The Web3 gaming sector is experiencing a massive decline in April 2026: 93% of projects are classified as “dead” due to extremely low levels of activity. This conclusion is found in a report by the research company Caladan, which provides a detailed analysis of the current state and trends in GameFi.
This is reported by Finway
GameFi Market Collapse: Investments, Failures, and Shift to New Technologies
From 2020 to 2026, venture investments in the Web3 gaming sector ranged from $12 to $15 billion, but most of this capital has effectively been lost. The largest influx of funds was observed in 2022 — around $4 billion, which accounted for 62.5% of all venture investments in Web3. However, after the peak, a crypto winter set in, leading to a sharp decline in investments, a series of high-profile collapses, and the notorious $625 million hack of the Ronin bridge, which resulted in a decrease in capital in the sector.
At the beginning of 2026, the industry is facing a real crisis — key indicators have fallen by more than 90%. Specifically, the number of daily active users (DAU) in the flagship project Axie Infinity dropped from 2.8 million to 99 thousand by the end of 2025. Venture capital has been redistributed to segments of artificial intelligence ($1.8 billion), tokenized real-world assets ($2 billion), and infrastructure ($2.6 billion).
Developers themselves are noting strategic changes: some studios, such as Mojo Melee, Planet Mojo, and Treasure DAO, have officially shifted their focus from GameFi to AI.
“The GameFi sector has not only diminished its own capital. The fact that it ‘captured’ 62.5% of venture investments at its peak has had consequences for the entire industry, which has been left without capital at a crucial stage of development.”
Caladan identified a number of signs that could have predicted the collapse: token and NFT sales before the game’s release, unfinished metaverses, flawed economic models (P2E), corporate governance issues, and endless development without a final product.
Examples of Failed Projects and the Scale of the Collapse
A striking example is Pixelmon, which raised $70 million in 2022 through NFT sales, but despite an additional $8 million in 2024, failed to bring a final product to market. Similarly, the Wilder World project raised over $60 million but remained in early access, with its token plummeting by 96%. The development of most similar games takes years, but the outcome remains uncertain.
In 2025-2026, the GameFi market faced a wave of mass closures: in the second quarter of 2025 alone, over 300 projects ceased operations, including Ember Sword, Nyan Heroes, MetalCore, Bloktopia, and others. Investment volume in the sector dropped from $91 million in the first quarter of 2025 to $73 million in the second quarter, and only $50-90 million at the beginning of 2026, with the number of deals not exceeding 15.
The collapse even affected promising projects in the T2E segment based on the Telegram messenger. For instance, the capitalization of the HMSTR (Hamster Kombat) asset fell from $300 million in August 2024 to $12 million in February 2025. Meanwhile, several gaming studios, such as Gala Games and Off the Grid, suffered due to internal issues.
Among successful projects, mostly simple and pixelated games remain, as well as hybrid solutions straddling Web2 and Web3.
As of April 2026, the situation is not improving: the number of inactive dApps is rapidly increasing, and the average asset value decline reaches 95%. Stablecoins are increasingly replacing native tokens as in-game currency.
Despite this, mixed signals are observed: in the first quarter of 2026, some gaming tokens showed growth, and some new projects, like Off the Grid, went public. At the same time, the industry is witnessing the closure of new solutions, cancellation of industry conferences, delisting of tokens on centralized exchanges, and a general deterioration of market conditions.
“The failure rate in the sector exceeds even the most affected segments of the dot-com era. Open-world games, photorealistic metaverses, and AAA shooters, which formed the investment narrative, have mostly not been realized or have been abandoned. Entire economic layers were built on the assumption of infinite growth and collapsed when growth stopped,” the experts concluded.
The further development of Web3 games will depend on investor interest and the ability of the few remaining projects to build sustainable business models and retain users.