The P2P trade and on-chain economic features of axie infinity are the main mechanics, which will be discussed in more depth later. While this may be surprising to those unfamiliar with cryptocurrency games, it is not wholly unique.
Games like Magic the Gathering Online (previously Magic the Gathering with Digital Objects), which saw the fluid exchange of semi-fungible cards anchored with real-world costs and in-game usefulness, included similar asset trading. While the economy in MTGO grew spontaneously, axie infinity was designed specifically for this kind of trade. The tools, both governmental and external, make asset exchange very simple.
The ease with which players may trade allows several new or previously underserved player behaviors and positions, such as:
- Collectors: Players who purchase goods only for aesthetic, rarity, or provincial worth.
- Speculators: Players who purchase axies with the expectation of future value appreciation. These forecasts of future worth might be the result of a paradigm change, a sense of present underpricing, or future collector desirability.
- Arbitrage Resellers: Players that scour the market for discounts before relisting at a higher price. Perhaps they’ll use some outside marketing to advertise their product.
- Breeders: Players who develop new, highly desired axies by breeding axies from excellent stock.
These jobs have real-world analogs in hobbies like stamp collecting and pet rearing, and they cater to psychographics that are generally underrepresented in conventional games. For many, the money side of hobbies, whether net positive or negative, is a key factor: It might be a side job or a method to invest and own a piece of their passion. As a result, the axie infinity Marketplace might be compared to a hobbyist swap meet or a breeder show, a meeting of individuals and a value exchange. Mt. Gox, the well-known crypto exchange, was founded as an MTGO card exchange to facilitate card speculating.
In relation to the interests mentioned above, one of the major advantages of axie infinity is the size and quality of the community. The official discord has approximately 780k members as of this writing, there are several community-built third-party tools, Twitch viewership is increasing, and YouTube is well-served for video.
Actively sociable players in a game establish relationships that persist longer than any game mechanism, akin to friendships formed via hobbies. Humans, who are highly sociable beings, are bound together by mutual interests.
In comparison to other games, these communities seem to be more pleasant and open. The partly linked interests of creators and gamers are likely strengthening this pleasant feature of the community: Both want their assets to appreciate, therefore they’re looking for additional participants.
Regardless, the community’s size and quality is a significant benefit for Sky Mavis, not just for the future success of axie infinity, but also for any future games the company may develop. It offers a ready-made playerbase that can be easily mobilized for a fresh release, both monetarily and in terms of player liquidity. What could be better than that?
P2E Isn’t a Long-Term Solution
Sky Mavis, scholarship programs, and the player community have all praised axie infinity ‘s earning potential. While this has proven true in recent months, much has been written regarding the economy of Axie Infinitie’s long-term viability.
The foundations, on the other hand, seem to be shaky. Since mid-July, SLP prices have progressively dropped, falling 85 percent from $0.40 to $0.06 today (29 September 2021). This is because the P2E mode has a basic flaw: Once fulfilled, demand becomes supply.
The demand for axies drives the value of SLP. However, since there is a limited limit to how many axes a person may possess, a steady influx of new players is required to keep demand consistent.
While this seems to be an acceptable solution, there is a second-order issue: those new players become suppliers. Turning Energy into SLP is the technique of effectively playing axie infinity. This decreases the need for SLP purchases by the player, and any surplus is sold on the open market. Furthermore, once these individuals leave the game, they will most likely liquidate their axies, increasing axies supply while decreasing breeding need and hence SLP demand.
The issue is compounded by P2E players who are solely concerned with increasing the amount of SLP created for the secondary market, not for the game. These players become economic taps, and their success simply encourages additional players (or employees) to follow suit.
As a result, a growing rate of new axie infinity players is required, not only a continuous supply of new players: The supply of grinded materials rises in tandem with the player base. Of the near term, an exponential growth in new players is feasible, but it is unsustainable in the long run.
This has been seen in the economy, as the supply of SLP has grown, leading in a price drop in recent months. It’s likely that P2E players and scholarship managers may abandon the game and cash out below a particular SLP price, causing a value exodus and falling prices across SLP, AXS, and axies.
Sky Mavis has reduced the reward rate of SLP and AXS required for breeding for the time being. Despite the fact that the market supply has been cut, prices have continued to decline.
In the long run, the dev team has been quite forthright about the need to control the amount of axie infinity players and their influence on the economy. The current strategy consists of three parts:
1. Increase axie demand by introducing additional gameplay concepts that aren’t part of the main game, such as the long-awaited land mechanics. Land mixes resource collection and management with what looks to be PvE-style gameplay from Final Fantasy Tactics.
2. Destruction of axes in order to build or improve other equipment.
3. Soulbound axes, which are available to gamers for free but do not yield SLP.
These solutions, on the other hand, do not seem to be compelling in terms of addressing long-term need. Specifically, the land element, although appealing, deviates from the core game that has made the game successful and exposes the product to significant risk. Land effectively dilutes the established product market fit, complicates an already complex onboarding process, and, like any additional gameplay, may become unappealing.
Breaking axes to make or improve objects is a more sensible strategy, since it adds to the economy’s drain. However, how this is handled has far-reaching consequences. To begin with, asking users to destroy products worth hundreds of dollars may be a tall order. Second, if breaking axes to improve other axes results in large PvP gains, it will become a de facto need to remain competitive, resulting in an increase in the beginning price.
Finally, soulbound axes are a fantastic addition. They may ease down the onboarding process if handled appropriately (see Accessibility below), but they run the danger of satisfying the gaming demands of users who have no interest in axie breeding, lowering upfront buy-in and hence reducing axie demand.