lose all its value in a few weeks.

I'm surprised that games like PUBG, CS2, LOL, Valorant are not using some kind of crypto to trade skins, but I guess there must be some legal wall.

They suck and just exist to drain money from naive investors.

Valid take — and I’ve heard the same frustration from many teams, especially after watching project after project burn through hype cycles with no underlying product or system.

You're absolutely right: not every game needs a token, and in some cases, tokenizing too early (or for the wrong reasons) does more harm than good. If there’s no gameplay utility, no economic loops to sustain it, and no governance role – it’s just another vehicle to extract value and disappear.

That said, tokens can work – but only when they’re tied deeply into the systems layer. Not just a currency, but part of how players interact, compete, trade, and progress. We’ve worked with teams that approached it more like designing an in-game resource economy – with emissions, sinks, sinks that evolve, and even hybrid monetization that doesn’t rely on token sales.

Equity and traditional funding absolutely still make sense, especially when the token has no real utility yet. But if a team is going the Web3 route, they need to treat the token not as a shortcut, but as a system design challenge – no less serious than progression or matchmaking logic.

Appreciate the candid view – conversations like this help push the space toward more mature and grounded thinking.

— Dmitriy | dimtiks.com

We are in some agreement here even if my view is a bit more strict than yours. A lot of web3 mistakes come from inexperienced project owners trying to get rich this way. The future is not going to be some world where people analyze and trade tokens and NFTs all the time. Neither a world where people participate in Discord and Telegram and such. Real people are too busy to invest so much time in a single project unless they are half addicted gamers who don't do anything else.

A game must have token economy embedded in itself, and preferably it should have very little exposure to crypto at all. What I mean with that is that an average user should be able to come and play the game without even understanding that the game currency is a real crypto token at all. If you build a good game where the in game currency is the token and you add some burn mechanisms, utility is already there. What I have seen web3 greedy games do is introduce another in game currency which can be bought with traditional money, so stupid.

[dimtiks]

A video game does not need a token and neither do many different types of projects in crypto. It is flawed from the start. Sell equity if you want funding, don't print tokens for free and then sell them.

Many crypto games are just a stacking pool with a game interface, like plants vs undead, or the one with the spaceships (I don't remember the name). People buy the scam token, play the game, and devs are cashing out the USDT. The token lose all its value in a few weeks.

I'm surprised that games like PUBG, CS2, LOL, Valorant are not using some kind of crypto to trade skins, but I guess there must be some legal wall.

They suck and just exist to drain money from naive investors.

Valid take — and I’ve heard the same frustration from many teams, especially after watching project after project burn through hype cycles with no underlying product or system.

You're absolutely right: not every game needs a token, and in some cases, tokenizing too early (or for the wrong reasons) does more harm than good. If there’s no gameplay utility, no economic loops to sustain it, and no governance role – it’s just another vehicle to extract value and disappear.

That said, tokens can work – but only when they’re tied deeply into the systems layer. Not just a currency, but part of how players interact, compete, trade, and progress. We’ve worked with teams that approached it more like designing an in-game resource economy – with emissions, sinks, sinks that evolve, and even hybrid monetization that doesn’t rely on token sales.

Equity and traditional funding absolutely still make sense, especially when the token has no real utility yet. But if a team is going the Web3 route, they need to treat the token not as a shortcut, but as a system design challenge – no less serious than progression or matchmaking logic.

Appreciate the candid view – conversations like this help push the space toward more mature and grounded thinking.

— Dmitriy | dimtiks.com

We are in some agreement here even if my view is a bit more strict than yours. A lot of web3 mistakes come from inexperienced project owners trying to get rich this way. The future is not going to be some world where people analyze and trade tokens and NFTs all the time. Neither a world where people participate in Discord and Telegram and such. Real people are too busy to invest so much time in a single project unless they are half addicted gamers who don't do anything else.

A game must have token economy embedded in itself, and preferably it should have very little exposure to crypto at all. What I mean with that is that an average user should be able to come and play the game without even understanding that the game currency is a real crypto token at all. If you build a good game where the in game currency is the token and you add some burn mechanisms, utility is already there. What I have seen web3 greedy games do is introduce another in game currency which can be bought with traditional money, so stupid.

Totally get where you’re coming from — and yeah, I think we’re largely aligned, even if coming at it from slightly different angles.

The “token-first” mindset has definitely wrecked a lot of otherwise promising teams. They chase short-term hype and forget they’re building for humans, not just DEXes. And I completely agree — the average player should never have to know they’re interacting with crypto. If anything, the presence of blockchain under the hood should feel like infra, not interface.

We’ve worked with teams that wanted to do “crypto-native” games — and we always push back on the idea of two separate currencies. Unless there’s an extremely strong design reason (which is rare), it just creates confusion, value leaks, and bad incentives. The best implementations we’ve seen treat the token as the only in-game currency, and let utility emerge naturally through crafting, trading, upgrading, staking for features, etc. Then add soft gates (like burn mechanisms, locked progression, or time-based unlocks) — and suddenly you’ve got an actual economic layer without it screaming “speculation”.

And yes, 99% of players aren’t going to sit in Discord/Telegram or follow floor prices. They just want a good game loop, some sense of progression, and the option to dive deeper if they feel invested. That’s where the real opportunity is — not in Web3 as a genre, but Web3 as a layer that disappears behind good design.

Appreciate the clarity in your take — feels rare these days.

— Dmitriy | dimtiks.com

[Webetcoins]

I played this horse game on SOL network once, it was great and all for the fact that it was entertaining, it's literally just buying horses, breeding, and racing, that's it.

However, the way it tried to make income didn't work, so the return was horrible, unless you won some of the huge rewards like big races at the end of the season, then you would not be making money.

Plenty of people lost a ton of money too, and I have seen like literally tens of thousands gone. You could literally buy a small real horse with that, not a fast one, but a horse nevertheless, and own a real horse that can win you something, made no sense to get the same, digitally and lose the same money.

Digital has one advantage, profit with ease, if you don2t, then what's the point? Why pay money for something, with no return? So income is the only thing, games needs income, and as long as they don't have that, it is not going to work.

[uneng]

Is there any worthy blockchain game to be played these days inside MMO category?

The last one I tried was Ni No Kuni years ago, but rewards were too scarce and restricted in a way I didn't make any penny from it.

Maybe there is an entertaining game where it's possible to make some bucks playing you have tried yourselves or heared about.

[passwordnow]

Weak / inflationary tokenomics[/b] – faucets > sinks, reward spam, dead price signals.

I think this is it. So, with the popular NFT game that has been popular in the past cycle. We know that they have a weak tokenomics and they have neve prepared any mechanism on how to slow down or totally avoid the inflation that they should experience. It's too bad that they have to stop on that cycle and lost a lot of players, the game was just based on pure hype and that's why the NFT based games thought that they can survive long without concrete plans on how to make their tokenomics stronger when they're on their peak. But badly, they just cashed out and left most of these games.

[shinratensei_]

Most of them fail because their entire user retention model only depends heavily on play-to-earn meaning the give you incentives to play their game.
Once the incentives ran out the players will leave without thinking twice.

The entire model is broken from the very start, it seems web3 game just doesn't work at all. even games like axie infinity that were popular is dying day by day.