Disclaimer: Cryptocurrencies are still considered highly speculative. Please consult a qualified financial advisor before investing in them. This article is not a recommendation by Demystifying Crypto or the writer to invest in cryptocurrencies. As of the date this article was written, the author does not own cryptocurrency.
In the Philippines, Axie Infinity has been used as a way for people to pay for their bills, nappies, school fees, mobile phones, even renovate their house. One guy apparently even used it to buy a plot of land.
This made me wonder: how viable is this crypto game for making an extra buck? Or is it all a scam or a ponzi scheme?
Crypto games have been touted as the next revolution in both gaming and investing. I decided to look into Axie Infinity to see how much potential it has for people to earn a side income, or whether it’s just a time and money sink like any online game.
Here’s my three-day dive into Axie Infinity and the world of crypto gaming in a nutshell.
The concept of crypto gaming started in 2017
Back in 2017, a Canadian studio named Dapper Labs created CryptoKitties, a game based on the cryptocurrency Ethereum that allows you to buy, breed, and sell collectible digital cats. Since then, more crypto games have sprung up: Alienworlds, Bankos Block Party, and Upland, to name a few.
Axie Infinity was created by Vietnamese developer Sky Mavis in 2018 as part of this wave of crypto games, but it didn’t pick up until late 2020, when poor Philippino fishermen started playing it as a supplement to their main income.
Image via PlayToEarn.net.
As of 10th July 2021, Axies Infinity is currently in the top 5 crypto games according to PlayToEarn.net and DappRadar Information on crypto is constantly fluctuating, so this ranking will probably be outdated a week after publishing.
What is Axie Infinity? How to play Axie Infinity?
Adventure mode on Axie Infinity. Image via Axie Infinity.
Axie Infinity is a turn-based card game where you use a team of cute pixel art monsters called “Axies” to fight other teams of “Axies” led by real-world opponents.
There are 2 gameplay modes: Adventure and Arena. In Adventure mode you fight against monsters and in Arena mode you fight against other players. If you win, you earn SLP (Smooth Love Potion), their in-game currency, which you can use to convert into cash.
If you’re familiar with Pokemon or Yu-Gi-Oh, the basic mechanics of “Play your turn, pick a move, deal damage, wait for the other player’s turn” are the same.
Image via The Lunacian on Axie.Substack.
However, the mechanics of the game become quite complex as you go deeper down the rabbit hole. There are different Classes of Axies (e.g. Plant, Aqua, Bird, etc) each with their own strengths or weaknesses against another class.
Then there are the individual body parts such as eyes, ears, horn, mouth, back, and tail. These can result in either pure Axies (E.g. a Bird with all 6 Bird body parts) or mixed Axies (E.g. a Bird with some Aqua and Plant body parts mixed in).
These body part combinations affect the stats of each Axie (E.g Health, Speed, Skill, Morale). And then each Axie gets 4 cards to play during the game. These cards all have different abilities and so on.
You can also breed Axies to sell their eggs to other players on the marketplace. Breeding itself is fairly complex, with mechanics like dominant and recessive genes, maximum breed count, and so on.
There’s no guarantee that the breeding will produce a desirable Axie that sells at a profit. But if you succeed at it, you can easily “rent” them out or sell them to new players.
So how much can you really earn from playing Axie Infinity?
This is the controversial and anecdotal part, so take it with a pinch of salt. I’ve interviewed people who have said they earn anything from RM1000 to RM4000 a month.
Ross Stephenson, a Malaysian crypto investor and Axie player since June 2021, says his average monthly earnings are between RM1000-2000.
To give you an idea of how much of a time investment this requires, Ross plays Axie Infinity for an average of 2-3 hours a day. For each game he wins at his skill bracket, he earns 8 SLP.
1 SLP (at time of publication) is worth USD 0.18. This is assuming the price of SLP remains stable at USD 0.18.
The price of SLP is constantly fluctuating between 0.45USD and 0.19 USD daily, but to be safe, I’ll be using USD0.18 as the metric for my calculations. Source: Crypto.com
So how does he arrive at that monthly income figure? Let’s do a bit of calculus:
- Players can play a maximum of 20 Axie arena games in a day. One match lasts between 5-8 minutes, so that takes roughly 3 hours of gaming in a day without breaks.
- On average, a player will win 50% of every game he plays, so out of 20 games played per day = 10 games won.
- 10 games x 8 SLP won per game = 80 SLP earned per day.
- In Adventure mode, you can earn a max of 100 SLP per day. It requires some grinding which will take roughly another 2 hours.
- There’s a Daily Quest Bonus which gives you another 50 SLP if you meet their daily target.
