During Covid 19 pandemic, where many people were losing their jobs, the popular P2E NFT game Axie Infinity came as a messiah by showing them a new path to a bright future with new goals. This game became the main source of income for those who lost their job during the pandemic. Unfortunately, it was temporary. The bull run of this game started facing a downfall this year, leaving many players’ expectations and investment goals unfulfilled.
Axie Infinity was created by the Vietnamese game developer company Sky Mavis, which has specialized in creating games with real player-owned economies running on blockchains. The game was first released in February 2018 and has turned out to be a success from the beginning. Axie Infinity is a digital pet universe where players fight, raise, and trade fantasy creatures called Axies. Axie is the first blockchain game to introduce both a desktop and native mobile application with the ability to earn money by simply playing the game. This is now known as ‘Play-To-Earn’ or P2E.
How can you make money through it?
To enter the Axie Infinity world, players need to purchase unique, non-fungible tokens called Axies. Axies are digital pets in the game, which exist in the Ethereum blockchain. These are used to win matches to get in-game currency, Smooth Love Potions (SLPs), which players can convert into real cash. Players can also breed Axies which can be sold on the Axie Infinity Marketplace to generate more income. In the good days, players and investors from different regions were making upto $1000 per month.
The downfall of Axie Infinity
In mid-2021, Axie Infinity attracted the attention of the cryptocurrency investors unlike any other nft game because of the sharp increase in the token price. The crypto token “AXS” shot from about 14 cents to above $150, handing out a mind-boggling 107,000%+ return. The game helped many people in the Philippines and Indonesia to make money during the pandemic period. This project opened the play-to-earn trend, which grew until the end of 2021.
But SLP collapsed 98%, falling to $0.005 because of its overwhelming supply. In other words, SLP’s tokenomics were bad. Every player was able to create a lot of daily SLP, but there were few ways to actually use the currency that doomed it to crash sooner or later.
Sky Mavis’ Ronin blockchain suffered a catastrophic hack, losing over $600 million. It affected the entire market and GameFi projects. The issue was temporarily resolved by a $150 million bailout led by Binance. However, the decline of this NFT game has become more evident through the incident. The game was facing an issue with its economy; SLP and the AXS have experienced volatility following many other crypto assets.
Steps to recover from price drop
Sky Mavis has made some tweaks to the game last December by adding an ambitious project which involves the long awaited land gameplay, also codenamed Project K. The currency has since recovered slightly to around three cents, but still far from the 2021 gold rush peak.
The popular play-to-earn token Axie Infinity (AXS) dropped heavily after a magnificent rally of close to $30 during the last trading day. The asset reached a three-week high but eventually failed to hold the gains and corrected by more than 18.5% since the early trading hours. Moreover, it is currently posing a possibility of a larger downside incoming very soon.
“People are starting to understand that it’s not free money falling from out of the sky, you do have to understand how to play this game well,” said YGG’s Buenaventura.
Adding to the woes of players in the Philippines, the country’s tax authority said last year that players should pay tax on their winnings from the game.
“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” said by Jonathan Teplitsky, CEO at Pipeline marketing.