Caladan Report: Web3 Games Burn $15 Billion, 93% of GameFi Projects Fail

On April 23, CoinDesk reported that data from market-making and trading firm Caladan shows that Web3 games have burned up to $15 billion in funding while failing to gain player acceptance in the pursuit of a token-driven future. The Caladan report states that approximately 93% of GameFi projects have officially declared failure, with token values plummeting about 95% from their peak in 2022, and funding for studios shrinking by 93% by 2025. Over 300 blockchain games have been shut down. The report notes, ‘Capital is being destroyed at every level,’ with venture capital, retail NFT buyers, gaming guilds, and the tap-to-earn craze among Telegram’s 300 million users all being victims during this period. Hamster Kombat lost 96% of its users within six months of launch, and the flagship gaming guild token YGG has dropped 99.6% from its peak in November 2021. Some individual project cases are alarming: Pixelmon raised $70 million during its NFT sale in 2022 but has yet to release a public game four years later; Ember Sword burned $18 million during its seven-year development and shut down last May with no refunds; Gala Games is embroiled in litigation, accused of co-founder misappropriating $130 million in tokens; and Square Enix quietly shut down its Symbiogenesis experimental project last July. Once a flagship of the industry, Axie Infinity’s daily active users have plummeted from a peak of about 2.7 million to around 5,500 currently (according to DappRadar data). The report cites a Coda Labs survey indicating that even at the peak of the craze, only 12% of players had tried crypto games. The shift in capital flow is telling: gaming accounted for 62.5% of total Web3 venture capital in 2022, but that proportion has dropped to single digits by 2025, with AI, real-world asset tokenization, and Layer 2 infrastructure absorbing the redirected capital. Even the most active supporter in the field, Animoca Brands, has reduced the proportion of gaming in its investment portfolio to about 25%, shifting towards stablecoins, RWA, and AI.