Play To Earn Crypto Games: The Story of Axie Infinity

Axie Infinity began in 2018 but has broken out very recently as the popularity of play to earn crypto games fueled the game’s rise to stardom. An up-and-coming powerhouse on the crypto market, Axie Infinity was built on the Ethereum blockchain and uses its own cryptocurrencies – AXS and SLP – to power its in-game features. 

Players around the world have been attracted to Axie’s style but more importantly many players are using the game to generate revenue and achieve financial independence. Of course, this seems a bit too good to be true. How can players earn money just for competing in a digital game? You wouldn’t be the first to wonder if Axie Infinity is a scam and you certainly won’t be the last. To understand Axie Infinity’s rise to success, it is necessary to understand how its current format is being used by the Axie Infinity community and what the future holds for Axie Infinity and games like it.

Axie Infinity Background

Essentially, Axie Infinity is a game built around trading and battling creatures called Axies along with other players and NPCs. These creatures are collected or bred, but before you can breed an Axie you must use the in-game cryptocurrency – Smooth Love Potion or SLP

Players can earn SLP in-game or buy it from crypto exchanges like Binance. Currently, SLP is trading at $.0198 but the breeding fee is at least 1800 SLP. It’s important for players to breed several Axies because each creature has different traits and stats which determine its battle role.

What separates this game from many others, is that its Axies are actually NFTs – which means each creature is a unique unit of data that’s not interchangeable with any other. Like Pokemon or Yu Gi-Oh, Axie Infinity uses a turn-based card game for its battles and as long as the player eliminates its enemies on the opposing team – they win. Of course, this means each turn the player must strategically play their cards to maximize their chance of winning.

While Axie Infinity is far from the first NFT game, other NFT games like CryptoKitties, Sandbox, and Decentraland haven’t attracted the same hype as Axie. But why is that? A big reason for Axie’s success is how easy it is for players to earn income from the game. 

Play To Earn Crypto Games

Players earn money by battling and trading Axies to gain SLP. After a certain number of battles, the amount of SLP depends on the player’s matchmaker rating which increases or decreases as they win or lose battles. But many players earn money by breeding and selling their Axies as well.

By breeding an Axie, players are basically creating their own NFT which can be traded for SLP. But given the finite Axie market, some creatures are sold for incredible amounts. For example, the most expensive Axie ever sold went for 300 Ether or $776,000. On average, players reportedly earn around 4,000 – 6,000 SLP or $520 to $780 by playing the game. For a lot of players this is especially worth it because as the game gains popularity and the coin’s value increases, the amount they make from the game will also increase.

On the other hand, if SLP loses value, they will also be making less so there is an incentive for current players to bring in new players to keep SLP’s value strong. Despite many believing Axie is one of the best play to earn crypto games, some people compare it to a ponzi scheme.

Axie Infinity Scholarship System

Another reason is that every player must purchase at least three Axies to start out which can require a $1,200 investment because the price per Axie ranges from $300 to $400. Now this is a considerable amount of money and has prevented some potential players from joining the game.

Since the cost of starting out is prohibitory for some, Axie Infinity has developed an informal scholarship system. Veteran players or managers lend out their Axie teams to new players or scholars who then earn SLP on their manager’s behalf. But in exchange for this free experience, the manager takes a 50-60% cut of their scholar’s earnings

Axie Infinity was first developed by the Vietnamese company Sky Mavis. Because of this, the game gained its following overseas and now 40% of Axie Infinity’s 350,000 daily active users live in the Philippines. Players earning $13 USD each day make about 657 Philippine pesos. Interestingly, only 5.72% of Axie’s players are Americans while players in Venezuela, Thailand, and Brazil make up around 14% of the game’s total users

While it appears that Axie Infinity’s developers have no intention of disrupting the scholarship system, it does present a significant problem for players. The system is not an in-game feature meaning managers are not regulated by the game. As a result, managers could take more of the scholar’s earnings than was agreed to or even rob them all together – presenting a major obstacle for the Axie community. 

