Research institution Caladan pointed out that the Web3 gaming sector is experiencing a comprehensive contraction: approximately 93% of projects are "basically dead," and the prices of related tokens have fallen about 95% on average from their 2022 highs, while funding for game studios has decreased about 93% from its peak. At the same time, capital allocation has also reversed significantly: in 2022, about 62.5% of Web3 venture capital flowed into gaming, but by 2025, it has dropped to single digits; quarterly funding has fallen from a peak of about $1.6 billion to approximately $18 million, a decline of nearly 99%. The report believes that after a period of expansion driven by high valuations and capital, the industry has now entered a clear cleanup phase, with funds accelerating to flow into AI, infrastructure, and RWA sectors.