93% of Web3 Games Are Dead After $15 Billion Boom, Gamers Never Showed Up

• Caladan’s new report confirms that 93% of GameFi projects have failed, wiping out 95% of token values and collapsing studio funding by 93% since the $15 billion peak in 2022.
• The play-to-earn model destroyed capital at every layer, from venture investors and retail NFT buyers to gaming guilds.
• Eight Web3 games have already shut down in 2026, continuing a wave of 300+ closures, as funding dries up and developers with no gaming experience exhaust their runways.

GameFi (Game Finance), the model that combined blockchain-based asset ownership with play-to-earn mechanics, has effectively collapsed, with 93% of projects now dead, token values down 95% from their 2022 peaks, and studio funding down 93% by 2025, according to a new report from Caladan, a crypto market-making and trading firm.

GameFi is a category of blockchain-based games in which players own in-game assets as non-fungible tokens (NFTs) and earn cryptocurrency rewards for playing. The sector attracted up to $15 billion in cumulative investment, absorbing 63% of all Web3 venture funding in 2022 alone. By 2025, that share had fallen to single digits as capital rotated into AI, real-world asset (RWA) tokenisation, and Layer-2 infrastructure.

The core failure was structural, as the play-to-earn (P2E) model turned games into speculative financial feedback loops: players bought tokens or NFTs, earned rewards denominated in those same assets, and profited as long as new entrants kept buying in. Once inflows slowed, token prices fell, rewards compressed, and users exited, collapsing in-game economies entirely. At the height of the boom, just 12% of gamers had tried a crypto game, according to a Coda Labs survey cited by Caladan. Demand never matched the capital deployed.

Axie Infinity, which is considered to be the sector’s one-time flagship and the game that defined P2E globally, saw daily active users collapse from approximately 2.7 million at its peak to around 5,500 today. Telegram-based tap-to-earn title that attracted 300 million users, Hamster Kombat, lost 96% of them within six months of launch. YGG (Yield Guild Games), the flagship gaming-guild token, now trades 99.6% below its November 2021 peak, according to Caladan.

“Capital was destroyed at every layer simultaneously,” the Caladan report states, identifying venture capital, retail NFT buyers, gaming guilds, and the Telegram tap-to-earn wave as parallel casualties. In 2024, GameFi funding fell to roughly $859 million, which is down approximately 85% from the 2022 high of $5.56 billion, before dropping a further 93% by 2025. More than 300 blockchain games have shut down entirely. Analysis of over 3,200 Web3 gaming projects by ChainPlay found the average GameFi title survives roughly four months before its token drops over 90% and daily active users fall below 100.

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The collapses are continuing in 2026. Eight Web3 games have already failed this year, according to Protos, following 18 studio shutdowns across the first five months of 2025. Off The Grid, a Web3-integrated battle royale game, drew attention in April after reports of delayed employee salaries emerged. The studio’s CEO publicly dismissed the reporting as “FUD” and framed it as “a new narrative from haters.” A Blockchain Gaming Alliance (BGA) survey found that 32.6% of Web3 gaming developers cited cash shortages as their primary challenge.

Chris Heatherly, who ran game studio Great Big Beautiful Tomorrow before its own closures, described the VC dynamic directly: “They wanted redonkulous returns and had no patience,” adding that crypto-focused funds “stopped deploying and writing checks” by mid-to-late 2023. Jeff “Jihoz” Zirlin, co-founder of Axie Infinity and the Ronin Network, warned in January 2026 that the shutdowns are structural: “I will continue to say this, you’re going to see a lot of teams die.”

Animoca Brands, one of Web3 gaming‘s most prominent investors, with more than 380 blockchain bets including The Sandbox, Axie Infinity, and Yield Guild Games, has cut its pure gaming exposure to roughly a quarter of its portfolio.

Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by the Editorial Team.

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