Some critics argue that the scholarship system is the real Ponzi scheme since managers are incentivized to maintain the value of their Axie investments by bringing in scholars. Scholars will not only work for them, but more importantly, will buy Axies of their own one day. As long as new scholars keep coming in and eventually purchasing Axies, the demand for SLP and AXS will remain strong. 

While fundamentally the value of SLP is based on demand, Axies are still digital assets and like any NFT they can be bought or sold in the marketplace at any time. As with any investment, people are taking a risk because its value could increase or decrease but this does not make Axie Infinity a ponzi scheme. 

Axie Infinity Upgrades

Still, it’s essential for Axie’s framework that its user community continues to grow and this could be one reason why Axie Infinity is developing an upgraded battle system, “Axie Infinity: Origin”. Bringing a slew of new features to the game, the “Axie Infinity: Origin” is expected to launch by March 2022 – as the company finalized its launch post and is now in the process of adding graphics to finish the game. 

This game will not only feature upgraded art, animation, and mechanics, but it will most importantly let players try Axie for free – by giving each Origin player three free Axies – before investing in their own team. While Axie Infinity has grown a lot over the last three years, the free trial upgrade will no doubt attract even more users as it effectively removes the barrier to entrance for newbies. However, it is important to note that these beginning Axies are not NFTs, and using them will not award players SLP.

Despite that cost barrier, Axie Infinity is likely becoming the most popular play to earn game. In fact, Axie Infinity’s NFT collection recently became the first to achieve $4 billion in sales – outnumbering the $2 billion in sales for CryptoPunks – one of the oldest NFT projects. Because Axie Infinity operates on the Ethereum network, the switch cut down fees helped avoid network congestion that would otherwise stall player actions such as breeding and trading Axie NFTs.

This switch and other upgrades fueled Axie Infinity’s sudden surge in popularity as major investors like Reddit co-founder Alexis Ohanian jumped on board to provide $7.5 million in funding. Axie has already supplemented that funding with a $152 million investment through the software venture capital firm Andreessen Horowitz aka a16z. With the infusion of funding from investors and more activity from its users, Axie has been busy rolling out a series of updates including a decentralized exchange called Ronin DEX which will also be built on the Ronin sidechain.

Axie Infinity has been growing exponentially the past few months, reporting over 830 thousand accounts owning the RON token. The platform has also seen over 134 thousand daily paid transactions using RON as well as an average of almost 860 thousand daily free transactions. To ensure further growth, Axie Infinity recently announced that they onboarded an events partner to help execute its first large-scale gathering within the community.

Axie Infinity has been also working on a building program which would allow the community to co-create in the Axie Infinity ecosystem. Successful, the program was met by an overwhelming number of applications and has highlighted that they will elaborate on that in the near future.

Axie Infinity Shard (AXS)

But no discussion of Axie Infinity is complete without diving into Axie’s cryptocoin – Axie Infinity Shard (AXS). The coin saw a 41% overnight increase last October after its developers announced plans for a $60 million token distribution or airdrop for early adopters of its staking system.

This is a big update for the cryptocoin because staking is essentially a way for players to earn passive income by “locking up” a portion of their cryptocurrency over a period of time. Staking is beneficial for the blockchain network because it takes AXS out of market circulation – preventing oversupply and bolstering its value. Usually staking provides users with interest on their crypto investments so the announcement was an immediate success with AXS holders. 

From these early adopters, Axie Infinity randomly chose 10,000 wallets to receive a share of the 800 thousand AXS airdrop. But all stakers will benefit from the 240% annual percentage rate distributed from 78.3 million AXS set aside by Axie Infinity. As an added bonus, staking will also give players voting rights and input on how the Community Treasury should be used which will continue growing the Axie community. 

