Research firm Caladan reports that 93% of Web3 games are effectively dead, while most usage metrics fell by over 90%.

Overview of the sector collapse

According to Caladan, investors committed between $12–15 billion to the GameFi segment since 2020, yet engagement and retention have sharply declined.

The market reached its peak in 2022, after which a crypto winter, the Ronin hack, and capital outflows toward AI and other segments accelerated the downturn.

Impact on leading projects and users

Even top-tier titles lost substantial audiences: daily active users for Axie Infinity dropped from 2.8 million to about ~100 000, illustrating the scale of the decline.

Caladan highlights that the majority of projects show activity metrics reduced by more than 90%, with many ecosystems unable to sustain developer and player interest.

Root causes identified

The report singles out tokenomics as a primary issue, where designs focused on investor returns rather than long-term user value collapse once growth slows down.

• Investor-oriented reward mechanisms led to unsustainable inflation of in-game economies.
• External shocks, including major security breaches, undermined trust in several flagship ecosystems.
• Shifts in venture capital priorities diverted funding toward alternative technologies like AI.

Conclusions and context

Caladan’s assessment frames the current GameFi environment as one where promises and speculative capital outpaced durable product-market fit, resulting in widespread project failures.

The firm’s findings indicate that without revised token models and renewed user-focused development, many Web3 game projects will remain nonviable.