Filipino players ditch crypto games

• By Mariejo Ramos / Thomson Reuters Foundation, MANILA

At the height of the cryptocurrency’s COVID-19 pandemic boom, migrant worker Gian Carlo McGlay thought he had found a way to avoid lockdown and provide income to dozens of unemployed people from his hometown in the Philippines.

However, McGlay’s dreams of leading a team of “play-to-earn” cryptocurrency players focused on the Axie Infinity game quickly collapsed when crypto prices crashed, leaving the 32-year-old with a loss of 1 million Philippine pesos (US$18,031) .

“Nothing was left. “My Axie Infinity assets became worthless, so I just gave them away,” McGlay said.

Photo: AFP

One of a new breed of blockchain-based online games that mixes entertainment with financial speculation, Axie Infinity also attracted investors who saw it as a way to introduce more people to cryptocurrency.

Axie players can earn cryptocurrency by earning tokens they win in-game – called smooth love potion (SLP). For a while it was a lucrative business.

McGlay’s “scholars”—a term applied to players who cannot afford to buy the game’s characters themselves, so instead rent them out from so-called managers in exchange for a cut of their earnings—originally earned 5,000 to 10,000 pesos per week.

Unlike other Axie executives, McGlay — who worked as a fisherman in Alaska before the pandemic — said he made no profit from the venture, letting the scholars keep all earnings.

At its peak, Axie Infinity drew 2.7 million active daily users, but those numbers have plummeted to around 250,000, according to Cryptogambling.tv, a website focused on cryptocurrency gaming.

Half of the game’s players came from the Philippines – and many others from developing countries such as Brazil, Indonesia, Peru and Venezuela.

Yield Guild Games (YGG), a group that invests in non-fungible token (NFT) games, said it “prioritized providing scholarships in emerging economies where job opportunities are lacking and government assistance has been limited” during the pandemic.

Many managers like McGlay faced heavy losses when the value of the game’s SLP tokens fell 99 percent from their peak last February, reflecting a collapse in the price of cryptocurrencies.

Axie Infinity was dealt another blow the following month, when hackers stole around $615 million in cryptocurrency from a blockchain network that allows users to transfer crypto in and out of the game.

While some Axie executives say their motives were philanthropic, other small investors were motivated by the potential gains.

Christopher Cruz, 36, a Filipino businessman and cryptocurrency trader who used to manage 200 Axie scholars, said he made as much as 600,000 pesos per day on the game by taking a 60 percent cut of players’ earnings.

“I felt like a drug lord,” Cruz said. “I could buy anything I wanted — every item in the mall was never too expensive — during that time.”

His scholars, who were mostly high school students and gig workers from poor provinces, earned a daily income of 450 pesos, just below the minimum wage of 470 pesos in regions outside the capital, Manila.

A Filipino doctor, who asked not to be named, said it was “extremely easy” to recruit players during the pandemic and that her income as a manager was equal to her income from her regular job.

SLP tokens were worth 3 pesos each when McGlay, Cruz and the doctor joined the game. The token’s value peaked at 20 pesos, before falling steadily towards the end of 2021. It now stands at around 0.16 pesos.

“It’s no longer worth it. Gaming also became more difficult,” Cruz said, adding that it was now difficult to earn 50 SLP per day – down from 150 in his heyday.

Losing their new source of income, legions of scholars left the game, turned to gigs as delivery riders or online clothing sellers, or pursued full-time education.

“The players who were motivated solely by the financial benefits of the game have moved on to other things now,” said YGG Philippines manager Luis Buenaventura.

YGG continues to rent out Axie’s NFT characters to interested players, “but it’s not as necessary as it once was since these NFTs are all affordable now,” he said.

Axie’s dizzying ups and downs should serve as a warning sign to potential investors in the volatile crypto world, said Elaine Tinio, a marketing expert in Manila who used to play the game for up to four hours a day to boost her income.

Excited by her initial profit, she spent more and more money on Axie characters before a sharp drop in the value of the game’s SLP token left her facing a loss of 200,000 pesos, equivalent to about five months of her salary.

“Greed got the best of us,” she said.