FIFA, Sega, and other web2 giants are doubling down on blockchain despite a 17% decline in gaming activity, a 93% year-over-year drop in funding (a two-year low), and more than 300 dApps becoming inactive in the second quarter of 2025. In this context, the launch of Studio Chain by Karrat Foundation is not just another flash in the pan. The Layer 2 blockchain, built for web3 gaming and entertainment, aims to avoid the trap of excessive hype and the limitations of blockchain games, which failed to survive market conditions due to unsustainable tokenomics, insufficient investor backing, or poor retention.
Studio Chain is powered by $KARRAT, the native gas token, and was developed on Caldera and Arbitrum Orbit. The official launch partner, AMGI Studios, will debut its flagship title, My Pet Hooligan, as the first project on the new layer. The game is an Epic MegaGrant Recipient, won Best Action Game at the 2023 GAM3 Awards, and was officially selected for Mix LA Comic Con 2025, Debut Festival 2025, Mix Fall Game Showcase 2025, and devGAMM Showcase 2025. It is a real-world example of how web3 infrastructure can be used by mainstream entertainment IPs to improve accessibility and user experience.
A Unique Staking-Based Mechanism Democratizes Governance
Transparent governance with traditional gatekeepers sounds like an oxymoron, but decentralized autonomous organizations have their own set of issues. Theoretically, DAO blockchain governance enables members to manage a collective entity without a centralized authority. However, users’ voting rights are typically proportional to their contributions or stakes in the organization, skewing governance in favor of larger players.
Studio Chain introduces Resiliency Nodes, a unique staking-based mechanism. Twenty nodes, each activated by staking 5 million $KARRAT, will go live at launch. The RN model lowers the entry barrier in contrast to conventional validator systems, using open, pooled staking instead of license-based access. As a result, all community members contribute to uptime and security, regardless of how much they invest.
The innovative model enhances security amid the ongoing vulnerabilities that threaten DAOs’ integrity and functionality. Interoperability limitations and network congestion complicate operations, while security breaches loom as constant threats. Governance capture is another security issue, which occurs when wealthy stakeholders or external entities manipulate DAO governance processes, undermining community goals and interests.
Active community engagement and transparency help prevent governance capture, and Studio Chain’s L2 status and transparency features help ensure that decisions reflect the collective will and not individual interests. Fair token allocation is essential to preventing dominance and ensuring inclusive decision-making, as an unequal distribution centralizes control. Limits on holdings and transparent token issuance promote unbiased, token-based governance and community involvement, reinforcing the decentralized ethos.
Studio Chain’s architecture supports token-based incentive systems, interoperability, and on-chain ownership, and enables traditional media workflow integration, potentially allowing studios and creators to access democratized funding channels and mitigate issues with tokenized IP and content rights. This is relevant because blockchain games typically feature decentralized storage and pseudonymous ownership, which pose challenges for copyright enforcement. Due to gaps in copyright law in many countries, these opportunities depend not on statutory entitlement, but rather on the rules of the platforms selling the digital assets and the underlying code.
Promising Implications for Performance and Product Quality
A combination of L2 solutions, custom architecture, and sidechains can fulfill web3 gaming’s promise of being fast, scalable, fun, and affordable. Studio Chain can combine multiple transactions into a single batch before moving them to an L1 solution, reducing gas fees and congestion. It therefore functions as a dedicated web3 gaming network, with Arbitrum’s scaling capabilities guaranteeing the quality of the underlying architecture.
Democratizing funding channels is imperative as critics find that many web3 launchpads advance ideas without substance. The current industry needs higher-quality products, not large quantities of them. As of February 2025, Virtuals Protocol has facilitated more than 17,000 AI agent token launches, but questions remain about launchpads’ accountability and sustainability. While projects lacking substance continue to secure funding, most end up failing, reflecting a deeper problem within the industry. Launchpads have been reduced to hollow cash funnels that fund initiatives without requiring a solid technical base or even a real product.
Studio Chain’s focus on practical, entertainment use cases is a breath of fresh air in a space that bombards investors with superficial hype and half-baked pitches. Raising capital without reliable support may have worked for earlier web3 projects, where long-term growth considerations took a backseat to token distribution, but it does not benefit the market anymore. Gone are the days of low-effort launches and quick wins; new launches must focus on actual use cases and real products as regulatory scrutiny increases.
Reliable Infrastructure Increases Funding Opportunities
Quality product launches make the case for why blockchain gaming remains viable and worthwhile. The industry is down, but not done. The data at the beginning shows that both the industry reset and the buildup are real. Almost three-quarters (74.8%) of Q2 2025 funding was in infrastructure, while the rest went to web3 game studios. Evidently, investors are betting on the meat and bones of game development.
Most developers need several disconnected tools to move a project forward, in addition to many other factors to be addressed, including security, server hosting, maintenance costs, and backend development. It’s no surprise that projects can stall before launching. The focus is predominantly on raising capital, but capital doesn’t eliminate operational bottlenecks in itself.
Developers require end-to-end support and the right tools to build holistic products, but resign themselves to patching projects. Layer 2 blockchains’ low-latency infrastructure unlocks high-speed applications, making web3 feel as responsive as web2 without sacrificing its reliability and decentralization guarantees.