Last year, Axie Infinity became a phenomenon in the NFT games market. By August 2021, the volume of trading operations within the game reached $848.18 million. But in the future, the project was overwhelmed by a wave of crises, because of which the developers had to revise the original concept. We have prepared an analysis of the main problems of the Axie Infinity gaming economy based on The Verge publication.
What is the gameplay in Axie Infinity based on
The economy of Axie Infinity includes three main resources: the in-game cryptocurrency SLP, the AXS control token and NFT units in the form of axi. Let’s analyze them in more detail:
- axi are the main game characters. They are used as NFT. That is, each axi is a unique object of the in–game system. They can be purchased only with the help of special AXS tokens;
- The AXS management token is a type of token that allows its owner to participate in the management of a cryptocurrency project. In this case, AXS holders can participate in surveys on the development of the game. Also, these tokens are needed for the purchase of axi. It is possible to purchase AXS only for real money;
- SLP is a cryptocurrency inside the game. It is for her that the players in Axie Infinity come. They earn SLP in PVP and PVE battles (previously, developers also gave up to 150 SLP per day for completing tasks). SLP can be converted into real money, or spent on breeding axi. It is the extraction of SLP (as well as the sale of axi) that is the main source of income for players.
An example of what the axi looks like
Initially, the game is based on the play-to-earn system (play to earn).
But in order to start playing it, the user needs to buy three starting characters (the cost of each starts at an average of $ 15).
This sets a certain contradiction. Sky Mavis employees tried to solve it by adding a character rental system to Axie Infinity. Thanks to her, players could not buy, but rent the first three axi from other players. In return, they asked for a percentage of future income.
This option helped those who could not afford to buy an axi to enter the game. It is also worth considering that at the start of Axie Infinity, the cost of in-game currency was lower than, for example, at the peak of the game’s popularity.
As a result, the gameplay was formed as follows: the player acquires three starting characters, develops them to win PVP or PVE battles. For this, he receives an SLP as a reward, which he either puts into his wallet or spends on the reproduction of characters.
What problems were found during the operation of the game
Accordingly, SLP and axi are two resources that are constantly and uncontrollably reproduced in the game. And this growth, devoid of restraining factors, has just become one of the key problems of the Axie Infinity economy.
The project essentially had no systems regulating the volume of circulating currency.
In the case of Axie Infinity, users always had two options: sell SLP, which returned the currency back to the ecosystem of the game, or use it for breeding, which increased the number of axies. And the main function of axi is SLP mining.
As a result, players somehow created more resources and reduced the value of everything acquired in the game.
Mihai Gheza, co-founder and CEO of the consulting company Machinations, called this process a positive feedback loop* and stated that such an approach to the in-game economy guarantees inflation.
*A positive feedback loop is a closed chain of interaction that connects the initial action with its result. Geza implies that Axie Infinity has created a vicious circle of game actions that has no restraining forces.
Sale of axi on the in-game platform
Inflation is an age–old problem of large multiplayer games. Alexander King, a game designer and consultant on the game economy, commented on the situation of Axie Infinity as follows: “Their problem is a classic scenario of the collapse of the game economy.
Players need to get some kind of resource to sell it. The sale, accordingly, reduces the price, which leads to the need to extract more. This reduces the price even more.”
As a result of the constant growth of the SLP supply, the exchange rate by May 2021 fell from a peak of $0.36452 to a minimum of $0.0094. It turned out that in order to maintain high demand for SLP and axi, an infinite number of new registrations are needed, that is, players who have neither one nor the other.
The game was also negatively affected by the character rental system. It led to the emergence of a group of players interested only in daily earnings of SLP. Which is not surprising, because the tenant players earned not only for themselves, but also for their patrons.
Jon Jordan, one of the first players of Axie Infinity and a consultant on blockchain games, said that such a model only worsened economic problems. “Axie Infinity has become a victim of its success,” Jordan commented. – “There was an economy that may have been poorly balanced, but it also did not go to extremes. And then she lost all the delicate balance she had.”
Another blow to the economy of the game was a major hacker attack on March 23, 2022. An unknown hacker stole $620 million from user accounts (exact figures vary). The hack did not lead to a direct theft of tokens, however, Sky Mavis had to temporarily freeze all player accounts. The company said it would recoup the losses with new investments.
What has been done to solve these problems
The studio’s developers have made changes to the gameplay and the economy itself. They have also begun to refocus on “in-game value,” that is, on the competitive, social, and entertainment experience that Axie Infinity itself has to offer.
Battles in Axie Infinity take place in the form of a card system
Among the key changes – the developers have removed SLP from the adventure mode, as well as from the rewards for daily tasks.
The only way to get currency was to win in the PVP arena, but even there the amount of winnings for the fight was reduced.
The developers have worked not only on the economy. They decided to rethink the gameplay itself, the combat system, crafting and customization. For example, the game has unique accessories and skins for axi. So they hoped to draw attention to the game content, and not just to the SLP farm.
In addition, Sky Mavis removed the rental system and made the entrance to the game free. Now users do not need to pay for the three starting axi.
The updated version was called Axie Infinity: Origin. It is not completely clear how this project is positioned. The key elements that the developers originally placed bets on were removed from it. At the same time, Sky Mavis claim that this is the same game that has become more accessible.
Such a decision was quite risky for a game whose main essence was to make money. According to one of the latest polls conducted on Twitter, 48% of Axie players said: they play primarily for profit.
However, over the years, Axie Infinity has developed a dedicated community on the market. The game saved many of them in difficult life situations. Therefore, most of the users expressed their willingness to play by the new rules.
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Despite all the crises that have happened to the game, experts believe that Axie Infinity still has a future, either as a play-and-earn, or as a classic free-to-play game.