GameFi Stalls, But Delphi Digital Sees Web2.5 as the Bull Market’s Next Catalyst

GameFi's hype cycle has slammed into a wall of user apathy and broken tokenomics. The play-to-earn model, once hailed as revolutionary, now faces its 'fun-to-play' reckoning. Player counts are stagnating, and in-game economies are buckling under the weight of their own speculative design.

So, where does the smart money look next?

The Bridge Between Worlds

Delphi Digital points to Web2.5—a hybrid model that doesn't demand a full leap into the crypto deep end. This approach focuses on integrating blockchain's ownership layer into familiar, polished experiences. Think digital items you truly own in your favorite game, not a clunky new game built solely around a token. It's an on-ramp, not a replacement.

Building for Users, Not Speculators

The strategy is a pivot from finance-first to user-first. Web2.5 targets engagement and utility, letting value accrue naturally rather than forcing it through inflationary rewards. It bypasses the complex wallets and gas fees that scare off mainstream audiences, opting for seamless integration. The goal is to cut out the middleman on asset ownership without making the user feel like they're conducting a financial audit just to play.

A dose of cynical reality? The finance sector loves a good narrative pivot when the old one stops printing money. Web2.5 might just be the new storyline for funds that need to show they're investing in 'the next big thing' and not just yesterday's stalled-out trades. But beneath the jargon, the core idea is sound: real adoption won't come from Ponzi mechanics dressed as games, but from genuine utility that people actually want to use.

Stablecoins to help expand Web2.5 gaming

Web2.5 studios can now leverage blockchain advantages without forcing users to participate in speculation or making excuses for awkward user experiences (UX). The trend is expected to accelerate as stablecoins gain popularity. Meanwhile, microtransactions, engagement-based rewards, and global payment rails all become easier.

In contrast, Web3 native games have also generated millions of dollars (over seven figures) in revenue in 2025, but their player bases remain small and largely dominated by bots. Additionally, the fun of Web3 games often dries up as incentives disappear. However, some teams are experimenting with new models to address this issue.

The Delphi Digital team further characterizes Web3 games as simple loops that create opportunities for users to compete for advantages in riskier environments. However, some argue that the trustlessness of transparent smart contracts enables participants to assume significantly higher risk profiles than traditional speculative platforms. Meanwhile, others argue that this is too idealistic, instead advocating for limitless spending possibilities compared to traditional gaming.

According to Delphi Digital, a significant amount of idle capital is always available to be invested in crypto around the clock. The crypto research firm observed that DeFi Kingdoms’ market cap peaked at $1.3 billion, Wolf Game’s daily volume peaked at approximately $118 million, and Raid Party raised nearly $60 million during the mint before the team gradually abandoned the project.

Web3 games market changes in 2025 as funding declines 

The Web3 games market is changing as the year comes to a close, due to declining investments and funding rounds, which are also becoming smaller. However, projects continue to receive funding from various sources. 

South Korean developer Ndus Interactive announced last month that it raised $1.6 million for pop extraction shooter Xociety, bringing the total funding to over $8 million. Xociety hit early access on November 29 through the Epic Games Store for PCs and the SuiPlay0X1 handheld device, which supports stores like EGS and Steam.

Meanwhile, Sunyoung Hwang, the CEO of Nexpace, believes that balancing financial and entertainment elements in blockchain games is challenging because of the players, not the developers. He also added that Web3 and Web2 gaming remain separate because traditional gamers view the threshold to try a Web3 title as still very high. Most traditional gamers have security and regulatory concerns, and they perceive crypto as complicated.

Hwang further believes that clearer regulatory frameworks, which make participation feel straightforward and safe, should progress in tandem with UX innovations that allow people to start playing various games without requiring DEEP Web3 expertise. 

The CEO of Play Network, Christina Macedo, also believes that the challenges in Web3 and Web2 gaming are fundamentally the same. She notes that traditional players do not want to think about token economics or manage wallets while playing. As a result, today’s Web3 gaming naturally leans toward users who appear more open to perceived financial barriers. 

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