Axie Infinity is a blockchain-based game that has made the play-to earn gaming model popular. It often inspires suspicion and awe. This game created a new job market and offers investors a quick return. Its highly volatile in-game cryptocurrency (the Smooth Love Potion or SLP), hacking of its Ronin chains, and the new digital inequality that has resulted pose serious threats to its existence. Axie is an extreme form of “extreme entrepreneurial” where success and failure can occur almost instantly, depending on the dynamics of SLP. Many predictions have been made about Axie’s imminent collapse and the loss of trust among its members. Is Axie able to return to its glory in the crypto winter?
Axie Infinity’s future was something that intrigued me as a gamer. This led me to want to study and research it. I interviewed over a dozen Axie guild members, managers, and scholars throughout the first half 2022. Some are still active, while others have retired or gone dormant. I watched them play Axie Infinity and asked them questions to help me understand the game’s complexities and evaluate Axie’s potential. I share some strategies to help Axie re-engineer its destiny, and move forward.
SLP demand can be lowered
Axie made a mistake by engineering too many demand for SLP. To provide a smoother demand curve, SLP must maintain a steady influx of new players. This could have extended the game’s shelf-life. The cost of Axies, the game’s digital collectibles that can be used for combat and commerce — which will impact how investors and new players plan and manage their return on investment (ROI), and their desire to recruit new scholars — should not change but be steady.
Another error is that Axie was dominated by lower-wage players. Because the salaries of SLP are so attractive in comparison to local living standards, this is why it is true. It is risky to place your bets on one group of players. It is important to diversify your risk. Axie is able to attract players from low- and medium-wage countries. They also focus on the game’s fun factor while giving the bonus of the “earnings factor”. It is essential to move towards a “play-to-own” model where players can have input on the game’s development.
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Multi-account players abused Axie Infinity, which led to an increase in the supply of SLP. This was one of the worst mistakes. There were stories of single players playing on up to 50 accounts with multiple mobile phones. This problem was not addressed by Axie.
Balance the supply of SLP
Axie’s ingame economics, which rewards players SLP for winning battles, was another mistake. This led to a significant increase in the supply of SLP and a decline in its value. This can be corrected by introducing more balancing mechanisms to burn SLPs. For example, a penalty SLP for losing a battle is one option.
Another problem is that players often don’t cash out their hard earned SLP. To avoid an oversupply of SLP, a healthy cashing ratio is required. The “gas fee” for cashing out SLPs should be kept very low. Axies can also introduce a time-based system to cash out SLPs and lose them. This will allow Axies to set the optimal cost for breeding SLP.
In-game economics is important to keep players from exploiting a game. Axie is simply too predictable about how players can win SLPs. A time delay could be used to allow for the birth and breeding of Axies. You can also add some SLP costs to help raise Axies.
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Axie’s business model can be creatively adapted
Axie Infinity’s key business model component is the price for SLP. This is affected by many factors, including supply and demand of SLP and supply of Axies. Crypto regulations, volatility of crypto, and the behavior and trading patterns of SLP traders are all important. The price of SLP can be managed, but it is not within Axie Infinity’s control. Nansen estimates that Axie’s $1.35billion revenue between May 2021 and May 2022 was mainly from breeding fees (85%), and marketplace fees (13%). This shows the extent of Axie’s revenue source. Axie Infinity needs to find other revenue sources than breeding and market fees.
It is essential to have a more innovative business model. Axie must be innovative in order to increase its player base. It cannot offer a boring gaming experience, as it is limited by its square battle area. You can allow the little monsters to roam around Lunacia, where they will face dangers (e.g., an epidemic or Axie-eating creatures that will reduce or burn SLP). Axies must be allowed to join forces with other players in an epic fight against other Axies, similar to the Gundam mecha anime series. This will increase demand for SLP. It is important to co-develop the game with indie developers, but it requires a profit sharing model. Axie is able to modify Pokemon Go’s revenue model by allowing players the ability to purchase decorations, avatars, and merchandise.
My informants suggested that Axie allow users to “burn SLP to upgrade into powerful Axies,” grow the AXS market, and host global esports tournaments.
Another error was the perception of a lack of communication between Sky Mavis (the developer and publisher) of Axie Infinity and its community. My informants stated that Axie’s future plans are unclear. Sky Mavis’ core team has been accused of “power play” against the Axie Infinity group. This needs to be addressed in the Axie ecosystem.
Axie Infinity’s not so grim future
Axie sold more than 325,000 Axies during the crypto winter at more that 3,500 Ethereum, or approximately $3.9 Million. My real-time Axie experiments with scholars in June 2022 showed that the time it takes to find enemies for each battle is the same. This suggests that there are still Axie players, contrary to predictions that the majority would quit Axie. However, Axie managers and players can be tempted to join other lucrative play-to-earn gaming opportunities. Axie’s “switchers” are a new threat.
Axie Infinity may not disappear completely. It will most likely reinvent itself and chart new paths in the rapidly changing GameFi landscape. GameFi will remain as an experimentation space in the Metaverse, which blurs the line between work/investing and fun.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph or The Hong Kong Polytechnic University.
Yanto Chandra, associate professor at The Hong Kong Polytechnic University. He is a pioneer researcher on the Web3, NFT and GameFi fields, as well as the Metaverse, which combines the organizational and entrepreneurship science perspectives.
Eileen Wilson –Technology and Energy
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