- Your total daily rate is 100 + 80 + 50 = 230 SLP. 230 SLP x USD 0.18 = USD 41.40
If you played like this consistently for 20 days a month, you may potentially earn USD 828 (RM3450 in my country's currency). Note that this is not including transaction fees when converting SLP to Ringgit, which can be anything from 5%-15%.
That’s more than my first drawn salary when I was a fresh grad in Malaysia!
Buying your first team of Axies is mad expensive
So what’s the catch? The answer is the price of the upfront cost: Each Axie is currently worth upward of USD 500 (RM1500).
Yup, just one Axie costs more than a new Nintendo Switch. To provide a bit of perspective, back when Axie Infinity was literally unheard of, each Axie was going for USD 3.
Image via Axie Infinity Marketplace.
As of July 2021, the average prices listed on the Axie Marketplace are between USD 350 - USD500 USD. Since you need 3 Axies to start, that’s a total investment of USD 1050 - USD 1500 for your first team.
And furthermore, these aren’t even the best Axies for competitive play. Buying a meta team can set you back up to a whopping USD 14,000 if you really want a top-performing team.
Is it worth buying the equivalent of two PS5’s for a crypto game?
Ross says, “If you see Axie Infinity as a long term investment, then it’s never too late to enter. However, right now, if you do not have the finances to invest into your own team, it would be better to join a scholarship program.”
How Axie Infinity Scholarship Programs work
To resolve this massive barrier to entry, some enterprising Axie players have been pooling together their roster of playable Axies and creating what’s known as Scholarship Programs.
The benefit of this is that it allows non-players to test the waters and play Axie Infinity for free, without the huge investment that comes with it.
One such scholarship program is run by a group called Lorcan. In this profit share model, scholars pay them a flat rate of 75 SLP per day and keep whatever earnings they get on top.
“We made it a flat rate, so that players are incentivized to earn 100, 150, or 200 a day,” says one of the Lorcan founders, who wished to remain anonymous. Spaces for new scholars are currently limited due to high demand.
Ross himself was an early recipient of a scholarship program run by another group called Lambda.
“Lambda was started by my Axie friends. Under this scholarship, they pay for all the upfront costs and I just need to play,” he told me.
After dipping his feet into it via the scholarship, Ross bought his own team with an upfront investment of USD 1000. Now he plays with his own team and plans to play until he makes back his initial investment, and then enjoy the rest of his earnings as pure profit.
What are the downsides that no one talks about?
Axie Infinity gameplay screenshot from gaming channel Bittrio.
So far, everything I’ve reported here on Axie Infinity paints a rosy picture, with a healthy competitive ecosystem, a quickly-growing playerbase, scholarship programs aimed at potential players with no capital, and real money being earned.
However, there are inherent risks to getting started in Axie Infinity, similar to risks investing in any crypto currency.
First of all, the legal aspect: The law has yet to make a decision on what type of financial instrument crypto games come under.
In the US, companies which offer ICOs (Initial Coin Offerings) can get in trouble with the law if they make misrepresentations about the potential earnings to investors, or how the technology will be used.
The law could introduce similar regulations to crypto-gaming. Right now, crypto gaming is under a legal grey area. If you lose your initial investment, there’s no legal recourse for you to sue the developers of the game.
The game’s difficulty level is actually (probably) quite high
Another aspect of earning that is glossed over by successful players is the difficulty of the game itself. With all the complexity of the Axies themselves, tons of guides have sprung up to meet the demand.
A Malaysian Youtube guide to transferring money to Ronin wallet in order to start buying Axies.
In competitive play, any rank below 800 gets 0 SLP. Yes, even if they win.
It will take some effort towards learning the game mechanics to become good at it. Ross struggled at first to meet the minimum daily SLP requirements, but after hours of grinding and hard work he was able to reach rank 1400. After that, he started earning SLP in earnest.
Your ranking determines the amount of SLP dropped. 1400 gives you 8 SLP, 1500 gives you 9 SLP, and so on. The best player in the world has a ranking of 3067 and earns 12 SLP per win according to Axie Leaderboard Axie.Zone.
Whether you can really earn SLP depends on how good a player you are.
The Axies Infinity leaderboard. Source: Axie.Zone.
The upside is that Adventure mode gives you a base amount of SLP as you progress through the game. It’s kind of like their single player mode. As of today’s date, you can earn 100 SLP daily from Adventure mode alone.
Periodic game updates may change the earning rate
However, this daily rate comes with the caveat that the developer can potentially tweak the rate of earning in the future at any given moment; which would make it harder to earn SLP.
For example, you might earn USD10 for every 2 hours you play now, but in 6 months, you may end up earning USD 2 instead.
This happened with another game called Alienworlds. According to investment watchdog The Market Herald, the plunge was due to the release of an exploration update at its Lucknow Gold Project in NSW, which it has a farm-in agreement with private company Lucknow Gold Company. (I have no idea what any of that means.)
