The number of GameFi projects has continued to rise steadily, reaching 1,551 games as of June 2022, crypto exchange Binance reports in its semi-annual research report. That said, the sluggish growth is evident, as month-to-month growth has slowed to a low single-digit percentage, clocking in at 2.5 percent in June 2022, the report said.

The name GameFi combines the terms “game” and “finance” and includes both gameplay and financial incentives. In addition to simple financial rewards, GameFi offers players the chance to own digital assets in the virtual world, along with the option of interoperability by bringing these assets across different virtual worlds.

Binance’s research report said that GameFi has tremendous potential arising from the integration of properties of Blockchain technology, gaming, financialization and non-replaceable tokens (NFTs), which has contributed to significant interest in and growth of GameFi.

According to the report, broad overall negative market sentiment likely contributed to this decline as market participants took a breather from Blockchain activity and the number of new game launches slowed.

Moreover, the report has cited that Ethereum remains the dominant Blockchain with the largest number of GameFi projects built. Market share has also steadily declined from over 50 percent in July 2021 to around 35 percent in June 2022.

“Private investments are good indicators of institutional importance and can serve as proxies to measure the health of the space. For the first half of 2022, GameFi witnessed healthy deal flow,” the report said.

In addition, total capital investment in GameFi in the first half of 2022 was more than $4.1 billion, contributed by a behemoth of $2 billion raised by Epic Games.

“This represents a 38 percent increase compared to the second half of 2021. Overall, GameFi remains a key focus for institutions; Andreessen Horowitz launched a $600 million gaming fund in May, and Immutable launched a $500 million venture fund in June focused on Web3 games,” the report said.

GameFi is also changing the rules of the game by bringing a new group of players into the Blockchain community.

GameFi is also changing the rules of the game by bringing a new group of players into the Blockchain community. The size of the gaming market is estimated to be about $175 billion, and GameFi’s market cap is less than 4 percent of that at just $6.2 billion.

“In the first half of 2022, tangible actions were taken by traditional gaming companies to enter the Blockchain gaming space,” the report said.

Square Enix, a gaming company, sold $300 million in valuable intellectual property in May 2022 to fund its Blockchain initiatives; Epic Games raised $2 billion in April 2022 to develop its Metaverse efforts.

However, companies like Ubisoft, EA (Electronic Arts), a gaming company, and Tencent have also entered the Blockchain gaming space, albeit to varying degrees.

“This means increased competition for existing Blockchain game companies; it is a positive sign for the industry in terms of driving innovation,” the Binance report added.