Content List
What’s wrong with gamification in web3
Vanya Tereshchenko
05.05.2025
7 Min Read
Gamification is the use of game-like elements (rewards, points, leaderboards, 'quests') in non-gaming products to attract and retain users.
In web3, gamification has spread across everything: GameFi, DeFi protocols with liquidity rewards, NFT marketplaces with point systems and airdrops, DAOs with social tokens, and quest platforms like Galxe and Zealy.
The expectations were huge; gamification was supposed to boost community engagement, metrics, and user loyalty. But in reality, things didn’t go as planned. So, what exactly went wrong?
Let’s break it down using recent 2023–2024 insights, opinions from web3 leaders, and real-world data.
Short-term hype vs. long-term retention
Most gamified campaigns in web3 trigger a spike in user activity… but only for a moment. People join in droves for the reward – a token, an NFT, or the promise of a future airdrop, but leave as soon as they get it.
Long-term retention? Often nonexistent.
A clear example: quest campaigns tied to airdrops. In one study of a blockchain platform that ran 43 different quests over 10 months (with a total of 80M completions), researchers tracked user behavior before and after the airdrop snapshot.
Once the snapshot was announced, activity exploded; but dropped off sharply right after. Two weeks post-snapshot, activity fell by 61.7%. And after the final token distribution? Completions were down 93.5%.
That means less than 7% of users stuck around. The rest were just there for the free loot; not for the product.
We’ve seen the same trend repeat across the space. A co-founder at Dune Analytics summed it up: airdrops often build get rich quick communities. People claim, dump, and bounce. Projects burn capital on short-term ‘farmers’ who never become real users.
Uniswap’s first airdrop showed a similar pattern. Most recipients dumped their UNI instantly and never interacted again.
The conclusion? >>> The airdrop model seems broken.
GameFi burnout: When play-to-earn becomes pay-to-exit
No corner of web3 got hit harder by short-term greed than GameFi.
Take Axie Infinity. In 2021, it exploded in popularity with the promise of ‘earn while you play.’ At its peak in January 2022, Axie had ~2.7 million monthly active users. But by the end of that same year, it dropped to ~500K >>> an 81.5% crash. By August 2023, it slid further to ~348K users.
[https://prioridata.com/data/axie-infinity-users/?]
Why? Token prices fell, rewards dried up, and players who weren’t there for the game, just the income, left en masse.
The same thing happened with STEPN, the move to earn app that paid users to run while wearing NFT sneakers. By May 2022, it had over 700K active users. But the reward model collapsed under its own weight: people cashed out fast, inflation spiked, and the system couldn’t sustain payouts. By late 2024, monthly active users were below 19K >>> a 97% wipeout.
Early adopters made money. Latecomers paid the price.
As Eva Wu from Mechanism Capital put it: ‘Financial incentives now drive player interest more than gameplay or story.’
Translation? If users show up for the rewards, and not the experience, they’ll leave just as fast. Gamification that leans purely on short-term payouts ends up building shallow loyalty at best.
Artificial engagement and the rise of reward hunters
Another major pitfall of web3 gamification? It often rewards the wrong kind of behavior.
When incentives are up for grabs, users (and bots) will always find the easiest way to farm them – even if it breaks the system.
We’ve seen this play out on NFT marketplaces like Blur. Their aggressive points system and upcoming airdrop strategy led to insane trading volumes (over $1B in a few weeks). But analysis revealed that 80%+ of that volume came from just a few whales wash-trading NFTs between themselves to farm rewards.
https://dune.com/hildobby/nfts-wash-trading?utm_source=chatgpt.com
In short: the leaderboard looked great, but real collectors were mostly missing. Blur gamified trading to the point it became a DeFi farm with JPEGs. Only ~1% of users accounted for the bulk of activity, and the illusion of a ‘booming market’ put casual users at risk of being exit liquidity.
On questing platforms like Galxe and Zealy, the same issue appears in different clothes – bots and ‘farmers’ completing basic tasks (follow, like, retweet) not out of interest in the project, but just to get points. The result?
https://medium.com/%40kassybwell/why-zealy-and-galxe-campaigns-are-killing-your-crypto-brand-f4c6220bf3a7
- Most users disappear after the campaign ends.
- Some studies found that post-airdrop, the user base shrank even below pre-campaign levels.
- Sybil attacks.
- telegram and discord channels flooded with copy-paste posts and reward questions.
- Fake quests launched by malicious actors to phish users.
Even when platforms like Galxe add sybil protection (e.g., a dedicated anti-bot quest with 800K completions), it becomes a cat-and-mouse game. And without proper filtering, community quality suffers.
[https://www.galxe.com/blog/solving-airdrop-distribution-challenges?]
