Axie Infinity

The Dawn of P2E Giants? An Inside Look at Axie Infinity

BY Jex Exmundo

August 17, 2022

Axie Infinity isn’t just one of the biggest play-to-earn (P2E) games out there — it’s also one of the biggest NFT projects in the entire community, full stop. In large chunks of the world, Axie Infinity reigns supreme as the single most popular NFT. When it launched in March 2018, it presented users with an offer that almost seemed too good to be true: the chance to earn real money by playing a game.

However, Sky Mavis’ Poké-clone has seen a rough couple of months. The company is still reeling following the Ronin network hack: a March 2022 attack that saw hundreds of millions of dollars stolen from its coffers. Since then, the game has slowly been hemorrhaging players, culminating in a mass exodus that saw more than 1.5 million players quit the game in June 2022.

With the odds stacked against it, are there any reasons left to check out what was once the go-to play-to-earn game on the market? You can see for yourself. In spite of everything, Axie Infinity still boasts a relatively straightforward entry point not just into P2E gaming — but the NFT world at large.

What is Axie Infinity?

Axie Infinity is an NFT-based play-to-earn online game where players collect, breed, and mint creatures called Axies and pit them against each other in battle. It runs on the Ethereum blockchain — minimizing delayed transactions and cutting fees with the help of the sidechain Ronin — enabling easy access for prospective players.

The game initially launched with an “idle battler” battle system reminiscent of the mobile game Idle Heroes. Games designed in this way are meant to keep running in the background with minimal player interaction. Following a December 2019 update, the game transitioned to its current system, giving players a deeper gameplay experience.

The goal of the game is to eliminate all enemies your team of three Axies is facing. Each turn, a player must strategically play cards that maximize their chance of victory. Each battle incrementally makes a player’s Axies stronger. With stronger Axies, players have an easier time completing runs on both of the game’s modes: Adventure, a player-versus-environment (PvE) mode that pits the player against computer-controlled enemies; and player-versus-player (PvP), a mode that pits users against each other.

Like other online games, Axie Infinity’s PvP mode gives players the chance to increase their matchmaking rating (MMR) with every fight, enabling them to climb up the ranked ladder with every win. Upon clearing various set MMR thresholds, players can expect to receive larger amounts of SLP with each win, at the cost of facing much tougher competition as they climb up the ranks.

Getting started with the game

So how does Axie Infinity work, exactly? Unlike conventional gaming titles, getting started entails more than just purchasing a copy of the game — or even simply downloading it, in the case of free-to-play titles. As specified on Sky Mavis’ website, a user’s first step is to secure a Ronin wallet. After loading it with ETH, users can then proceed to the next step: purchasing Axies.

An in-game battle on Axie Infinity. Source: Sky Mavis

Axies? What are those?

Axies are what the whole game revolves around. Pokémon has Pokémon, Digimon has Digimon, and Monster Rancher has whatever this guy is supposed to be. However, unlike those other digital creatures, Axies cost real money to purchase.

This means that instead of a kindly professor gifting you a monster, you have to buy one. But it works both ways. You can also breed Axies to sell on the secondary market — and if you’re really lucky, for quite a bit of coin. In November 2020, an Axie sold for 300 ETH, which was worth well over $1 million at the time on the secondary market.

Source: Sky Mavis

Each Axie has different traits which determine their role in battle. Further, each Axie has four stats: Health, Morale, Skill, and Speed. An Axie’s stats are dependent on two variables: its class and its body parts. Axies also have classes — each class is either strong or weak against another type, similar to how a water Pokémon will have an advantage over a fire type,

Once you have three Axies you’re ready to download the application and start playing.

Breaking down SLP and AXS tokens

It isn’t just Axies themselves that can be traded in for real money, though. You can also trade the in-game currency you make from playing the game into fiat currency. Players are awarded Smooth Love Potion (SLP) — an in-game currency that lives on the blockchain as a cryptocurrency — by defeating other players in PvP mode. This too, can be exchanged for fiat currencies.

However, the Axie Infinity team announced they were removing SLP from classic (v2) gameplay in an August 11 blog post, leaving the token to ranked gameplay from August 12 onward. This marked the arrival of Origin Season 0. “As planned, we will be moving SLP over from Axie Infinity Classic (V2) to Axie Infinity Origin (V3) as part of Phase 3. This means that SLP emission will be completely turned off from V2 […],” the company wrote in the blog post.

“One major benefit of transitioning to Origin from Classic is expanded abilities to balance the SLP economy. Thus, the design of the SLP rewards system with Origin is being tuned in a way to align with that goal.”

Still, while the team monitors bugs, players won’t be able to mint SLP during Season 0, which lasts 30 days.

Axie Infinity Shards (AXS), function as the game’s governance cryptocurrency. Users can opt to stake these tokens, which confers privileges unto them, such as the right to vote on how future patches of the game will go. Additionally, by staking this currency, players gain the opportunity to be rewarded in more AXS gained via interest, at the cost of the game locking up staked funds. AXS is also used to pay for in-game fees related to breeding and participating in its economy.

The Axie’s homeland

Ready to own a part of the metaverse? You’re in luck, as players can buy plots of Land in Axie Infinity that can act as homes and bases of operation for their Axies. There are five types of Land players can choose from, each of which offers its own special items: Genesis, Savannah, Forest, Arctic, and Mystic. While the plots vary in price, a rare Genesis Plot sold for 550 ETH (approx. $2.48 million) in November 2021.

