How did TreasureDAO, aiming to be the Web3 Nintendo, head towards failure?

Author: Cookie, BlockBeats

On January 6, 2022, TreasureDAO's official Twitter account issued a bold declaration: "The Nintendo of Web3 will be a DAO."

On April 3, 2025, TreasureDAO released a nearly 15-minute video titled "The Next Chapter of TreasureDAO," announcing the decision to completely terminate the game publishing stack and game distribution and transition to AI.

After waiting for 3 years, the long-anticipated "Nintendo" never arrived. How did the once-thriving TreasureDAO gradually fall into obscurity?

Origins

Treasure was founded in September 2021 by John Patten (@smoldev__) and yyyy (@0xyyyy). It initially emerged as a Loot derivative project. Loot NFTs are generated from random weapon and equipment names, such as "Crown of the Dragon" and "Silver Ring," as shown in the image below.

The Loot NFT, which many found difficult to understand, led to the question, "Is this English word made of gold?"

Inspired by Loot, John Patten and yyyy thought, since randomly generated weapon names as NFTs was a brilliant idea, why not use names of common RPG treasure items like "Diamond" and "Emerald" to randomly generate NFTs? Thus, the "Treasure Bag" was born.

Soon, they established a staking website where users could stake NFTs from projects including $AGLD, Loot, and Treasure to earn $MAGIC tokens and Bridgeworld game Legion NFTs.

According to a tweet by @arius_xyz on September 8, 2021, staking a "Treasure Bag" NFT could yield 3600 $MAGIC in just 30 days. The historical peak price of $MAGIC was $6, meaning that staking a "Treasure Bag" NFT for 30 days could turn into $21,600 six months later.

Similar to Loot's vision at the time, Treasure aimed to build an on-chain gaming world from the ground up. After the 8 items in each "Treasure Bag" were individually split into NFTs, the number of staking transactions significantly increased. The congested Ethereum mainnet made the gas fees unbearable. Considering the poor player experience and the anticipated high demand for transactions after the game's release, Treasure decided to migrate to Arbitrum. TreasureDAO was officially established to promote this grand vision.

At that time, there was no NFT trading market supporting Arbitrum, so TreasureDAO's NFT trading market was launched. Later, this NFT market evolved into Trove, which for a considerable time became the undisputed representative of Arbitrum NFTs.

Glory

At that time, the Treasure team had a leading understanding of how to use NFTs and gamification to create the latest DeFi narrative. Even now, looking back at TreasureDAO's Medium, one can't help but exclaim, "They really know how to tell a story." "Liquidity is weather, liquidity is time, liquidity is a measure of spatial range," this metaphor will forever remain on my cryptocurrency quote mountain.

Not only could they tell stories, but they could also deliver. The speed at which TreasureDAO advanced its work was astonishing, not just within the Loot ecosystem but across the entire cryptocurrency space. Within just one month of launching, they completed resource splitting, resource animation production, cross-chain asset operations, and notably announced the integration of a new game called "Life," which was the first community project in the Treasure ecosystem not created by the team. The game's concept inspired me to join the Chinese white paper translation work organized by @GavinGPT, who even personally funded rewards for all translators.

In the process of evolution, individuals exhibit new characteristics and undergo age-related changes. They go to school, fall in love, pursue careers, experience many unique successes and disappointments in life, and ultimately die. Life is a long experiential board game. It should be an emotional experience. NFTs reproduce like humans, not like hamsters. Their lifespan is limited but extraordinary, just like our own.

When co-founder John Patten proposed an NFT project called Smol Brains, many did not understand and believed it would dilute the value of $MAGIC. However, Smol Brains soon became the leading NFT series on Arbitrum. This was the most successful narrative-driven GameFi series at the time. What impressed me the most was when the storyline progressed to the point where the island inhabited by the Smol Brains was about to sink, Smol Brains holders had to choose whether to board a rocket to escape to the moon. To build the rocket, Smol Brains had to stake to reach a certain IQ value. At that time, Smol Brains had already become too expensive for me, but I followed closely, wondering what would happen to the Smol Brains with insufficient IQ? Would they be destroyed?

Smol Brain was a Free Mint project. At its peak price, holding a Smol Brains from start to finish could yield $100,000 when converted at the price of $MAGIC. Another flagship project in the TreasureDAO ecosystem, Bridgeworld's Legion NFT, had a peak floor price of 20 ETH, a time when ETH diamond hands were still proud.

Before Treasure, the daily NFT trading volume on Arbitrum was less than 1 ETH. Since the launch of the NFT market on November 13, 2021, it achieved over $285 million in trading volume in just 7 months. By early 2022, Treasure's market was the second-highest-grossing NFT market globally, with just the Bridgeworld and Smol Brains series accounting for 10% of OpenSea's total trading volume.

By the end of February 2022, the price of $MAGIC reached its historical peak of $6.