DAO ecosystems aren’t immune either. Many launched internal token systems to incentivize voting or participation; but often, users grabbed the tokens and ghosted.
Even Optimism, in its second airdrop, had to specifically reward those who already delegated and voted in order to push governance participation forward.
[https://gov.optimism.io/t/did-op-airdrop-2-increase-governance-engagement/7270?]
Still, the question remains: is this sustainable?
Even if you pay more for engagement, how long can you keep doing it? Some DAOs discovered they’d need to continuously tweak incentives or keep handing out tokens just to maintain minimal participation. That’s hardly a foundation for lasting governance.
Takeaway:
Without real value or utility, gamification becomes just another pump-and-dump.
Loyalty can’t be minted; it has to be earned through consistent product value.
And that brings us to one of the biggest fallacies in web3: confusing quantity with quality.
More wallets ≠ more real users.
More clicks ≠ more believers.
More quests ≠ more community.
In reality, chasing inflated KPIs often rewards shallow or even malicious behavior and that leads to long-term damage.
So, why does gamification fail in web3? And how can we fix it?
Why It doesn’t work: common mistakes in web3 gamification
By analyzing both the flops and a few wins, we can see where most web3 projects go wrong with gamification:
1
Chasing short-term spikes, not long-term value
Too many teams run one-off ‘engagement’ campaigns just to pump vanity metrics like user count, TVL, or social followers. It looks great for investors; but doesn’t build a real user base. Once the campaign ends, numbers crash, because users didn’t find real value in the product.
‘It’s KPI theater,’ as one marketer put it. ‘You’re optimizing for screenshots, not sustainability.’
2
Incentivizing the wrong behavior
At the root of most failed campaigns lies one simple flaw: they reward the wrong things.
If your quests only incentivize numbers retweets, Discord joins, or invite spam; you’re not building a community. You’re building a botnet. If your KPIs are ‘volume’ or ‘growth,’ expect wash trading, fake referrals, and copy-paste engagement.
It’s the same in ambassador programs. Airdrop-maxi “ambassadors” who grind referral links or shill without context don’t help your brand; they hurt it. They flood your channels with low-effort content, confuse real users, and damage trust.
The real goal? Reward behavior that aligns with your product. That means:
- Creating educational content
- Helping onboard new users
- Gathering product feedback
- Participating in creative campaigns
- Hosting meaningful conversations
This is where smart ambassador design and content marketing intersect. You don’t need a viral army; you need aligned operators who actually believe in what you’re building.
At Solus Group, we’ve helped projects build ambassador funnels that don’t just look active; they stay active. From high-conversion onboarding paths to UGC-powered storytelling systems, we focus on signal > noise.
Good behavior starts with good design. Incentivize intention, not inflation.
3
Tasks are too basic or pointless
Web3 quests often ask users to ‘like a tweet,’ ‘join telegram,’ or ‘click here.’ These ultra-low-effort actions attract bots; not users.
Even humans don’t feel anything after doing them. There’s no discovery. No learning. No fun.
Better strategy? Raise the bar.
Include creative challenges, skill-based tasks, or product interactions that filter out bots and reward the curious.
Also avoid the other extreme: mindless work. If users grind repetitive or meaningless actions (spam tweets, post random content), they burn out. And they don’t retain anything about your brand.
4
No connection to the product
Too many quests live entirely on twitter or discord, with no actual product usage. So even if someone finishes the quest, they still don’t know what your platform does.
Fix this by integrating quests into the product experience:
- Try a feature
- Spot a bug
- Leave feedback
- Create content using your tool
You’ll build understanding, not just stats.
5
No emotional or social layer
Clicking buttons isn’t community-building.
If your quest system lacks human interaction, stories, or shared goals; it’ll feel empty. Some of the most effective campaigns added:
- Live events (AMAs, streams)
- Creative challenges (memes, content quests)
- Recognition systems (leaderboards, badges, tiered rewards)
These create emotional bonds. Just be careful leaderboards can demotivate newcomers if the top is unreachable. The best systems offer multiple reward paths so everyone feels progression.
6
No bot resistance
If you don’t design for Sybil protection from day one, your campaign will get botted. And your budget will evaporate.
Use basic tools like:
- Wallet history checks
- Token/NFT ownership requirements
- One reward per address rules
- CAPTCHAs or identity verifications
Galxe and similar platforms now offer built-in filters. Still, it’s an arms race. Expect workarounds and plan accordingly.
7
Zero data feedback loops
Gamification is not 'set and forget.' You have to track:
- Which tasks led to retention?
- What % of users stayed active after 1 week? 1 month?
- Did they convert into real users?