Plots can be upgraded over time using a variety of resources and crafting ingredients. In addition, land-owners might find AXS tokens on their land plots, or use the Axies that occupy the land plot to explore resource nodes on the map.

While this might sound exciting, Land gameplay is still being actively developed and will be released in phases, which means that those Land NFTs don’t have utility… yet.

Who made Axie Infinity?

Axie Infinity launched long before the NFT industry’s massive bull run in 2021: in March 2018. Before Sky Mavis turned into the crypto giant it is today, the game started out as an idea from Vietnamese developer Trung Nguyen.

As reported by Tech In Asia, Nguyen fell in love with P2E OG CryptoKitties in 2017, and looked to develop a blockchain-based game of his own. Taking inspiration from the “advanced genetic system found in CryptoKitties” and the “competitive gameplay of the Pokémon series,” Nguyen linked up with a group of friends to turn this idea into a reality, eventually putting together a beta release for the game in 2018. Nguyen and his friends went on to form Sky Mavis as they looked to scale up the game — and the rest is history.

A ‘life-changing’ game

So how much can you earn from playing Axie Infinity? During the game’s peak, players have reported making anywhere from eight dollars to $40 a day playing it. In a vacuum, Axie Infinity’s P2E format — with the promise of greater rewards the better you are at the game — should provide more equitable earning opportunities to gamers than the current gaming landscape. But the reality of Axie Infinity’s impact on a large segment of its player base strays from this ideal to varying degrees.

So what better market to examine than the Philippines — which houses more than 40 percent of Axie Infinity’s player base? According to Sky Mavis, several factors enabled the game’s popularity to take off in the region relatively quickly: “high proficiency in English, strong gaming culture and widespread smartphone usage.” While these factors undoubtedly boosted the game’s popularity in the Southeast Asian nation, it omits the single most significant attractor to the game: money.

In developing nations like the Philippines, where annual household income rarely crosses the five-digit mark when converted to USD, Axie Infinity seemed like a perfect chance for many to supplement their monthly income. As such, the popularity of Axie Infinity — and NFTs as a whole — exploded in the country, as supported by a November 2021 survey conducted by Finder.

During the crypto and NFT world’s bull run throughout 2021, early Filipino adopters of the game experienced the full potential of the P2E format firsthand. In a November 2021 article on CNN Philippines, sentiment amongst interviewees was primarily optimistic. With the value of 1 SLP equivalent to roughly 3 Philippine pesos (5 cents for Americans) at the time, local gamers were able to enjoy some extra pocket money to spend on snacks at worst — and a life-changing financial opportunity at best.

More well-off users even offered gamers who couldn’t afford to buy their Axies outright the chance to earn via the game via a “scholarship” system. Through this system, Axie owners rent out their Axies to select individuals, taking in payments for these rentals via a percentage of SLP earned during the renter’s playtime.

While a good idea in theory, this setup left Axie Infinity scholars in dire financial straits (and frankly burned out, to put it lightly). As the crypto and NFT worlds entered a bear market in 2022, scholars found fewer and fewer reasons to put in hours playing the game. One disgruntled ex-player even spoke to TIME Magazine on his experience, publicly decrying the game and urging others to stay away.

The Ronin Network hack

In March, 2022, the Ronin Network lost $615 million in a hacking attack. Following the attack, transactions on Ronin’s bridge were put on pause, making the last two high-ticket transfers on the network the fraudulent withdrawals for 173,600 Ethereum and 25.5 million USDC. According to an FBI report, hacking cabals Lazarus Group and APT38 were responsible, appropriating the ill-gotten wealth to fund the North Korean regime.

According to The Block, a fake LinkedIn job ad was the root cause of the multi-million-dollar loss — a senior engineer at Axie Infinity “was duped into applying for a job at a company that, in reality, did not exist.” After rounds of interviews, the engineer was sent an offer in the form of a PDF, which they then downloaded, “allowing spyware to infiltrate Ronin’s systems.”

As of June, 2022, the Ronin Network has been fully rebuilt, and all users have been “made whole” according to a statement by the Sky Mavis team.

What’s next for Axie Infinity?

Mere weeks after Axie Infinity’s multi-million dollar hack, Sky Mavis announced in April 2022 that a much more consumer-friendly version of the game was entering early access, called Axie Infinity: Origin.

This experience aimed to offer new and old Axie Infinity players an opportunity to keep playing the game while the team tried to resolve the losses faced during the hack. Besides various gameplay tweaks intended to make it a “faster, more dynamic experience,” new players are now given free starter Axies, essentially making the game free to play.

On August 11, the company announced that Origin Season 0 had arrived, marking the transition into Origin Phase 3.

As mentioned above, Season 0 means changes to SLP rewards — they’ve been added to Origin’s ranked gameplay mode and removed completely from Classic. Further, the team introduced Runes and Charms, which require SLP and Moon Shards to craft and can be minted onto Ronin through the Marketplace. A full rundown of all the updates can be found on the company’s Substack.

With Axie Infinity: Origin Season 0 here and Season 1 on the horizon, we may be able to take a glimpse into the game’s long-term staying power. This is due to the early access build of the game lacking its standout feature: P2E functionality. If Neopets is still thriving (albeit ridden with cheaters) today, there’s no reason Axie Infinity can’t do the same.

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