Afterglow

However, the good times did not last long. After peaking at $6, the price of $MAGIC almost continuously declined. By May 2022, the price of $MAGIC fell below $1, and at its lowest, it dropped below $0.3. Although there was a rebound to around $2 in early 2023, since the peak, $MAGIC has never returned to even half of its historical high.

Despite this, games within the ecosystem continued to progress steadily, with more and more games choosing to join the TreasureDAO ecosystem. The most famous among them was "The Beacon," which exploded in popularity at the end of 2022, marking what I consider the last glory of TreasureDAO.

Due to the long development time and high difficulty of games, a significant number of games within the ecosystem ended up being abandoned, such as the aforementioned "Life" and "Battlefly," which once had NFTs priced in the four-digit dollar range.

Apart from the market attention triggered by this complete shift in development direction, the last time TreasureDAO was in the market spotlight was due to the AI concept promoted by Shaw. Shaw was originally a developer within the Treasure DAO ecosystem, responsible for the AI game project Smol World. The vision for Smol World was that each Smol Brain would act as an AI Agent in on-chain games, able to steal each other's assets for PvP, while the game itself integrated with the Eliza framework. At that time, influenced by this positive news, Smol Brains surged fourfold.

Doubts

Such a significant strategic adjustment announced suddenly in such a weak market environment naturally sparked many doubts.

Chinese KOL Blue Fox, who was once a supporter of TreasureDAO, commented under John Patten's tweet, "Why now? Why not earlier?"

This is also my question. During the peak of the AI concept last year, TreasureDAO did not lack market attention. Why did they not transition at that time but wait until now?

John Patten stated in the video, "This transition is not a choice but a necessity for survival. Even if financially healthy, this is the most rational choice." According to his disclosure, if only considering USDC-denominated expenditures and the stablecoins held, the remaining operational funds for TreasureDAO can only last until July 2025.

Currently, the TreasureDAO treasury holds $2.4 million in stablecoins to support infrastructure and Bridgeworld game development. Additionally, Flowdesk (TreasureDAO's market maker) controls about $1.49 million in assets, of which $786,000 is idle and can be reclaimed. If the DAO agrees to the proposal to withdraw these funds, the stablecoin assets will increase to $3.2 million.

The treasury also holds 22.3 million MAGIC, currently valued at about $2.3 million. Grants issued to games within the ecosystem are priced in USD but actually paid out in $MAGIC, calculated at the average price at the time of issuance. As the value of $MAGIC depreciated, the actual amount of $MAGIC required increased significantly, greatly reducing TreasureDAO's ability to fulfill its commitments.

Well, for such an urgent situation, it seems that "decision-making errors and untimely transitions" could explain it. However, some players also expressed confusion over TreasureDAO's financial expenditures—after all, the games being developed are not AAA titles; do they really burn that much money?

According to John Patten's disclosure, TreasureDAO's annual personnel expenditure is about $6.1 million, and annual operating costs are about $3 million, with the team size once nearing 40 people. When I asked ChatGPT to find a traditional game company with an annual operating cost of about $10 million, the answer was Telltale Games, an American game company that once made "The Walking Dead," with around 90 employees.

Nina Rong, an official from Arbitrum, also commented on TreasureDAO's financial difficulties:

Did TreasureDAO make money by migrating to zkSync? Yes, but it is also burning through it. The total grant from the Zk Foundation is about $1.1 million, half of which has been promised to game developers and will unlock over two years. The annual fixed cost of operating Treasure Chain is $450,000 (denominated in USDC), and even with planned unlocks, Treasure Chain will still incur a loss of $175,000 annually.

Conclusion

The predicament facing TreasureDAO may be the same as that faced by all projects in the cryptocurrency space. It is hard to blame them for expanding when they had surplus at home, but they tightened their belts far too late. This sudden official announcement leading to the drop in $MAGIC's price undoubtedly added insult to injury.

Currently, TreasureDAO has laid off 15 employees, completely terminated the game publishing stack and game distribution, and communicated with game partners to cancel remaining grants. Annual expenditures have been reduced from $7.5 million to $3.8 million, with plans to decrease to $3 million within a few months.

However, John Patten also emphasized that if $MAGIC depreciates significantly after the announcement and fails to recover, TreasureDAO will struggle to survive until 2026.

He proposed that TreasureDAO undergo a strategic contraction, focusing on four areas: the NFT market, Bridgeworld, Smol World, and AI Agents. Multiple governance proposals are also on the way, including reserving liquidation fees, withdrawing idle assets from market maker Flowdesk, confirming new product directions, and shutting down Treasure Chain.

TreasureDAO will still make games, but the vision of being the "Nintendo of Web3" has been completely erased. Faced with survival, they can no longer pursue their former ideals.

This ideal was not only theirs but once belonged to the entire Web3 community. Whether as project founders or as Web3 users, perhaps we have never lost our ideals, but we may all feel the disappointment of shattered dreams.

The era has ended.