A Crypto Game that Turn Pandemic Jobless Into Traders
What could go wrong to earn money while playing a game, huh?
Pandemic is not only taking lives but also taking jobs from everyone. Business was closing down and people got unemployed. Economy in general was not in a good condition. Recession was inevitable.
To be more specific, young people are the one who have been particularly badly hit by the pandemic. Shops, pubs, restaurants and entertainment were unable to fully open and these are areas where lots of young people work. As a result, over the past year the number of under-25s on company payrolls fell by 289,000 and many are also choosing to stay in education.
In the situation when offices encourage remote work and government print stimulus check, young and jobless people turn into crypto craze, by playing a fun game called Axie Infinity.
Axie Infinity explained, briefly
Axie Infinity is among the biggest — and most polarizing — of crypto-based games, which allow players to accumulate tradeable crypto coins. To investors like billionaire Mark Cuban and Reddit co-founder Alexis Ohanian, who were part of a $7.5 million funding round for Vietnamese game-maker Sky Mavis in May, this kind of game is such a gateway to crypto for people around the world.
Axie Infinity’s daily active users grew from 30,000 in April this year to more than 1 million in August in the same year. The users was mostly coming from developing countries hit hard by Covid, including the Philippines, Brazil and Venezuela.
The game is originally built on the Ethereum blockchain, and it recorded around $30 million worth of Ether transfers a day over the past month, according to Etherscan. That’s not much in the $2.2 trillion universe of cryptocurrencies, but meaningful for players — and governments — in poorer countries. The money on the game is so much. The Philippines’ Department of Finance and the Bureau of Internal Revenue even need to remind players that their Axie Infinity profits are subject to income tax.
Sky Mavis, the developer team behind Axies Infinity, said they take their responsibility seriously, monitoring the in-game currencies and tweaking the market as needed.
“Some people say we’re like the Fed. We are ultimately the creators of this universe and are responsible for making sure that it lasts. We are always tracking the economy to make sure it stays at a healthy level.”
How to play the game
In Axie Infinity’s virtual world of Lunacia, players steer colorful, blob-like creatures called Axies to acquire two kinds of coins. Smooth Love Potions (SLP) are awarded for successful battles and can be cashed out or used in the game to breed new Axies. Axie Infinity Shards (AXS) can be earned in seasonal tournaments or for selling Axies in the game’s marketplace. AXS can be cashed out too, but like other governance tokens, they’re designed to function like company’s shares. Sky Mavis says holders will eventually be able to vote on new game features or corporate spending proposals.
Players need three Axies to get started, at a minimum of around $200 apiece. That was far too much for the newly young unemployed. Many sought out a sponsor, someone who lends his Axies to new players in exchange for a percentage of their in-game takings, sometimes as much as 90%. Anything a player earns with a borrowed Axie accrues to its owner, who is then supposed to wire the player his cut.
In some countries with the most players like Philippines, player can appeal other through Facebook to the join so-called a “guild”, a group of where players and sponsors can meet. If everything is agreed, sponsors then let other player to play their creatures for a small cut. The guild would keep 30% of his earnings.
The boom has been a windfall for Sky Mavis, which takes a cut every time an Axie changes hands and collects a fee when players breed new, non-fungible token creatures. Players have created more than 2 million of the digital monsters, and the Axie trade has generated more than $1 billion in transactions, the first NFT platform to do so, according to CryptoSlam, w websites that tracks NFT marketplaces.
Axie Infinity generated just $21 million in revenue for Sky Mavis from its 2018 inception through July 1. Since then, it’s brought in $485 million.
Virtual goods with real-world value have been a staple of gaming for years now. The difference between Axie and most other big in-game markets is that Axie encourages players to cash out and gives them the tools and transparency to do so. Other games may used peer-to-peer exchange on an unauthorized third-party marketplace for player to cash out, but Axie players can take their SLP and AXS directly to a major crypto exchange and sell for whatever’s on offer. One of the supported exchange is Binance, and no wonder the SLP-Peso offer is very high.
The critics: high barier to enter, for players
Independent analysts argue it’s no mystery why Axie has been a hit in emerging markets. The price of AXS has soared in the past two months, a sharp contrast with the broader economy in the Philippines, where roughly one out of 11 people are still unemployed. Access to cryptocurrency also appeals where local currencies are weak or in crisis.
But the Axie frenzy has also bred criticism that the platform is propped up by new money drawn to a get-rich-quick premise. Many said the Axie business model is “fundamentally unhealthy and unsustainable.” Vanessa Cao, founder of venture-capital firm BTX Capital, also argue that it is wrongful to ask players spend hundreds of dollars upfront just to play.
Well, Axie Infinity’s upfront cost is such a barier for new players. It is very contrast with other games, like X World Games, who is backed by BTX Capital It’s free to get started in X World Games. The game have almost 560,000 users customize character cards and trade them, but it is nowhere close to Axie.
Sky Mavis doesn’t regulate the relationships between sponsors and contract players, though in June, the company tweeted to condemn reports that sponsors were soliciting nude photos from female applicants.
“Axie Infinity is a digital nation and, like in any society, certain people might be criminals”
As a result, the company has banned “several thousand” accounts for violating the game’s terms, including for bot behavior or when there is “clear evidence of scams.”
The company seems more comfortable in the role of central bank. After the price of AXS rose nearly 650% from July to early August, Sky Mavis reduced the price to breed Axies. It cut by half how much users can earn each day on quests and increased the rewards available to better players.
Some of the risks for Axie Infinity players and investors are in line with the rest of the crypto world, where massive drawdowns are common. If AXS and SLP tank, as predicted by traders taking short positions against the coins, players may not be able to cut their losses. The game only allows them to cash out SLP every 14 days. That constraint, like all lock-ups, prevent players to reduce lost when asset values are falling.
Axie still has long bright future
Despite some critics above, people seem to have confidence with the game. Many believed that the game has lasting appeal, whatever happens to the currencies. They see it as more of a social network than a game. People come in because it’s such a new opportunity, then they fall in love with the community and the game.
Whatever it is, Axie is opened up the opportunity to help crypto to be mainstream. For crypto enthusiasts, crypto-based game is going to help digital-asset adoption 100%. Imagine a large group of people who have never had crypto before, who have never had a wallet and they’ve never transferred within the blockchain. A game like Axie is a perfect tool to tap in and educate this market.
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