Eight months ago, Toronto management consultant Ansel Gravelle stumbled across a video game called Infinite Axis, which promised to pay players in cryptocurrency to fight digital monsters. After paying the $ 1,000 registration fee and playing for over a month, Gravelle realized he could make more money in another way.
Along with a friend, the 24-year-old launched a company in July which offers “scholarships” to finance players who cannot afford it. from Axie entry fees, taking up to half of their winnings in exchange for access to the game.
“Once you have the capital, you can land a scholarship in a matter of hours,” Gravelle said. He hopes to start working full time on this company, called AxieFacts, starting in January.
Gravelle is hardly alone – more than any other application, Axis and its competitors have become the most popular gateways to introduce cryptocurrency markets to the general public, laying the groundwork for new online worlds and financial systems powered by tokens that trade on digital ledgers. Gambling has spawned an entire economy, filled with businesses like Gravelle’s that depend on it for survival.
Axis, which is loosely based on the Pokemon franchise, rewards players with tokens for winning battles and completing quests.
Many players in developing countries rely on richer benefactors to pay the up-front cost of three monsters, or Axies, non-fungible tokens that can be freely bought and sold on the stock exchange. Sponsors typically take 30 to 50 percent of a player’s earnings.
Players can also use tokens to breed new monsters, which can be sold to new players looking to enter the game.
But video game analysts have recently started to question the sustainability of from Axie economic, which relies heavily on the growth of new players to remain in balance.
While video games have long incorporated their own currencies, Axis and other cryptocurrency-based titles allow players to convert their in-game assets into real money through officially sanctioned channels. This feature creates the risk that players will cash out the majority of their winnings instead of returning them to in-game savings.
Sky Mavis, the company that developed Axis, recently attempted to stem the free fall in the price of Smooth Love Potion (SLP), a cryptocurrency token that players earn in-game.
Increasingly, players have chosen to exchange the SLP tokens they earn in-game for local currencies instead of reinvesting them in breeding new monsters to sell to other players, the developer said. of the game. This has contributed to an overabundance of depreciated SLP tokens in the game.
The slump affected actors from developing countries such as the Philippines who joined Axis after early adopters bragged about quitting their jobs to make money from the game.
In the past three months, all but the most experienced Axis gamers earned less than the average daily salary in the Philippines, according to an analysis by video game research firm Naavik. Some poorly qualified players fell below the minimum wage from September, after taking into account the drop in sponsors.
Sky Mavis said during the pandemic, gambling wages have served as a “lifeline for hundreds of thousands of people in the Philippines,” and argued that the Naavik report “is shrinking the community too sharply and focusing on players playing Axis only to earn income ”.
Number of Axis Daily users increased more than four times in less than three months to reach 2 billion in October, according to figures released by Sky Mavis. Analysts have now started to watch for signs of slowing growth.
“They could have 50 billion [users], but if the growth line is flat, no income is generated, ”said Lars Doucet, a video game consultant who co-authored the Naavik research paper.
from Axie the performance could have big implications for dozens of start-ups that have raised funds from venture capitalists to create games that reward players with potentially lucrative cryptocurrency tokens. More than traditional titles, the games have forced developers to act as central bankers as well, making adjustments to control inflation and other economic variables.
Sky Mavis acknowledged that Axis relies on new entrants for its growth and has promised to release new features that will make the game more appealing to people who are not primarily motivated by cashing in their winnings.
from Axie the biggest funders have promoted an optimistic view of the game, to throw it is an antidote to the economic models of traditional games because it is paying to play. In October, Andreessen Horowitz’s cryptocurrency fund made one of its largest investments to date in Sky Mavis, leading a $ 152 million fundraiser valuing the company at $ 3 billion.
“What we’re going to see from here is incredible growth in the number of people who actually work in the metaverse,” said Arianna Simpson, Andreessen’s cryptocurrency fund partner, referring to a booming group of virtual worlds.
Sky Mavis plans to sell more than 90,000 in-game virtual lands that can be redeemed as non-fungible tokens, and will allow outside developers to create new games in the game. Axis universe.
Sky Mavis, which records a 4.5% reduction in in-game transactions, has made around $ 1.2 billion in revenue, almost entirely in the past year, according to data provider Token Terminal. The developer has promised to hand over the keys to the treasure to the game’s players, although it has not set an exact timeline for the transfer.
Meanwhile, a cottage industry of financial sponsors has been among the biggest rewards of the game’s rise in popularity.
A token issued by Yield Guild Games, one of the first sponsors of Axis players in the Philippines, reached a market value of nearly $ 800 million in just a few months. YGG, which also raised funds from Andreessen, had nearly $ 850 million in assets largely related to Axis and other cryptocurrency games starting in September.
The potential for future earnings has led Akhil Jindal, an engineer and computer scientist, to drop a doctoral program in the Boston area this month to start a cryptocurrency gaming partnership, Proof of Game.
Proof of Game sponsors over 700 players in Axis and similar games, according to its website, which says the company aims to promote “positive, empathetic and responsible citizens of the metaverse.”
“This is a speculative social experiment,” Jindal said. “If it works it will be a game changer, and if it doesn’t work then there will be a lot of lessons to be learned. “
Sky Mavis co-founder Aleksander Larsen said Axis had yet to experience an increase in the number of players leaving the game.
Axie Infinity Shards (AXS), various in-game cryptocurrency tokens that represent an in-game stake, have climbed to a total market value of $ 8.8 billion as speculators claim some of its growth. Sky Mavis owns around 20% of the AXS tokens.
“I think we’re going to continue to shock the world with what’s possible with this cute little pet game,” Larsen said. “People have never seen anything like this before.”