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Is Axie Infinity a get rich quick scheme?

09:18 PM July 21, 2021

Filipinos love a rags-to-riches story and Axie Infinity has provided many with the means to live out this fantasy. The chance to earn a month’s salary in a week’s time has tempted many new players into picking up the game. But what really is Axie Infinity – an overextended bubble or a rich new frontier?

Before Axie, there was blockchain

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As Bitcoin prices rose, interest in cryptocurrency also skyrocketed. Blockchain, at its core, serves as a type of database to keep track of transactions being made with cryptocurrency. It can be thought of as instead of one bank keeping records of their clients, multiple computers around the world hold the information of their every transaction. This allows for transparency as well as a secure way to avoid tampering when all information that enters the blockchain can be easily cross-referenced. A hacker would not be able to alter the blockchain and steal Bitcoin because if the hacker alters their copy, it would be different from everyone else’s copy and be deemed illegitimate.

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An NFT, or a non-fungible token, on the other hand is a unit of data stored on a blockchain that certifies a digital asset to be unique. Think of it as a birth certificate for digital files. While a simple CTRL+C and CTRL+V can essentially duplicate a file, what can’t be duplicated is ownership. Owning an NFT certifies that you are the sole owner of a digital file. Similar to how anyone can print out a picture of the Mona Lisa, but only one person actually owning the original painting.

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About Axie Infinity

From the CS:GO skin trade to the buy-and-trade of World of Warcraft, earning money from in-game goods is not a new phenomenon. Axie Infinity simply formalized in-game item trading and applied the blockchain and NFT aspect. Built as a fun and educational way to introduce blockchain technology to the public, Axie Infinity built upon what is known about decades-old gaming economies long before the age of cryptocurrency.

The game, developed by Vietnamese studio Sky Mavis, is making its rounds across the internet as a “Pokémon-inspired universe where anyone can earn tokens through skilled gameplay and contributions to the ecosystem.” Players can engage in battling, breeding, and trading digital pets called Axies, which are NFTs.

On top of this NFT economy are the Ethereum-based cryptocurrency Axie Infinity Shards (AXS) and Smooth Love Potion (SLP). SLP is the in-game currency players can earn which can then be exchanged for cash. AXS, on the other hand, are governance tokens which represent voting power on the Axie blockchain given as an end of season reward to the top 300 players in the leaderboard. In-game, AXS can be used alongside SLP for breeding purposes.

With the most expensive Axie being sold at 300 ETH in November 2020, roughly 28-million pesos today, the hype surrounding the game is understandable, especially when its largest player bases are from developing countries like Brazil, India, and the Philippines. A blog post written by the co-founders of Sky Mavis even boasts how “Axie has attracted thousands of players from developing countries in the pursuit of a new income stream during the Covid pandemic.”

What are Axie scholarships?

Players first need to invest in three Axies before being able to play. With increasing demand and a downpour of new users, this initial investment is becoming less and less affordable with the NFT pets reaching 300USD, roughly PhP15,000.

Axie scholarships sprouted as a profit-sharing model for players who cannot buy their own Axies upfront. These scholarship programs lend or rent out Axie teams for other players to use and earn money while taking a cut of the profit.

While the Axie hype is ongoing, more and more people understandably want in. Aspiring players should be reminded to be careful with sharing personal information on the internet. The onslaught of replies on Facebook and Twitter posts mentioning the game and scholarships have begun to include full names, phone numbers, and even complete addresses. With identity theft and other forms of fraud abundant, it is important to keep in mind that the internet is a public space not meant for private information.

Play-to-Earn

Some Filipino players might find the earning potential of Axie to be “too good to be true.” With a strong mobile game audience and rising inflation rates, being able to earn a month’s salary simply by playing video games is a dream come true for any avid video game fan. While Axie Infinity is not a get rich quick scheme, it is the pioneering title of the play-to-earn genre. Just like grinding for resources in World of Warcraft, in order to earn from Axie, users must play to gain SLP which can then be exchanged for real-world money.

Considering the game’s hefty entry fee, don’t spend more than you can afford to lose. It is, first-and-foremost, an investment and cryptocurrency is extremely volatile. The price of Axies may be rising now, but to put things in perspective, Dogecoin for example, saw a sudden drop in trading price over a Saturday Night Live appearance from Tesla CEO Elon Musk.

Axie Infinity has its own economy and will experience swings like any other market. It’s uncertain if Axie Infinity will be able to stand the test of time (and the markets), but one thing is for sure: the play-to-earn revolution has begun, and at the helm are cute axolotl-based creatures.

Disclaimer: author is not a financial adviser.

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TAGS: Axie Infinity, Sky Mavis
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