Games like Axie Infinity became the main source of income for many people who lost their jobs during the pandemic. However, pouring money into this game is also risky.
Before entering the world of Axie Infinity, Vincent Gallarte as well as many newcomers had never had any particular interest in any coin. But after just two weeks, Gallarte, from the Philippines, had earned more than $732, three times the monthly salary from his previous job.
According to the Financial Times, the pandemic has pushed a lot of people in the Philippines in general and developing countries in particular into prolonged unemployment. Many people look to ways to make money at home and accidentally know Axie Infinity. Many people like Gallarte plan to stick with this game for a long time, even if they find a new job. However, there are still many potential risks such as high participation fees, or unpredictable volatility of the cryptocurrency market.
The main income of many unemployed people
Axie Infinity is one of the biggest money-making games by market capitalization, allowing players to accumulate exchangeable cryptocurrency. In Lunacia, the game's virtual world, players will control creatures called Axies to collect two coins: Smooth Love Potion (SLP) and Axie Infinity Shard (AXS).
Both are exchangeable for fiat currency. AXS also functions like a stock: Sky Mavis promises that in the future players will be able to vote on new features or vote through company spending.
Losing their jobs, many people look to games like Axie Infinity for extra income. Photo: Ira Lichi.
In the eyes of investors, Axie Infinity opens the door for many people around the world to this emerging digital economy. In fact, in May 2020, billionaire Mark Cuban and Reddit co-founder Alexis Ohanian poured a total of $7.5 million into Sky Mavis, the Vietnamese studio that released the game.
Regular users of Axie Infinity increased from 30,000 in April, to more than 1 million in just 4 months, mainly from developing countries hit hard by the pandemic, including the Philippines, Brazil and Venezuela.
Etherscan noted that Axie moved an average of $30 million in Ether per day in July, an unimpressive figure in the $2.2 trillion crypto universe. However, this is a huge amount of wealth for players and governments of poor countries. On August 23, the Department of Finance of the Philippines (DOF) decided to consider game money as taxable as personal income.
In the game, users can buy and sell virtual items Axie. Photo: Sky Mavis.
However, many people doubt the sustainability of the business model with Axie Infinity when looking at the high initial investment, possibly up to $ 600 that many "newbies" are willing to spend to dig coins. low value.
The first barrier is money
However, many people doubt the sustainability of the Axie Infinity business model when looking at the high initial investment, which can be up to 600 USD. Specifically, to start the game, participants need to own at least 3 Axies, the lowest price is 200 USD each, too much money for an unemployed person like Gallarte.
However, Gallarte was lent Axie by this group of Filipino sponsors in exchange for 30% of his earnings to make it easier to join the game.
The popularity of this model brought huge profits to Sky Mavis. The publisher charges a fee each time ownership of Axie transfers to another user and when a new Axie is born. According to CryptoSlam, players have generated over 2 million Axies to date, each being an NFT (non-fungible token), and generated more than $1 billion in developer revenue from trading. Axie Infinity is the first NFT platform to do this.
John Aaron Ramos, a 22-year-old gamer in the Philippines, once bought a house by playing Axie Infinity. Photo: NVCC.
From its launch in 2018 until July 1, 2021, Sky Mavis earned more than 21 million USD. In just over a month, the studio earned $485 million.
Virtual goods have long been part of online gaming. Axie's difference is the mechanism that facilitates and motivates players to make money from the game. Instead of uncertain two-way exchanges on the "black market", Axie Infinity allows players to bring their earned coins to the official exchange, making transactions quickly when someone bids. With the demand for fiat emerging in the Philippines, major crypto exchanges like Binance have added pesos to the system.
The expansion of Axie Infinity did not surprise analysts. Contrary to the economic picture of the Philippines, the country currently has an average of 1 out of 11 people unemployed, the price of AXS has increased sharply in the past 2 months. Cryptocurrencies also appeal to people where fiat currencies have low value or are in crisis, as is the case with Venezuela.
John Aaron Ramos, a 22-year-old Filipino student, through his relationship with a Venezuelan investor, has started playing Axie Infinity since November 2020. By March, he had bought two apartments south of Manila for his parents.
Many potential dangers
Founder of venture capital group BTX Capital, Vanessa Cao believes that the "get rich is not difficult" model called Axie Infinity is inherently unstable and unhealthy. "Players have to pay hundreds of dollars in advance to get started. This is the wrong idea. You can't make someone pay before they know how the game works," Ms. Cao explained.
In addition, the new player sponsorship model is not managed by Sky Mavis. In a tweet posted in June on the official account, the studio spoke out about many sponsors asking new players to pay with "sensitive" photos.
Aleksander Leonard Larsen has an optimistic view of the future of Axie Infinity. Photo: Bergens Tidende.
Despite banning thousands of accounts for violations such as bots and scams, Larsen said the internal problems between players are in a completely different category.
"Axie Infinity is a digital nation, and like any society, a section will play criminals," explains Sky Mavis co-founder and COO Aleksander Leonard Larsen.
A risk for the entire crypto world, not just Axie Infinity players, is deep coin price drops. Billionaire Cuban himself experienced in June when the price of his favorite coin, Titan, from $60 bottomed in just one day.
If the AXS and SLP coins plunge, players will not be able to sell off because they are only allowed to export SLP once in 14 days. Currently, many new players still do not understand how to manage assets. The proof is that many users send their e-wallet passwords to the company when they need advice and support.
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Crypto