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

Original Author: kipit

Original Compilation: Luffy, Foresight News

TL;DR

• All angel and seed round investors will receive a full refund of principal and interest, with investment funds returned in full via the original channel.
• Fantasy has been fully self-sustaining through its own revenue for two and a half years, returning approximately $20 million to the community.
• The core lesson we learned over these two and a half years is: If a product prioritizes economic incentives above all else, it will attract 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 all possible paths, talking to people we trust, and seriously discussing potential pivots. We ultimately reached a consensus: we lacked the conviction to continue. So, we chose to end things responsibly and gracefully.

This article serves as a post-mortem: what we built, why we failed, and what we learned about social products, cryptocurrency, and tokens along the way. We are not the first team to try this path, and we certainly won't be the last. If these experiences can help future builders avoid our pitfalls, then this entrepreneurial journey holds value.

What We Built

For two and a half years, Fantasy operated entirely on its own revenue. Although the project completed a $5.6 million funding round led by Dragonfly, the team operated without using any of those investment funds for the entire duration. Few projects in the crypto space can claim this, and we are deeply proud of it.

The core data on our value returned to the community is clear:

• Distributed 2,665 ETH (approximately $8 million) to regular players
• Distributed 1,078 ETH (approximately $3.2 million) to top creators
• Leveraged the Blast ecosystem, distributing 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, the capital Fantasy returned to the community far exceeded the revenue it generated. This 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 modes.

We maintained a rapid iteration and efficient product launch cadence. Even so, we could not overcome the growth bottleneck.

Core Reasons for Fantasy's Failure

The core reason for our failure is simple: We tried to place cryptocurrency on a foundation that was never built for it.

Trading card games (TCGs) have a proven business logic. Magic: The Gathering, Pokémon, and Yu-Gi-Oh! are globally popular, enduring top-tier entertainment IPs. Players love collecting, trading, and battling with cards. The audience base is massive.

But all crypto card games have ultimately failed, from TopShot and Sorare to us now. This is not a coincidence; it's a structural defect of the track.

The core logic of traditional top-tier card games is game first, financial mechanics second. Players' primary motivation for acquiring cards is to experience the joy of gameplay. The financial premium attached to cards is a natural byproduct of a mature game with a thriving community, not the primary reason for user acquisition.

Crypto card games completely inverted this logic: the card becomes a financial speculation vehicle first, and the game itself becomes secondary. What you attract is not players who love the game, but speculators looking to profit from card trading. These two groups have fundamentally different needs.

Once a project is financialized from its inception, all subsequent operational decisions become constrained: you cannot freely optimize gameplay, as any rule change directly impacts card prices; you hesitate to launch new game modes for fear of redistributing community interests. Eventually, the team stops focusing on polishing the game content and is forced to become managers of a financial system. This is the industry trap we fell into.

We identified this problem early on and tried everything to break free. We introduced the Arena mode to lower the barrier to asset holding, built lightweight traffic acquisition channels, opened free-to-play access, and even removed the NFT asset system entirely to pivot fully into a social prediction market. Every adjustment was made to return to the "game-first" principle, but we could never reverse the overall decline.

The ebbing tide of the Blast ecosystem exacerbated our difficulties. During Blast's peak hype, a massive influx of users came to Fantasy, hoping to farm for a supposedly huge ecosystem airdrop. In the first month of our mainnet launch, our revenue hit an all-time high, accounting for 70% of the project's total lifetime revenue.

This peak-at-launch trajectory meant that all subsequent operations faced a downward trend. Instead of steadily building for long-term growth, the team was forced to reactively manage the decline in traffic and engagement after the initial hype faded.

Financialization Fundamentally Changes the User Base

This industry-wide issue is pervasive in crypto. Social tokens were originally created to reshape the connection between creators and their fans. Yet, almost every attempt has failed, for the exact same reason: true fans follow creators to support their work, ideas, and community atmosphere, not simply for financial gain.

