This a overall examination about what Axie Infinity did wrong and why it is dying. You can find the summary at the end.
First “Normal” Game on Blockchain: Axie Infinity
What is Axie Infinity?
Axie Infinity is a Pokemon-inspired 2D game that started to develop in early 2018. You attack your opponents in a turn-based mechanism. There are 2 types of battles: Arena and Adventure. In the Arena, you battle with other players while you battle with the computer in the Adventure mode.
You basically earn an SLP token in the game which has real-world value. Some people cover their living costs with the SLP they earn in the game. The average SLP gain was 150 SLP before August 2021 but they reduced it by half due to preserving the value of SLP. You would earn nearly $1.500 in a month with 150 SLP earning per day before August (1 SLP = $0.33). Currently, you can earn $180 in a month with 75 SLP earning per day. (1 SLP = $0.08)
I call Axie a “normal” game because the previous playable blockchain games are card games and just a few people play card games nowadays. The main purpose of card games is to make money out of the crypto market. Not make a good game that is desired by people.
Why AXS Token Has a Value?
There are 2 reasons for AXS token to be valuable. Network effect and use case.
People make AXS valuable by thinking AXS going to be valuable. Just like all crypto markets or the normal stock markets, people’s optimistic belief about AXS makes AXS valuable.
The second and real thing that makes AXS valuable is its use case. You need AXS if you want to breed your Axie to have new Axies. This need took AXS’s price to the moon even though there was a downtrend in the market.
So why would you want to breed new Axies then? Well, there 3 things that make you breed new Axies. First and the biggest reason is that newcomers buy Axies from the marketplace to play the game and as they buy the price of Axie goes up and you can make a good amount of money by breeding and selling them in the market. Secondly, you can take bonus advantages of having more Axies in the game (you have more energy if you have a certain amount of Axie, therefore you can play and earn more SLP). The third reason is that you can start a scholarship to have a passive income. The scholarship is basically you give your Axies to someone else and split the profit. There are even some guilds about it.
How is Axie Infinity’s Economy?
Axie Economy is the only bad thing about the project. Basically, it collapses when the number of newcomers decreases or stops. It is pretty much a ponzi-like scheme.
Newcomers buy Axies by Ethereum (which is another bad thing about Axie’s economy) and Axie’s prices go up. When Axie prices go up people who have Axie and money breed their Axie by burning some amount of SLP and AXS. This is the only thing that makes AXS and SLP price goes up. But, players mint new SLP tokens by playing the game and that makes SLP prices go down.
As Axie Infinity’s website, AXS token will have a use case for governance and as a currency in the marketplace. But there is no progress so far. Most of the users never touch AXS token and just earns and sells SLP token.
Why Axie Infinity is Dying?
As you can see there is a balance to keep SLP price relatively stable but unfortunately, this balance is not well established and this is why Axie Infinity is dying.
Every player mints at least 75 SLP (150 SLP formerly) every single day no matter there are newcomers to leverage SLP price or not. But there is a limit to growth. Even though the whole world gradually starts to play Axie infinity, there is a dead-end for this system.
Sadly, the end is about to come. Axie has more than 1.5 million daily active users and it seems the growth has stopped for now. The only way to play Axie Infinity is downloading its desktop app or android app as an apk file which is undesirable because of trust and that limits the growth. SLP price hit as low as 8 cents and this makes a lot of players quit playing just like me. Some people sell their Axie’s half of the price they buy because of lack of demand.
The uptrends you see above are the times when Axie obtains new players.
Downsides of Playing Axie Infinity
1- Fixed income: No matter how much you play, there is a certain amount you can earn. If the game would be fun to play, this would be a major demoralizing factor.
2- Daily tasks: Arguable it is quite hard to play a game just for money and have “daily task” barrier to earn the amount you can earn. It the main motivation is making money by playing, it becomes more and more annoying if you have barriers like daily tasks.
3- Lack of trust: Because the game is not on the trusted 3rd parties platforms like Google Play Store, I had to find a device that I don’t use.
4- Cost of collecting your income: I made 1.473 SLP by playing nearly a month and it was worth around $130. I couldn’t get my SLP’s out of the system but at that time transfer fee was above $500 because of NFT madness. I’ve waited 2 weeks and made my transfer with a $60 fee. Nearly half of my 1-month earnings went for just transfer and basically, I have played 2 weeks for Ethereum miners, 2 weeks for myself. Quite annoying.
5- Connection problems: There were a lot of connection problems probably because of the Ronin network.
Lessons to Learn
Value Creation and Economy
The token people earn should have a strong valuation. Any project which gets its valuation from growth eventually dies. The ideal valuation comes from people who like to play the game.
In an ideal metaverse, there should be as many as possible use cases for the native currency to have a high and healthy valuation. But there is only 1 use case for AXS token and that breeding which is a very little part of the game. Most of the players don’t breed their Axies.
Possible use cases for Axie:
- Governance (They promised already but never implemented)
- Stake (They promised already but never implemented)
- In-game items like accessories, boosters, etc.
- Betting over other players’ glories
Ethereum is the best network ever on this market but it has scaling issues. Games on the Ethereum network can not be successful due to transfer fees and speeds. Games have to use alternative networks like Axie did.
But what Axie did wrong is to make its own network called Ronin. Ronin is good enough but it doesn’t have a bridge to exchanges or other low-fee networks like Solana and Polygon. Even though you can play the game on it, you severely suffer from transfer fees when you withdraw your earning.
There are many options to use like Solana, Polygon, Avax, etc. But when we consider the time Axie Infinity build Ronin, they did the right thing because there was no strong solution at that moment.
Secondly, we can not imagine a game that depends on users’ effort to download apk files and play. Games should be published on major platforms like Google Play Store, Steam, App Store.
Blockchain Gaming (Or GameFi, Metaverse, etc.) is a quite new thing and it is normal to not have a perfect project. We will see a better project in the near future. But one thing is obvious; this is going to change lots of things and not just about gaming.
If we summarize the reasons why Axie is dying:
- The major reason: They built an unsustainable economy that collapses when the growth goes down.
- Minor reason: They didn’t build on a strong network and have their own.
- Minor reason: The game is not available on the major markets like Google Play Store and Steam.
Published By : Medium