93% of Web3 Gaming Projects Are Now ‘Effectively Dead,’ Including Hamster Kombat

Crypto market-maker Caladan estimates that 93% of Web3 gaming projects are now effectively dead. Roughly $12 billion in capital has been committed since 2020, with average token prices off 95% from their 2022 peaks.

Published April 22, the study is built on a ChainPlay review of more than 3,200 GameFi titles. It reads as one of the harshest sector post-mortems crypto has produced.

Five Structural Failures, Not a Market Cycle

Caladan argues the collapse was not simple market timing but the product of repeated design flaws across the GameFi sector. Projects sold tokens and NFTs before playable builds existed.

Pixelmon raised $70 million in a February 2022 mint and shipped no public game four years later. The Sandbox pulled in $93 million from SoftBank but never sustained more than 4,500 daily on-chain users.

Pixelmon Performance. Source: Caladan

Play-to-earn tokenomics required a constant flow of new buyers to pay existing players. Axie Infinity peaked at 2.8 million daily users before collapsing to about 99,000.

The damage spread beyond studios. The Telegram tap-to-earn wave saw Hamster Kombat fall from 300 million users to 12 million in six months. Yield Guild Games (YGG) is down 99.6% from its all-time high.

Hamster Kombat: 300M to 12M Users in 6 Months. Bar chart showing the user collapse from Aug 2024 (peak) through Nov 2024 (3 months) to Feb 2025 (6 months). Source: Caladan

Annual funding fell from $4 billion in 2022 to about $360 million in 2025. Gaming’s share of Web3 venture capital dropped from 62.5% to single digits as capital rotated to AI and real-world assets.

Caladan found 58% of venture firms booked losses between 2.5% and 99%.

“Between 2020 and early 2026, an estimated $12 billion to $15 billion in venture capital, token sales, and NFT proceeds flowed into blockchain gaming…Of the venture firms that invested in the sector, 58% have realized losses between 2.5% and 99%,” read an excerpt in the Caladan report.

A Narrow Group of Survivors

The firm identified a small group of survivors that built games first and treated tokens as supporting infrastructure. Gunzilla Games’ Off the Grid, backed by over $100 million, became the first major Web3 title on Steam.

User metrics remain weak too. Daily active wallets slid from 7 million in January 2025 to 4.66 million in the third quarter, a 33% decline.

Whether the early 2026 token rally holds depends on the survivors. They must show real game businesses, not another wave of speculation.