Reconstructs its fate in the GameFi landscape
Axie Infinity, the blockchain-based game that has popularized the game-to-earn game model, often invites awe and suspicion. The game has created a new type of labor market and provides a quick return for game investors. However, the very volatile crypto of the game (Smooth Love Potion, or SLP), the hacking of the Ronin chain and the resulting new digital inequality pose threats to its existence. Axie is a form of “extreme entrepreneurship”, where success and failure can happen almost overnight, subject to the dynamics of SLP. Many predictions have been made regarding Axie’s upcoming collapse and lost confidence among the players. Can Axie rise to its former glory in the middle of the crypto winter and uncertain global economy?
As a game lover myself, I was very fascinated about Axie Infinity’s future, which led to my desire to explore and study it. I interviewed more than a dozen Axie leaders, guild members and scholars – some are still active while others have quit or gone to sleep – through the first half of 2022. I also saw them play Axie Infinity while asking them questions to make sense of the rough issues in the game and assess Axies mistakes and potential. I offer some strategies for how Axie can reconstruct her destiny and move on.
Equalizes the demand for SLP
One mistake Axie made was constructing too much demand for SLP. The influx of new players must be kept steady, but not grow too much to offer a smoother demand curve for SLP. This could have extended the game’s durability. The cost of acquiring Axies (the game’s digital collectibles that can be used in combat and trade) –– which will affect how investors and new players plan their return on investment (ROI) and control their appetite for recruiting new researchers –– should be kept steady , but grew slightly over time.
Another mistake is that Axie has been dominated by players from low-wage countries. This is because SLP earned is very attractive compared to their local standard of living. However, it is too risky to bet on a single group of players. Risk diversification is necessary. Axie can attract players from countries with medium to high pay and focus on the game’s “fun factor” while setting the “earnings factor” as a bonus. A move towards a game-to-own model, where players have an opinion on the game’s development, is necessary.
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One of the biggest mistakes was the misuse of Axie Infinity by players with multiple accounts, which increased the offer of SLP. I heard stories of single players playing on up to 50 accounts using multiple mobile phones. Axie was too slow to respond to this problem.
Balancing the offer of SLP
Another mistake was Axie’s economy in the game which rewards players SLP for all matches won. This severely increased the supply of SLP, which led to a fall in value. One strategy to correct this is to introduce more balancing mechanisms that burn SLPs. Examples include having an SLP penalty for those who lose a match.
Another problem is that many players do not take out their hard-won SLPs. A healthy outlet ratio for SLP is necessary to prevent oversupply of SLP. Axie should keep the “gas charge” when extracting SLPs extremely low, and can introduce a time-based system for removing SLPs or losing them, and set the cost of breeding Axier optimally to burn more SLPs.
The element of uncertainty is important in gaming economics to prevent a game from being exploited by players. Unfortunately, Axie has simply been too predictable in how players are able to win SLPs. Another strategy would be to offer a time delay between breeding and birth of new Axies, or even add some SLP costs to raising baby Axies.
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Creativation of Axie’s business model
A key component of Axie Infinity’s business model is the price of SLP, which is affected by a number of factors: supply and demand of SLP, supply of axes, cryptocurrencies, volatility of crypto and behavior of SLP traders. Thus, the price of SLP is partly manageable and partly outside Axie’s sphere of influence. Nansen estimated that Axies’ revenue of $ 1.35 billion (from May 2021 to May 2022) came mainly from breeding fees (85%) and marketplace fees (13%). This shows how limited Axie’s source of income is. Axie Infinity must find ways to expand its sources of income beyond breeding and marketplace fees.
A more creative business model is needed. To increase the number of new players, Axie must innovate and offer a gaming experience beyond a static environment with its small square battlefield, which is very boring for players. The small monsters may be allowed to roam around the world of Lunacia and face danger (eg a deadly epidemic) or axis-eating beast that will burn SLP or reduce supply. Players must be allowed to merge their axes with other players’ axes in a colossal battle against other axes – such as the epic battles in the mecha anime series Gundam – and thus increase the new demand for SLP. Developing the game with indie developers is important, but this requires a profit-sharing model for it to work. Axie can also change the Pokémon Go’s approach by allowing players to spend money on decorations, avatars and merchandise to increase revenue streams.
Some of my informants suggested that Axie should allow “SLP burning to upgrade to powerful Axier”, “expand the AXS market” and “host global e-sports tournaments”. Esports is a lucrative arena where Axie can stand out.
Another flaw was the perceived lack of communication between Sky Mavis, the developer and publisher of Axie Infinity, with the community. Many of my informants claimed that Axie’s plans for the future are unclear. There have also been complaints about the “game of power” shown by Sky Mavis’ core team against the Axie Infinity community. This requires a cultural fine-tuning of the Axie ecosystem.
The not-so-gloomy future of Axie Infinity
In the middle of this crypto winter, Axie sold over 325,000 Axies for more than 3,500 ETH in total, about $ 3.9 million. In my real-time experiments in the game with some Axie scholars in June 2022, the time to find enemies for each battle has remained the same, suggesting that there are still many Axie players out there, contrary to the prediction that they most players would leave Axie. However, it is a temptation for Axie players and managers to join other attractive games to make money. This is a new battle for Axie: «Swappers».
Axie Infinity may not disappear completely. It is likely to reinvent itself and chart a new fate in the rapidly changing GameFi landscape. GameFi has come to be like a room for experimentation in Metaverset that blurs the line between fun and work / investment.
This article does not contain investment advice or recommendations. Each investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph or Hong Kong Polytechnic University or its affiliates.
Yanto Chandra is an associate professor at The Hong Kong Polytechnic University. He is a pioneer researcher in Web3, NFT, GameFi and Metaverse using organizational and entrepreneurship perspectives.