Also: ask for community feedback. What did they like? What confused them? What made them want to leave?
Without these insights, you’ll just keep repeating broken loops.
What does work in web3 gamification?
Despite the failures, gamification isn’t dead; it just needs a smarter playbook. Let’s look at what’s worked and why.
Optimism quests
Instead of farming hype, Optimism used quests to educate users about its ecosystem via Galxe.
- No token promises just NFT badges for completing tasks
- Introduced users to real dApps and voting tools
- Result? Daily active addresses doubled from ~11.6K to ~25.1K
- 30-day retention increased, not dropped
Align tasks with real learning and value. Users stick around when they gain experience, not just tokens.
Yuga labs & Dookey dash
Yuga didn’t launch a ‘quest.’ They launched a full-blown meme tournament.
- Exclusive access for NFT pass holders
- Prize: a 1-of-1 'key' NFT, sold later for $1.6M
- Over 700,000 hours of gameplay
- Huge viral engagement via social media and e-sports crossover
Retention campaigns with real utility
Some projects have started taking a smarter approach to rewards by shifting from one-off drops to ongoing, utility-based systems.
Protocols like dYdX and Galxe have introduced seasonal or recurring loyalty programs where users don’t know exactly when the campaign ends, or it’s continuously refreshed. This unpredictability, paired with regular incentives, keeps engagement more sustainable.
A study on quest campaigns showed that after introducing permanent token rewards for completing actions, user activity increased by 128.7% over several periods and kept growing.
https://arxiv.org/pdf/2501.18810
The idea? Even a small token payout tied to meaningful action can bring people back.
Yes, this can feel a bit like keeping users ‘hooked’ with micro-rewards. But when done right (when the tasks are actually valuable and get more interesting over time) it can help build habits around product usage.
Gamification doesn’t need to be a hype stunt. It can be part of a user’s onboarding and ongoing experience.
Learn-to-earn: Gamification meets education
One of the biggest positive trends in 2023–2024 has been blending gamification with learning.
Projects started rolling out learn-to-earn and quest-to-learn formats where users complete educational modules or quizzes and earn rewards.
This approach hits two goals at once:
- The user gets valuable knowledge.
- The project onboards better-informed, higher-quality users.
Platforms like Galxe reward users with NFT badges for passing blockchain-related quizzes. Others, like Layer3, offer quests that double as interactive tutorials; walking users through protocols step-by-step.
Yes, the rewards still matter. But here, knowledge is the hook; not just the payout. And that tends to bring in users who care more.
Conclusion: No silver bullets, just smarter design
Gamification in web3 has gone through its share of hype cycles from early excitement to burnout and backlash. We’ve seen all the pain points: 90% user drop-offs, bot attacks, fake metrics, failed P2E economies.
Too many teams reached for quick fixes: drop tokens, launch a low-effort quest, watch numbers spike and then disappear.
But that doesn’t mean gamification is doomed. It just means it needs to evolve.
Done right, it can be one of the strongest tools for community growth and education. But it has to be part of the product, not an afterthought. Here’s what that looks like in practice:
1
Start with value
Every quest, badge, or reward should point toward something useful – insight, learning, fun, or connection. Even without the prize, users should walk away feeling it was worth their time.
2
Design for long-term motivation
Short-term rewards can hook people, but only layered systems – levels, status, deeper benefits – build habits. Help users transition from external incentives to internal satisfaction.
3
Know your users
Don’t try to attract everyone. Target users who are aligned with your mission. If you’re a DeFi protocol, design quests that bring in DeFi-curious users – not just general gamers. You’ll get fewer participants, but more real conversions.
4
Quality > quantity
If only 500 people join your quest but 100 of them become loyal users – that’s a win. Don’t chase inflated KPIs just to look good for VCs. Chase signal, not noise.
5
Adapt and experiment
Web3 is still early. What flopped last year might work this year with a twist. Concepts like soulbound tokens (non-transferable NFT achievements) are helping tackle ‘sellable rewards’ and pushing toward more reputation-based systems.
Projects like Lens Protocol are experimenting with social gamification, rewarding content creators. Friend.tech gamified personalities. Every iteration brings new insights.
Gamification isn’t magic. It won’t fix a weak product or save a team from bad fundamentals. If your app doesn’t solve a real problem or offer real value – point and badges won’t fix that.
But when paired with a great product and real community, gamification becomes the amplifier – a way to educate, activate, and retain the users who matter.
Web3 is finally moving beyond the ‘engage-to-earn’ era. The next generation of projects will build loyalty through meaning, not just money. And gamification, done right, might just be the bridge that gets us there.
#web3
#airdrops
#ambassador_programs
#gamification
Share this post