Once you insert a token's price chart 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 minor detail; it is the core problem constraining the entire track.

The crypto industry's core strength lies in designing incentive mechanisms to align participants. However, there's a common misconception: simply grafting financial incentives onto traditional internet products, games, or social communities will somehow upgrade them.

The opposite is true. Adding financial elements fundamentally changes the product's nature, and in most cases, severely undermines its original core value.

Trying to replicate crypto products on top of traditional internet ecosystems and achieve scale is fundamentally flawed. Financial incentives are always an add-on that directly reshapes the user base structure and their initial motivations.

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, despite considering it multiple times. We ultimately chose not to, for a simple reason: issuing a token before achieving substantial development milestones is irresponsible. 95% of tokens see their price decline after launch. We firmly resist the behavior of launching a token knowing this outcome.

Looking at various token launches across this market cycle, I am increasingly convinced that the token issuance mechanisms of most projects are fundamentally flawed.

Issuing a token before having a mature product and stable market demand is a mistake. I used to think traditional financial regulations were too strict, but now I fully understand the underlying logic: strict regulation aims to protect ordinary investors from early-stage startups that haven't proven commercial viability. The crypto industry bypasses this risk filter entirely, and the whole space is paying the price.

Rushing to launch a token before validating product-market fit is detrimental to the project. After a token launch, team members' attention shifts entirely to the token price, regular users only watch price charts, and everyone stops focusing on deep product development. The project stagnates.

Even Across Protocol, a quality project with real revenue and steady growth, has publicly stated that the negative impacts of launching a token far outweigh its actual value. This conclusion deserves deep consideration from the entire industry.

The well-performing token projects this cycle are exceptions, not the norm: Hyperliquid, Pump, Jupiter, and others built mature commercial systems and achieved stable revenue first. They used platform profits for token buybacks and value accrual, giving them the genuine strength and justification to launch a token.

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

Similar to financialized card games, launching a token too early traps a project in a vicious cycle. Binding itself to high market financial expectations upon listing severely limits a startup's ability to iterate flexibly and explore the correct development path.

Full Refund to Investors

All angel and seed round investors in Fantasy will receive a 100% full refund, with their investment capital returned in full via the original channel.

We have the confidence to do this because the project was fully self-sustaining throughout its operation and never used external investment funds. Our investors originally invested believing the project could grow into a multi-billion dollar entity. Since the project cannot achieve that goal, and we lack the conviction to use their funds for a pivot we don't believe in, a full refund is the right course.

We deeply value the trust our investors placed in us and will not waste that trust on blind attempts we are not confident in ourselves.

To Our Platform Creators

Sincere thanks to all of you! You trusted us with your reputation and influence when our business model was still unproven. You collectively earned over $3.2 million 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 mentioned above is thanks to your strong support. We tried our best to build the most fun social game in the crypto space, and for a time, we succeeded. Thank you for your daily company, actively building decks, and participating in competitions.

It's unfortunate we couldn't meet your expectations. We understand the disappointment and regret everyone feels, and we accept this outcome.

If anyone still believes there's a multi-billion dollar business idea behind Fantasy, feel free to try. The opportunity in this track is open and barrier-free. We are willing to share all our hard-earned experience and lessons learned without reservation.

We encountered many difficult industry barriers that future builders don't need to rediscover by trial and error. We encourage you to adopt new development approaches, avoid our mistakes, and build a better product than ours.

Writing this post-mortem is not a formal goodbye but a practical reference for future entrepreneurs.

Currently, crypto card games have an inherent ceiling; social products prioritizing financial incentives are destined to attract only speculators, not a core fanbase; launching a token before establishing product-market fit mostly hinders project development.

These are not just our project's problems; they are widespread pain points in the entire crypto industry. These challenges are not unsolvable, but they cannot be solved by simply replicating old models.

We are 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 explore and experiment boldly. Entrepreneurial exploration inherently involves ups and downs, but every attempt holds unique value.

Finally, thank you again to everyone who ever trusted and supported us.