It has more than two million players every day. In this blog post, we take a closer look at the game principle, shed light on the trend of blockchain games and the play-to-earn (P2E) concept and show what impact this can have on the gaming sector and new business models.
What is Axie Infinity?
Axie Infinity is a role-playing game inspired by Pokémon and runs on the Ronin blockchain, a sidechain of the Ethereum blockchain. Players own the NFT (Non-Fungible Token) game creatures, known as Axies, with which they can fight, breed or simply collect.
What is the motivation behind the P2E game Axie Infinity?
With its "Play to Earn" concept (P2E), Sky Mavis aims to create an entire ecosystem in which people from all backgrounds have the opportunity to earn an income. Players can contribute directly to the ecosystem with clever gameplay and benefit from it at the same time. Especially in low-wage countries, it would be an alternative to generating income or could serve as a side income. The great advantage of the playful approach of P2E blockchain projects is that even non-technical people can participate and the entry barriers are kept low.
Of course, there are also risks involved: You have to invest a small amount of money first in order to participate in the game. However, unlike in normal video games, where you spend your money on in-game skills or equipment that you can no longer trade, this is possible in P2E games on marketplaces. There is always the risk that the game operators will block the tokens and you will not be able to sell them on. In addition, you have to invest several hours a day in gaming to really generate an income. Consumer advocates warn that Axie Infinity could become a pyramid scheme. Although there are currently more players every day, a decline in trading volume and active players could quickly lead to massive price collapses. The huge interest worldwide could trigger hyperinflation[1].
Why blockchain?
Axie Infinity is a P2E game, which means that players can earn new assets and even money during the course of the game. The game is based on a combination of crypto and economic concepts, where players are rewarded for their play. Players can earn Smooth Love Potions (SLP, the in-game currency) by winning Player versus Player (PVP) competitions or by completing daily quests. Experience points (EXP or XP) can only be gained by winning Player versus Environment (PVE) battles. The more EXP an Axie has, the more SLP it can achieve per battle. Work and play should become one. Players can contribute directly to the ecosystem through skillful gameplay and benefit from it at the same time, because only through the concept of the blockchain do players become direct owners of non-fungible tokens (NFTs). NFTs are digitally protected, non-exchangeable objects, i.e. they are unique digital objects that are linked to an existing blockchain with the help of a smart contract (a self-executing programmed contract).
NFTs are stored on a blockchain. The blockchain uses the concept of a decentralized database, i.e. a peer-to-peer network is created in which all computers have equal rights. Each computer has stored a complete copy of the blockchain. This makes manipulation virtually impossible. A Blockchain is made up of blocks of information. Each block contains the hash value of the previous block and certain data, such as information about the seller, the buyer or the transaction amount. Each block is therefore unmistakable and a consistent sequence is created. This makes the blockchain an extremely secure way of storing data. The long-term goal of the platform is to familiarize a larger part of the population with blockchain technology.
What are NFTs?
Non-fungible tokens are unique tokens that have certain properties with a unique digital asset value. They are distinct from coins and tokens. Coins are cryptocurrencies that operate their own blockchain, such as Bitcoin or Ether. These are identical and interchangeable. Tokens are usually based on an existing blockchain and are also interchangeable. An NFT therefore has a certain value or a certain function. At the same time, however, real assets such as real estate or music rights can also be represented as NFTs. This means that the ownership structure is digitally mapped in smart contracts and can therefore be traded. As the NFTs run on a blockchain, the data can always be traced back and individual ownership can be documented very well.
In the Axie Infinity game, not only Axies are bought and traded as NFTs, but also landscapes and items. They are traded with the utility token SLP (Smooth Love Potion) or with the governance token AXS (Axie Infnity Shards). The acquired assets (Axies, landscapes or items) are NFTs according to the ERC-721 standard and are owned directly by the player. Each NFT has its own genetic code, which is stored on the blockchain. The value of the NFT can be increased through strategic play and then sold in-game on the marketplace.
How does Axie Infinity work?
The game pieces, called Axies, can be bought and raised. You can train and customize them. They can breed and thus multiply and fight each other. The appearance of the Axies is based on Pokémon or Tamagotchi creatures. Each Axie has its own individual appearance, strengths and weaknesses and its own genetic code, which is stored on the blockchain.
The battles take place either PvP (Player versus Player) or PvE (Player versus Environment). Three Axies from each player compete against three other Axies. In PvP battles, players can win the cryptocurrency SLP (Smooth Love Potion) by winning or collect it by completing challenges (Daily Quest). If you have enough SLPs, you can use them to breed new Axies, acquire and expand landscapes, so-called plots of various types: Savannah, Forest, Arctic, Mystic, or buy items for the Axies, which increases their value. SLPs can be traded on external exchanges as SLP tokens, e.g. on Binance, and sold for a real dollar value. In addition to SLP, there is also the governance token AXS (Axie Infinity Shards) in the game, which gives the player shares in the game universe and allows them to participate in the fees, among other things. AXS are Ethereum-based tokens based on the ERC-20 Standard. They are limited to a circulating supply of 270 million.
They allow each token holder to vote on decisions such as the development of the platform or the distribution of funds. Axie Infinity intends to become a fully decentralized organization in the future, controlled only by the players of the game.
Record sums in the Axie Infinity universe
There are around 140,000 million Axies worldwide. On average, an Axie costs 350 US dollars.
- The most expensive Axie ever sold, one of only 19 triple mystic Axies, was sold in November 2020 for 300 ETH (about 120,000 US dollars).
- In February 2021, an Axie Inifity Game plot was sold for 888.25 ETH, which is equivalent to around 1.5 million US dollars.
- On July 10, 2021, 50,000 NFTs were sold in a single day via Axie Infinity.
In August 2021, the market capitalization of Axie Infinity Shards (AXS) was USD 15 billion. In April 2021, it was still at 2.2 billion US dollars. 23 percent of the total amount is currently in circulation and AXS is currently the 22nd largest cryptocurrency. An AXS token currently costs around 155 US dollars.
Most players, around 40 percent, come from the Philippines, where P2E is a desirable profession. In second place is Venezuela and in third place the USA.
With over 750,000 members, Axie Infinity has the world's largest Discord groups.
Conclusion
Many people dream of earning money with their favorite pastime. The eSports industry shows you how it can be done if the market grows accordingly. The coronavirus crisis has boosted the gaming industry and provided many people with a new source of income. By combining blockchain and NFT, Axie Infinity was the first to recognize the trend, creating a sustainable in-game economy and ushering in a change in the gaming sector, away from free-to-play or pay-to-play game models. Gamers can truly own game items for the first time. Blockchain and NFTs are also enabling new business models for other industries, as they can digitally prove the origin of an asset in a tamper-proof manner. Companies can use NFTs to secure brands, products and processes. This can also open up new sales channels and target groups.
This article was written in collaboration with Larissa Kazungu-Igumba.
Learn more about blockchain applications
Further sources:
https://www.coinpro.ch/hype-um-axie-infinity-was-steckt-hinter-dem-online-game
