Yield Guild Games closes its Web3 game publishing division and shifts to AI data

Yield Guild Games (YGG), a pioneer in the game-to-earn movement and an icon of the NFT era, will lay off 35 employees within a less-than-successful year of operation.

7/8/20262 min read

The key point: The "Casual Degen" game model.

YGG Play launched in 2025 with the ambition of building a "casual degen" gaming ecosystem – mini-games incorporating cryptocurrency rewards for a community of players who don't consider themselves traditional gamers. The company developed its in-house game LOL Land as a test product, signed agreements for nine other titles, partnered with Pudgy Penguins NFT, and launched its own token platform.

YGG Play's business model is based on the assumption that the cryptocurrency user market will continue to expand sufficiently to sustain demand for games with decentralized finance elements. However, let's assume this has been achieved after a series of adverse events.

The mandatory liquidation event on October 10, 2025, which wiped out over $19 billion in leveraged positions within 24 hours, was a turning point that Dizon identified as the moment when "retail market sentiment fundamentally changed." Players holding blockchain assets lost confidence, either preserving capital or abandoning cryptocurrencies entirely, and the number of blockchain app users decreased in response to this market sentiment. YGG's user base plummeted following this event.

Since October 2025, Bitcoin has fallen nearly 50% from its peak, while major altcoins have lost over 80% of their value, creating an environment where revenue from cryptocurrency game rewards correlates with a decline in asset prices, while operating costs have not decreased at the same rate.

Shifting focus to Artificial Intelligence

YGG will shift its focus to global AI training market datasets, moving away from its previous concentration on enterprise-to-enterprise game datasets. The organization determined that its global user community would generate behavioral datasets through real-world gameplay, building on previously obscure architectures where users completed tasks that labeled data as gamified.

YGG's core business thesis in the AI field focuses on the value of player behavior data to in-game decisions, reaction times, and strategic behavior in three-dimensional interactive environments for AI labs training "world models" to understand how physical and spatial environments work. Game data provides valuable insights into human decision-making processes, strategic thinking, and interactive behavior, making it useful for next-generation AI applications.

Similar to how YG Entertainment once acted as an intermediary connecting users in the Philippines with opportunities to earn income from NFT games, a groundbreaking model in 2021, the new AI strategy reuses the same global community infrastructure but replaces the buyer: instead of game studios needing players to participate in the ecosystem, now it's AI companies needing high-quality action data.

The company's financial situation

As of the end of Q1 2026, Yield Guild's treasury stood at $20.6 million, with $6.2 million held in stablecoins, T-bills, and large-cap tokens. The cessation of the unprofitable issuance unit and operational restructuring extended its operating runway to four years.

The $20.6 million treasury and four years of runway provided a relatively comfortable amount of time to prove the new AI business model, a crucial buffer since the B2B market for gaming behavior datasets was still in its early stages and lacked sufficient regulation to determine the product's value. The three founders of YGG remained, ensuring leadership continuity throughout the strategic transformation.

Disclaimer: The information presented in this article is the author's personal opinion in the field of cryptocurrencies. This is not financial or investment advice at all. Every investment decision should be based on careful consideration of your personal portfolio and risk tolerance. The opinion in the article does not represent the official position of the platform. We recommend that readers do their own research and consult experts before making any investment decisions.

Synthesized and analyzed by HCCVenture

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