Nyan Heroes Shuts Down: Is Web3 Gaming Struggling in 2025?

The Rise and Fall of Nyan Heroes

Nyan Heroes, a highly anticipated cat-themed hero shooter built on the Solana blockchain, has officially ceased development, marking a significant setback for the Web3 gaming sector.

Developed by 9 Lives Interactive, the game garnered substantial attention over its four-year journey, attracting over 1 million players across four playtests and amassing more than 250,000 wishlists on Steam and the Epic Games Store.

Despite raising $13.5 million in funding, 9 Lives Interactive announced on May 16, 2025, that it could not secure the additional funds needed to complete development. The team expressed heartbreak in a recent X post, stating, "We're collectively heartbroken that we won't be able to bring our cat-inspired universe to completion." The most recent build failed to drive the player numbers required to attract publishers, grants, or acquisition deals.

Following the announcement, the $NYAN token plummeted over 40% in value, now down nearly 99% from its all-time high. The closure of Nyan Heroes underscores the challenges of sustaining momentum in the volatile Web3 gaming landscape.

A Wave of Web3 Game Shutdowns

Nyan Heroes is not alone in its demise, as 2025 has seen a series of Web3 game closures, highlighting systemic issues in the sector.

Just hours after Nyan Heroes’ announcement, Blast Royale, a Web3 battle royale game that raised $5 million, revealed it will shut down on June 30, 2025.

Other notable closures include:

• Tatsumeeko, a project backed by $7.5 million from Delphi Ventures, which stopped development on May 19, 2025, as the team pivoted to a new project, Project: Wander.

• The Walking Dead: Empires, supported by Gala Games, also confirmed it will end support in July 2025, struggling to maintain player interest in a challenging funding climate.

• In January 2025, Deadrop, developed by Mystery Society, ended after three years, citing funding shortages.

Why Web3 Gaming Is Declining?

The wave of Web3 game shutdowns in 2025, including Nyan Heroes, points to deeper structural issues within the sector, supported by data from recent reports.

According to DappRadar’s report, blockchain gaming reached 5.8M daily unique active wallets (dUAW) in Q1 2025, marking a 6% decline from the previous quarter. Metaverse NFT trading volume dropped 28%. Funding for Web3 games has also plummeted, with $91 million raised in Q1 2025, a 71% drop from Q4 2024 and a 68% decline from Q1 2024.

Player retention is another critical issue. Many Web3 games, including those that shut down, relied heavily on speculative token models rather than engaging gameplay, leading to rapid user drop-off. Many blockchain games focus more on token economics than the gaming experience, leading to rapid player attrition.

Additionally, competition from AI applications and social platforms like TON’s Mini Dapps has diverted user and investor attention, suggesting a more diverse and competitive landscape.

Macroeconomic uncertainty and a cautious investment climate further exacerbate the funding drought, as seen in the struggles of even high-profile projects like Symbiogenesis by Square Enix, set to close in July 2025. While some remain optimistic about a potential rebound through AAA-quality games like Illuvium, the current data paints a stark picture: Web3 gaming is grappling with insufficient funding, poor player retention, and a failure to prioritize gameplay over speculative economics.