Two and a half years, burning illusions: A SocialFi project’s failure confession

Original Author: kipit

Original Translation: Luffy, Foresight News

TL;DR

• All angel and seed round investors will receive a full refund of principal plus interest, with investment funds returned in full via the original channel.
• Fantasy has been fully self-sustaining through revenue for two and a half years, returning approximately $20 million to the community cumulatively.
• The core lesson we've learned over two and a half years is: If a product prioritizes financial incentives above all else, it attracts speculators first, not users. This principle applies not only to card-based blockchain games but is also the fundamental reason why most social tokens and early-stage token projects struggle.

The decision to shut down Fantasy was not impulsive. We spent months exploring every possible direction, talking to people we trust, and seriously discussing pivots. Ultimately, we reached a consensus: we lacked the conviction to continue. So, we chose to end things responsibly and let it bow out gracefully.

This article serves as a post-mortem: what we built, why it failed, and the new insights we gained about social products, cryptocurrencies, and tokens along the way. We weren't the first team to try this赛道, and we certainly won't be the last. If these experiences can help those who follow avoid the pitfalls we encountered, then this entrepreneurial journey has been worthwhile.

What We Built

For two and a half years, Fantasy was entirely self-sufficient through its own revenue. Although the project was led by Dragonfly in a $5.6 million funding round, the team never touched any of the investment capital during operations. Few projects in the crypto space can claim this, and we are deeply proud of it.

The key community return data is clear:

• Distributed 2,665 ETH (approximately $8 million) to regular players
• Distributed 1,078 ETH (approximately $3.2 million) to top creators/influencers
• Leveraged the Blast ecosystem to distribute a total of $12.2 million in ecosystem incentives to all players and creators
• Combined with Blast rewards, 86% of players ended up profitable

Overall, Fantasy returned significantly more value to the community than it extracted, which is the project's most valuable achievement.

We built one of the most viral and sticky products in the social crypto space. We introduced novel mechanisms: industry mindshare influence scores, social graph prediction markets, and lightweight free-to-play models.

We maintained a pace of rapid iteration and efficient product launches. Yet, even with all this, we couldn't break through our growth ceiling.

The Core Reason for Fantasy's Failure

There is one primary reason for our failure: We tried to place cryptocurrency on a foundation that wasn't built for it.

Trading card games have a proven business logic. Magic: The Gathering, Pokémon, and Yu-Gi-Oh! are globally popular, enduring top-tier entertainment IPs. Players are passionate about collecting, trading, and battling cards, creating a massive user base.

But every crypto card game has ultimately failed, from TopShot and Sorare to us now. This is no accident; it's a structural flaw in the赛道.

The core logic of traditional top-tier card games is to build the game first, and then the peripheral products. Players buy cards primarily to experience the fun of the game. The financial premium associated with cards is a natural byproduct of a mature gameplay system and a thriving community ecosystem, not the primary reason users join.

Crypto card games completely inverted this logic: cards become financial speculation vehicles first, and the fun of the game becomes secondary. This attracts not gamers who love playing, but speculators looking to profit from card price fluctuations – two groups with entirely different motivations.

Once a project is fully financialized from its inception, all subsequent operational decisions become constrained: you can't freely optimize gameplay because any rule change directly impacts card prices; you can't easily launch new game modes for fear of redistributing community profits. Ultimately, the team stops focusing on polishing the game and is forced to become managers of a financial system. This was the industry trap we fell into.

We recognized this problem early and tried everything to break free. We launched Arena mode to reduce asset holding thresholds, built lightweight traffic channels, opened free-to-play entry points, and even dismantled the NFT asset system entirely to pivot fully into social prediction markets. Every adjustment was aimed at returning to a "game-first" philosophy, but we couldn't reverse the overall decline.

The fading of the Blast ecosystem exacerbated the situation. When Blast was at its peak hype, a flood of users came to Fantasy, hoping to secure the rumored massive ecosystem airdrops. In the first month after our mainnet launch, our revenue hit its all-time high, accounting for 70% of the project's total lifetime revenue.

This peak-at-launch trajectory made every subsequent operation a fight against declining momentum. Instead of steadily building for long-term growth, the team was forced to passively manage the ebb of traffic and hype.

Financialization Fundamentally Alters the User Base

This industry-wide ailment is everywhere in crypto. Social tokens were initially created to reshape the connection between creators and their fans. Yet, almost all attempts have failed for the same reason: true fans follow creators because they appreciate their work, vision, and community – not purely for profit.

Once you embed token price fluctuations between fans and the content they love, the pure emotional connection is completely corrupted. The most active participants in the community shift from loyal fans to short-term traders.

This is not a trivial issue; it's the core bottleneck restricting the赛道's development.

