Crypto’s hottest game is facing an economic maelstrom

Eight months ago, Toronto-based management consultant Ansel Gravelle came across a video game called. Axie Infinity, Promised to pay players cryptocurrency to fight Digital Monsters. After paying an admission fee of $ 1,000 and playing for over a month, Gravelle realized that he could make more money in other ways.

Together with a friend, the 24-year-old launched a company in July, offering “scholarships” to fund players who can’t afford it. Axie’s Entry costs account for up to half of your revenue in exchange for access to the game.

“If you have the capital, you can get a scholarship in a few hours,” Gravelle said. He hopes to start working full-time on this business called Axie Facts from January.

Gravelle is less than any other application on its own. Axie And its competitors have become the most popular gateway to bring the general public to the crypto market, building a new online world and financial system building block with tokens traded in digital ledgers. The game is full of businesses like Gravelle that create the whole economy and rely on it to survive.

AxieIs roughly based on the Pokemon franchise and rewards players with tokens when they win battles and complete quests.

Many players in developing countries rely on wealthier benefactors to pay the entry cost for the game of three monsters (Axies), which are non-fungible tokens that can be freely bought and sold on the exchange. Sponsors typically receive 30 to 50 percent of a player’s revenue.

Players can also use tokens to breed new monsters. This monster can be sold to new players who are trying to join the game.

But video game analysts have recently Axie’s Economy. To keep the balance, we mainly rely on the growth of new players.

Video games have long incorporated their own currency, Axie And other crypto-based titles allow players to convert in-game assets into real cash through officially licensed channels. This feature runs the risk of players monetizing most of their winnings rather than recirculating them into the gaming economy.

Sky Mavis, the company that developed it AxieRecently sought to stop the price plunge in Smooth Love Potion (SLP), a cryptocurrency token that players earn in-game.

According to game developers, players are increasingly choosing to exchange SLP tokens earned in the game for local currency rather than breeding new monsters for sale to other players. This contributes to the over-depreciation of SLP tokens in the game.

This slump affected players in developing countries such as the Philippines who participated. Axie After early users boasted of quitting their jobs to make money from the game.

Everything except the most experienced people in the last 3 months Axie According to an analysis by video game research firm Naavik, players are below the average daily salary in the Philippines. Some low-skilled players have fallen below the minimum wage since September, after considering sponsorship cuts.

Sky Mavis said wages from the game acted as a “lifeline for hundreds of thousands of people in the Philippines” during the pandemic, and the Naavik report “focused on players who over-discount the community and play. I have. ” Axie Just to earn income. ”

Number of Axie According to figures released by Sky Mavis, the number of users per day has more than quadrupled in less than three months to 2 billion in October. Analysts are now beginning to monitor signs of slowing growth.

“They can be 50 billion people [users]But if the growth line is flat, no revenue is being generated, “said Lars Doucet, a video game consultant who co-authored Naavik’s research paper.

Axie’s Performance can have a significant impact on dozens of start-ups that have created games that raise money from venture capitalists and reward players with potentially lucrative cryptocurrency tokens. More than traditional titles, the game has forced developers to act like central bankers and tweaked to control inflation and other economic variables.

Sky Mavis admits it Axie We promised to release new features that make the game more desirable for those who rely on new entrants for growth and are primarily unmotivated to monetize their revenue.

Axie’s The biggest supporters are driving an optimistic vision of the game, pitching It’s as an antidote to the economic model of traditional games because it pays people to play. In October, Andreessen Horowitz’s crypto fund made one of the largest investments in Skymavis to date, leading the raising of $ 152 million, bringing the company’s value to $ 3 billion.

Arianna Simpson, a partner of Andreessen’s crypto fund, said of the fast-growing group of virtual worlds, “What we’re looking at here is a surprising increase in the number of people actually working in the Metaverse. “.

Sky Mavis plans to sell over 90,000 plots of in-game virtual land that can be traded as non-fungible tokens, allowing outside developers to create new games in-game. Axie universe.

According to data provider Token Terminal, Sky Mavis, which reduces in-game transactions by 4.5%, has generated approximately $ 1.2 billion in revenue over the past year. The developers have promised to pass the financial keys to the players in the game, but the exact timeline of the transfer is not shown.

Meanwhile, the financial sponsored cottage industry has created some of the biggest rewards from the surge in game popularity.

Tokens issued by Yield Guild Games, the initial sponsor of Axie Filipino players have risen to a market value of nearly $ 800 million in a few months. YGG, which also raises funds from Andreessen, owned approximately $ 850 million in primarily related assets. Axie Other cryptocurrency games as of September.

Due to future earnings potential, engineer and computational scientist Akhil Jindal quit his doctoral course in the Boston area this month and launched the cryptocurrency game partnership Proof of Game.

Proof of Game sponsors over 700 players Axie According to the company’s website, the company aims to promote “a positive, empathetic and responsible citizen of the Metaverse.”

“This is a speculative social experiment,” said Jindal. “If it works, it will change the game, and if it doesn’t, there will be many lessons to learn.”

SkyMavis co-founder Aleksander Larsen said: Axie We have not yet experienced an increase in the number of players quitting the game.

Axie Infinity Shards (AXS), various in-game cryptocurrency tokens that represent ownership of the game, soared to a total market value of $ 8.8 billion as speculators demanded some of their growth. Sky Mavis owns about 20% of AXS tokens.

“I think we’ll continue to shock the world with what’s possible with this cute little pet game,” Larsen said. “People have never seen anything like that.”

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