On February 8th, AXS saw massive increase in price as the team changed the games’ overall reward structure as a way to ensure the future progress of the game. Axie Infinity’s season 19 rewarded its best gamers with 3 thousand AXS tokens. In the following season, this reward as increased to 117,676 for the top 300 thousand players – positioning Axie as one of the fastest growing play to earn crypto games.

Now, AXS has a market cap of $7.1 billion AXS and ranks 46th among cryptocurrencies. Out of its 270 million supply, only 60.9 million tokens are currently in circulation. The coin has been on a major run due to its updates and staking announcement, with this in mind a dip in value is to be expected but crypto’s volatility should never be underestimated.

AXS Technical Analysis

play to earn crypto games - AXS Chart

At the time of this writing, AXS is valued at $48.77, but the coin shows a relative support at 46.52 and a secondary support at 42.48. Its first resistance lies at 50.38 with a secondary resistance at its recent high of 57.07. Accumulation has been consistent despite a recent downfall in light of the current bearish market conditions. Currently, the RSI is at 60 but is trending downwards and the MACD recently had a bullish crossover.

Play to earn crypto games - AXS Chart

AXS spiked to almost $72 at the beginning of February as Axie Infinity reduced 56% of SLP token supply – leading to a major increase in the currency’s value. However, like the majority of cryptocurrencies, AXS lost a lot of its value recently given the downtrend of the overall crypto market in light of the Russia Ukraine crisis. Despite the recent dip, accumulation continues to trend upwards – reflecting investors’ bullish sentiment on the token’s potential going forward. While AXS is still trading far from its ATH of nearly $160 in last November, the token has a promising future in spite of its constant development, enhancement and growing community.

Smooth Love Potion (SLP)

However, a better gauge of AXS value is probably Axie Infinity’s popularity and the growing real-world applicability of SLP. Given the game’s tremendous following in the Philippines, many businesses are offering services in exchange for SLP and even valuing SLP in relation to real-world items instead of the Philippine peso or US dollar. 

This was mostly triggered by pandemic related restrictions which tightened the Philippines’ economy and caused an increasing number of businesses to accept SLP. With many savvy business owners adjusting their standards to make money off of Axie Infinity players loaded with SLP, it is clear that play to earn crypto games are already making a revolution.

In early February, Axie Infinity announced it will implement changes to its reward system in order to rebalance its ecosystem. To do that, the game initiated a 56% reduction in the supply of Smooth Love Potion (SLP) tokens – leading to massive 40% increase in value which left the currency trading at $0.04 shortly after. However, SLP fell in the weeks following this announcement line with the downtrend in the crypto market.

Axie Infinity Future

Unlike many other cryptocoins, SLP has real life usefulness which is important when considering the future of Axie Infinity. While Axie Infinity is far from the only play-to-earn NFT game, it is one of the first and its established following will only continue to grow as more people enter the play-to-earn economy. In light of the success of Axie Infinity’s cryptocurrencies and its edge as not only the biggest NFT project to date but the biggest blockchain game as well, means it will likely continue beating out its competition. Given that Axie Infinity combines NFTs with a play-to-earn model – many believe it could be the perfect candidate for a major metaverse project.

On top of that, Axie’s parent company has reached a total valuation of almost $3 billion so the game is undoubtedly hitting every growth metric. In the third quarter alone it passed 1.5 million active users and $776 million in revenue leading the game’s co-founder to predict Axie Infinity will hit $1 billion in revenue by the year’s end. Axie has also become the most traded NFT collection ever, surpassing $2 billion in trading volume. With this impressive growth in key performance metrics, the company could be well-positioned to grow further as it capitalizes on the lucrative metaverse industry.

Despite all these wins, the road ahead is not all roses for Axie Infinity. With revenue declining recently due to a change in the game’s price scale for breeding in-game characters, its developers will need to focus on retaining users and maximizing growth. Luckily, the company does have some plans for the future as it looks to expand Axie Infinity’s features to include financial services such as a decentralized crypto exchange, a debit card, and crypto lending and borrowing. 

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