Bloomberg’s Joshua Brustein tells captivating story about rise and fall of first-ever play-to-earn unicorn Axie Infinity (AXS)
Mr. Brustein interviewed the directors of Axie Infinity and one of the players who bought their vision of the game to win and suffered five-figure losses.
Full-time job instead of “real games”
Boomberg Crypto tells the story of Alejo Lopez de Armentia, an Argentinian emigrant who started playing Axie Infinity amid the GameFi euphoria of Q3, 2021.
According to Mr. Armentia, he has pumped $40,000 in cash since October 2021 into in-game assets and items from the Axie Infinity world. At first, this strategy was profitable: the player made 300-400% weekly profits.
Mr. Armentia earned money in Axie Infinity in both avaliable ways, but mostly from breeding the in-game characters. However, after reaching its peak in November 2021, the popularity of Axie Infinity started to vanish—and so did all its economic metrics.
This decrease has amplified the fundamental flaw in Axie Infinity’s tokenomic design: its SLP token is inflationary by default and is under insane selling pressure that is increasing day by day:
The game is designed to offer ways to both earn and spend SLP within the game. Any tokens spent within the game just disappear. But play-to-earners instead cash out all SLP by selling them on crypto markets, meaning the total number of tokens increases over time. The additional supply depresses prices, in a crypto version of hyperinflation.
At the same time, Axie Infinity’s gameplay and graphics remain too primitive; one of Bloomberg’s correspondents even refused to call it a “real game”.
“I could’ve worked at McDonald’s and made more”
As crypto market capitalization dropped in Q1, 2022, the problems with Axie Infinity tokenomics became more and more dangerous: people started aggressively withrawing their SLP, trying to cut the losses.
As of May 2022, the average Axie Infinity player (in the Philippines there were large specific gaming guilds with thousands of athletes online) earned around $0.6 per day. Mr. Armentia calculated that he only managed to earn $5,000 during his eight-month trip:
I’ve been at it since August, so $5,000 in that many months is not something to be proud of, right? I could’ve worked at McDonald’s and made more.
Recently, the Sky Mavis team brought on former Pokemon Go product manager Philip La. He stresses that in his vision, Axie Infinity shouldn’t be treated as an alternative to a full-time job.
Instead, it “first and foremost needs to be a game,” Mr. La told Bloomberg Crypto.
At press time, the AXS token is changing hands at $17.03, a 90% drop from its ATH, while the SLP token has lost 98.95% of its net capitalization.