Crypto excels at designing incentive mechanisms and aligning participants' interests. This is its core strength. But the industry suffers from a common misconception: that simply grafting financial incentives onto traditional internet products, games, or social communities will upgrade the business model.

The reality is the opposite: adding financial incentives fundamentally changes the nature of the product, and in most cases, it completely erodes its core value.

Trying to replicate crypto products on top of traditional internet ecosystems and achieve scale simply doesn't work. Financial incentives are never a foundational layer; they directly reshape the user base structure and users' reasons for joining.

Deep Thoughts on Project Tokens

This logic applies not only to end-user products but also to crypto startups themselves.

Our team never launched a native token for the project. Even though we considered it many times, we ultimately chose not to. The reason is simple: launching a token before reaching meaningful development milestones is inherently irresponsible. 95% of tokens on the market decline in price post-launch. We firmly oppose the practice of launching tokens knowing this outcome just to generate hype.

Looking at various token launches in this cycle, I am increasingly convinced that the token launch mechanisms for most projects are fundamentally flawed.

Launching a token arbitrarily when a project has no mature product and no stable market demand is inherently wrong. I used to think traditional financial regulations were too strict, but now I fully understand their underlying logic: strict regulation protects ordinary investors from early-stage startups that haven't proven their commercial viability. The crypto industry skipped this layer of risk filtering, and the entire赛道 is paying the price.

Rushing to issue a token before validating product-market fit does more harm than good to a project. Post-launch, the team's attention is consumed by the token price, and regular users only focus on market fluctuations. Everyone stops working on product development, and the project stagnates.

Even a high-quality project with real revenue and steady growth, Across Protocol, has publicly stated that the negative impacts of issuing a token outweigh its practical value. This conclusion warrants deep consideration across the entire industry.

The stable, high-quality token projects in this cycle are exceptions, not the rule: projects like Hyperliquid, Pump, and Jupiter first built mature businesses with stable revenue, used platform profits for token buybacks and value accrual, and only launched tokens when they had substantial underlying strength and a real rationale.

Decentralized Physical Infrastructure Networks (DePIN) are arguably one of the few structural exceptions, but many early DePIN projects launched with inflated valuations that wouldn't hold up in today's market, and the赛道 still lacks a universally recognized, long-term successful benchmark case.

Similar to financialized card games, launching a project token too early creates a vicious cycle. High market expectations tied to the token severely limit a startup's ability to iterate, experiment, and find the right path forward.

Full Refund for Investors

All of Fantasy's angel and seed round investors will receive a 100% full refund of their capital, returned via the original channel.

The reason we can confidently do this is that the project was entirely self-sustaining throughout its operations and never used the external investment funds. Initially, investors funded us because they believed the project could grow into a multi-billion dollar enterprise. Now that the project cannot achieve that goal, we also lack the conviction to use that capital for pivots we don't firmly believe in.

We greatly value the trust our investors placed in us and will not squander that trust on blind attempts we don't believe in ourselves.

To Our Platform Creators

Sincere thanks to you all! At a time when the project's business model was unproven, you were willing to join and build with us based on your reputations and influence. You earned over $3.2 million collectively on the platform. We hope this return was worthy of the trust you placed in us.

To Our Entire Community

Every community member made Fantasy what it was. All the impressive data points mentioned above were only possible because of your dedicated support. We tried our hardest to build the most fun social game in the crypto space, and for a time, we succeeded. Thank you for your daily companionship, for actively building decks, and for participating in competitions.

We regret that we couldn't ultimately meet your expectations. We understand everyone's disappointment and regret, and we accept this outcome.

If anyone still believes there is a multi-billion dollar creative idea hidden within Fantasy, by all means, try. The opportunity in this赛道 is open and barrier-free. We are willing to share all our practical experiences and lessons learned without reservation.

We encountered many industry barriers that were difficult to overcome. Those who come after us don't need to repeat our mistakes and experiment firsthand. We encourage you to adopt entirely new development strategies, avoid the pitfalls we fell into, and build a better product than ours.

Writing this post-mortem is not a final farewell; it's a practical reference for future entrepreneurs.

Crypto card games currently have a natural growth ceiling; social products that prioritize financial incentives are doomed to attract speculators, not build core communities; and issuing tokens before product-market fit mostly hinders project development.

These were never just our project's problems. They are widespread pain points in the entire crypto industry. These challenges are not unsolvable, but they cannot be overcome by merely copying old models.

We were not the first to try, and we certainly won't be the last. The most valuable trait of the crypto industry is its willingness to boldly explore and experiment. Entrepreneurial exploration is inherently uncertain, but every attempt has its unique value.

Finally, thank you once again to everyone who believed in and supported us.