“Axie Infinity,” a blockchain-based video game with a “play-to-earn” model, continues to hemorrhage players due to diminishing returns.
Developed by Vietnamese studio Sky Mavis, “Axie Infinity” has attracted a large player base in developing countries such as the Philippines, Indonesia, Brazil and Venezuela due to its real-world earning potential.
In the game, players buy Pokémon-like virtual creatures that double as NFTs (non-fungible tokens) to breed and battle for profits in the form of its in-game currency, SLP.
At the height of the “Axie” frenzy last year, players considered the platform a viable means to earn a living. Stories of players making more than their day jobs and being able to buy homes further increased the game’s popularity as most people were forced to stay home due to the COVID-19 pandemic.
The game’s economy has also given rise to guilds that loan their NFTs to thousands of “Axie scholars” to use and earn with.
Even amid its initial growth, gaming industry analysts have found the business model unsustainable as it relies on the continuous acquisition of new players to keep the in-game economy going.
The in-game token suffered from a massive oversupply and eventual hyperinflation as players cashed out all their earned SLP by selling them on crypto markets instead of spending it within the game.
“Axie Infinity” Shards (AXS), the platform’s governance token, peaked at over $170 last November but has since significantly dropped in value to just around $12.50.
Sky Mavis is also dealing with the approximately $620 million in Ether and USDC that the FBI said North Korean state-sponsored hacker groups stole in March. The hack, which was the largest-ever breach in the crypto sector by dollar value, further damaged the value of SLP.
In recent months, “Axie Infinity” developers have implemented several changes to address inflation and unsustainability, such as limiting the amount of SLPs generated per game.
However, the devaluation of the in-game currency and governance token slashed how much real-world money players could earn, prompting many to quit playing.
The Axie Infinity devs’ mentions are full of digital landlords pissed that their “scholars” (Filipino employees being paid in game scrip) are all quitting the game and no-showing their weekly quotas.
— Dan Olson (@FoldableHuman) April 12, 2022
According to DappRadar, Axie’s player count dropped from 63,240 in January to just 8,950 in June, registering a staggering 85% decline.
Christian Llloyd Navarez, who previously earned around $350-$450 for playing a couple of hours a day, lamented that he recently earned approximately $24 for a month of playing in January.
While thousands of players have left the game in recent months, some have stuck around waiting for changes to arrive in the form of updates or policy changes.
Jonathan Teplitsky, director of community growth at blockchain company Horizen Labs, told AFP that play-to-earn games such as “Axie” are a “house of cards” fueled by “hype and price speculation.”
“This entire system works well while the Axie company is flush with cash and willing to fuel a massive marketing machine,” he said. “If Axie wants to survive the next market crash, they will need to build some real-world utility into their game that does not depend on the mood of the markets.”
Featured Image via Axie Infinity