In a pinned comment, Youtuber Zueljin gaming shared: “As of April 22, 2021, these values have decreased dramatically. I’m earning around 2TLM (0.09 USD) per hour now and TLM is trading much lower than before. Just an FYI that this is a crypto game and things change rapidly in the market. Hoping some of the new updates coming to alien worlds will boost profits <3.”
This shows that anything can happen in the real world which can impact the game’s currency value through no fault of the players themselves.
Buying your first 3 Axies requires in-depth game knowledge
One more challenge to getting started on the right foot is the Axie-buying process.
Ross shared the story of 2 beginners who just bought random Axies based on their price budget instead of researching what each Axie's cards and abilities are. In the end, their Axies were weak and they found it difficult to earn as much money.
Says Ross: “Personally I think any beginner to Axie infinity will struggle to understand how to buy good Axies unless they first play the game themselves or they do massive research beforehand.”
“For myself, I paid someone RM 100 to help find the 3 best Axies within my budget for me. It was much easier than having to spend hours of my time researching and finding good Axies that work well together,” he shared with me.
Not knowing how your first 3 Axies synergise with each other will lead to an overall poor initial experience of the game.
Newbie players often end up selling their first Axies for better ones, incurring selling costs of 4.25%. That’s because Axie Infinity charges a platform fee of 4.25% to the seller when they sell Axies in the marketplace.
Let’s say you bought an Axie for USD1000, so 4.25% of that is USD 42.50. It is assumed that this fee goes to the developers, Sky Mavis as operational costs. There are currently no platform fees for buying Axies.
Another point, if you find yourself buying your first Axies at the height of the craze, and after the hype dies down, sell off your Axies for cheaper than what you bought them for, you will incur further losses.
Scholarships are a viable option to circumvent this risk, since it’s a practice that is above board in the community and even has the developers’ blessings. But it does come with its own risks.
For example, the investor may refuse to pay the scholar their cut, as there’s no way to legally enforce the agreement.
A scholar may also sign up for multiple scholarship programs, which is strictly prohibited and is actively monitored by the Axie community.
Should you get into playing Axie Infinity?
So to wrap up this extremely long and detailed breakdown of Axie Infinity, the big question on your lips is probably: Is it worth it?
As of July 2021, Axie Infinity is experiencing a boom. According to Delphi Digital’s report, Axie Infinity’s marketplace volume increased from USD 8 Million in April this year to USD 96 Million in June.
My personal unsolicited advice? Don’t get caught up by greed from looking at the highest potential earnings, the users who show off their pie-in-the-sky numbers. First think about your own personal habits and risk appetite:
- Are you drawn to the gameplay of Axie Infinity? Would playing it be a chore for you, or would you enjoy the process of learning how to beat your opponents?
- Do you have the patience to read up on all the different moves, skillsets, characteristics, capabilities, and breeding?
- Do you have the capital to plonk down 5-6 thousand ringgit for a game that may or may not make your investment back for you?
- Do you enjoy learning about crypto and appreciate both its risks and potential for growth?
- If any of your answers to the above questions is no, would your time and energy be put to better use by doing something else?
If you can commit to the daily grind of 3 hour gameplay of Adventure/Arena games, you have a chance of earning back your investment within a few months. Going by Ross’s example, you need to be earning the equivalent of USD 30 of SLP in a day for it to be worth your while.
Where you go from there is up to you.
Is Axie Infinity here to stay?
It’s difficult to gauge how much longevity Axie Infinity has in the future. Some games have longevity that far outlast their original playerbase; Pokemon and Magic the Gathering are just two that spring to mind.
Axie Infinity draws inspiration from both franchises so it has potential to go far. If the game becomes even more popular over the next few years, the ones who got in early get a nice return on their investment.
Yet, it’s still within the realm of possibility that people eventually stop being interested in the game. If it stops making waves on social media, it’ll stop being relevant, and the value of its currency will drop.
At the end of the day, you still need to think of Axie Infinity as a game company with shares. The value of the shares is in its Axies, the robustness of its ecosystem, the size of its playerbase, and the vagaries of the market.
To me, all crypto games operate under essentially the same concept: To grow the value of the currency it uses. The only difference between each game is simply a factor of how the game ecosystem is set up. Is it fun? Is it able to earn real money? Will people keep coming back for more? Will it be overtaken by a better designed game?
Essentially, in this world its buyer/investor beware. As one catchphrase in the crypto world goes, DYOR (Do Your Own Research).
P.S. While researching this article, every person I spoke to talked about the opportunities without dwelling too much on the risks. If you are one of those who have tried and failed at Axie Infinity, let me know in the comments!