Research firm Caladan reports a significant contraction in the Web3 gaming sector, with approximately 93% of projects now considered 'essentially dead.' Token prices related to these projects have plummeted by an average of 95% from their 2022 peaks. Additionally, funding for gaming studios has decreased by about 93% from its peak levels. The report highlights a dramatic shift in funding allocation. In 2022, around 62.5% of Web3 venture capital was directed towards gaming, but by 2025, this figure has dropped to single digits. Quarterly funding has fallen from a peak of approximately $1.6 billion to about $18 million, a decline of nearly 99%. The industry is now in a phase of significant correction, with capital rapidly shifting towards AI, infrastructure, and real-world assets (RWA).