Once upon a time, Axie Infinity was the blockchain game on everyone’s lips within the GameFi space. It was breaking records and meeting various milestones at an amazing pace. However, everything soon began to fall. The decline was so rapid that it shook the entire GameFi industry. So, what went wrong? How did this promising project fail?
Axie Infinity Rise to The Top
Regardless of the outcome, Axie Infinity will remain a leader in the play to earn industry. This project paved the way for literally every other blockchain-based gaming outfit. It was really the talk of the town. With numerous guilds and individuals offering scholarships to interested persons. They will pay for the player’s buy-in and the player will repay them the capital spend, alongside an interest.
It was not long before more players began joining this course of gameplay. Most of whom were situated in the Philippines. One thing that made Axie alluring is the simplicity and straightforwardness of the game. You battle other players and earn rewards. At some point in 2021, the AXS token was valued as much as $164.
The Rapid Decline of Axie Infinity
To ease the pressure on AXS, the game introduced another in-game reward called Smooth Love Potions or SLP. This token would be burned alongside AXS to create new Axies and ensure gameplay continuity. However, this was not to be so. One of the major reasons is that SLP had no maximum cap. In addition, it was also an ERC-20 token. Meaning that it can be traded on crypto exchanges.
As mentioned earlier, a number of players were scholars for guilds or private individuals. Therefore, they had to fulfil certain financial obligations. What other way to do that than by selling off their in-game earnings? Yes, they did exactly that. Users soon began selling off their SLP, instead of using them to breed new Axies. With no market cap, the token experienced significant inflation. With prices dropping from $0.07 to $0.02.
Speaking of prices, Smooth Love Potions were not the only ones affected. Even before the bear market, AXS fell by over 50% and struggled to trade for more than $51 per token. However, it was not only the in-game currencies that were affected. Even NFTs within the game is experiencing a significant decline. The whole fumbling resulted in a serious decline in revenue. With the team not able to boast of more than $10 million in revenue.
Lessons for the GameFi Community
In every mistake, there are lessons to be learned. The case of Axie Infinity is no different. Despite serving as the backbone of play to earn projects, this game made a huge mistake. Below are some take-homes from this GameFi project.
Blockchain Games Are Mostly Rewards for Passion
The idea of play-to-earn has been grossly abused. So much so that third parties are becoming “businessmen” in the GameFi industry. It is at the point where some people think that they can literally earn a living by simply playing games. Axie Infinity shows that it is important for everyone in this sector to understand that they are only getting rewarded for their passion. Crypto gaming is not some get quick rich scheme. Knowing this will help to reduce the expectations of players on games. It will also help to reduce the pressure on dev teams.
One of the reasons for the drop in revenue is reduced player activity. Most users who joined at the latter stages did it because they saw it as a poverty alleviation scheme. When Sky Mavis made some economic balancing adjustments, most of them abandoned the game.
Balancing the Tokenomics is Key
Speaking of the teams and pressure, this is where it lies. When creating a project, founders will have to create a reward system that balances the inflow and outflow of funding. The in-game economy has to be very sound. It must be satisfactory enough for players not to feel cheated. While it brings in revenue that will ensure the sustenance of the project. There is no doubt that no team has figured it out yet.
As a matter of fact, even the most established projects are still making adjustments. Some are minting new tokens, while others are burning off existing ones to create values. There are still those who are incorporating other reward currencies. However, it is vital to set the standard from the onset. This should indicate that you do not plan to give out everything Axie’s mistake was giving off the “come and earn money” vibe. When it could no longer sustain it, it began making adjustments. Which led to the mass exodus of players.
Despite all that has happened, Axie Infinity remains one of the biggest things to have happened to GameFi. In addition, some enthusiasts are even rooting for a comeback. With the new Origin ecosystem, things can get better. Even though it may take time. However, it should not ignore these important lessons. Neither should other blockchain gaming projects.