“Even many Axie regulars say it’s not much fun, but that hasn’t stopped people from dedicating hours to researching strategies, haunting Axie-themed Discord channels and Reddit forums, and paying for specialized software that helps them build stronger teams…”
Bloomberg pays a visit to the NFT-based game Axie Infinity with a 39-year-old player who’s spent $40,000 there since last August — back when you could actually triple your money in a week. (“I was actually hoping that it could become my full-time job,” he says.)
The reason this is possible — or at least it seemed possible for a few weird months last year — is that Axie is tied to crypto markets. Players get a few Smooth Love Potion (SLP) tokens for each game they win and can earn another cryptocurrency, Axie Infinity Shards (AXS), in larger tournaments. The characters, themselves known as Axies, are nonfungible tokens, or NFTs, whose ownership is tracked on a blockchain, allowing them to be traded like a cryptocurrency as well….
Axie’s creator, a startup called Sky Mavis Inc., heralded all this as a new kind of economic phenomenon: the “play-to-earn” video game. “We believe in a world future where work and play become one,” it said in a mission statement on its website. “We believe in empowering our players and giving them economic opportunities. Welcome to our revolution.” By last October the company, founded in Ho Chi Minh City, Vietnam, four years ago by a group of Asian, European, and American entrepreneurs, had raised more than $160 million from investors including the venture capital firm Andreessen Horowitz and the crypto-focused firm Paradigm, at a peak valuation of about $3 billion. That same month, Axie Infinity crossed 2 million daily users, according to Sky Mavis.
If you think the entire internet should be rebuilt around the blockchain — the vision now referred to as web3 — Axie provided a useful example of what this looked like in practice. Alexis Ohanian, co-founder of Reddit and an Axie investor, predicted that 90% of the gaming market would be play-to-earn within five years. Gabby Dizon, head of crypto gaming startup Yield Guild Games, describes Axie as a way to create an “investor mindset” among new populations, who would go on to participate in the crypto economy in other ways. In a livestreamed discussion about play-to-earn gaming and crypto on March 2, former Democratic presidential contender Andrew Yang called web3 “an extraordinary opportunity to improve the human condition” and “the biggest weapon against poverty that we have.”
By the time Yang made his proclamations the Axie economy was deep in crisis. It had lost about 40% of its daily users, and SLP, which had traded as high as 40 cents, was at 1.8 cents, while AXS, which had once been worth $165, was at $56. To make matters worse, on March 23 hackers robbed Sky Mavis of what at the time was roughly $620 million in cryptocurrencies. Then in May the bottom fell out of the entire crypto market. AXS dropped below $20, and SLP settled in at just over half a penny. Instead of illustrating web3’s utopian potential, Axie looked like validation for crypto skeptics who believe web3 is a vision that investors and early adopters sell people to get them to pour money into sketchy financial instruments while hackers prey on everyone involved.
The article does credit the company for building its own blockchain (Ronin) to provide cheaper and faster NFT transactions. “Purists might have taken issue with the decision to abandon the core blockchain precept of decentralization, but on the other hand, the game actually worked.”
But the article also chronicles a fast succession of highs and lows:
- “In Axie’s biggest market, the Philippines, the average daily earnings from May to October 2021 for all but the lowest-ranked players were above minimum wage, according to the gaming research and consulting firm Naavik.”
- Axie raised $150 million to reimburse victims of the breach and repair its infrastructure. “But nearly two months later the systems compromised during the hack still weren’t up and running, and the executives were vague about when everything would be repaired. (A company spokesperson said on June 3 that this could happen by midmonth, pending the results of an external audit….):
- Days after the breach it launched Axie: Origin, a new alternate version with better graphics/gameplay — and without a cryptocurrency element.
- About 75% of the 39-year-old gamer’s co-players have “largely” stopped playing the game. “But at least one was sufficiently seduced by Axie’s potential to take a significant loan to buy AXS tokens, which he saw as a way to hedge against inflation of the Argentine peso. The local currency has indeed lost value since he took out the loan, but not nearly as much as AXS.”
Thanks to long-time Slashdot reader Parker Lewis for sharing the article
