Axie Infinity was the breakthrough success in the blockchain gaming world. Riding the wave of excitement surrounding non-fungible tokens, the game was one of the first examples of blockchain’s promise to disrupt existing financial systems and generate value in new ways — by paying people to play a video game.

 After the game’s in-game cryptocurrency Smooth Love Potion, or SLP, grew in value by over 1000% in less than a week in early May, the game turned practically overnight from a fun pastime that could earn players a little extra cash to a full-time job for some. This was especially true in countries with low buying power compared to the U.S. dollar — and nowhere more so than in the Philippines, where the game proved so popular that the government started a specific campaign to tax players’ earnings from the game. For many players, the game has been transformative to their lives. For many industry and technology watchers, it represents the beginning of a transformation for society.

“Now we’ve got to the stage where Internet 3.0 is democratizing money,” Jeremy Britton, CFO of Boston Trading Co., told Forkast.News, speaking of the hoped-for next stage of the internet’s evolution in which blockchain will allow for easy trading of value, not just information. “Kids in Africa or in China or wherever can be sitting around playing a game on their phone or playing a game on their laptop and can be making $50 a day in a country where the average wage is like $1.67 a day.

“What an amazing time to be alive,” he added.

But the good times did not last forever. SLP’s price spiked again in July, bringing it back to close to its all-time high of US$0.4191 it set back in May, but since then has been steadily falling. It now rests in a similar range to where it was before the boom in May, trading around US$0.07 since late September, according to data from CoinMarketCap. Monthly revenue for the game has also fallen for the second consecutive month, according to data from, with October’s revenue down 45% from August’s high of US$364 million.

As developers tweak forms of the game to try and rebalance the reward system and stabilize the price of SLP, it begs the question whether Axie Infinity’s model is sustainable in the long run.

Play to earn gaming

Axie Infinity is kind of like Pokémon; players breed, train and fight teams of three “Axies,” cute little monsters that are also minted as NFTs. Through playing, users are rewarded with the in-game token SLP, which is used to breed and train more Axies but can also be traded on crypto exchanges.

Entry-level Axies are selling for around 0.027 ETH, or US$116 at press time according to Axie Marketplace. Considering three Axies are needed to play the game, this might seem like a steep price just to start playing, but it is down significantly from the 0.203 ETH it cost for entry-level Axies when Forkast.News reported on the game in July.

Once the cost of entry became so high as to make the game unattainable for many people in developing economies, as usual, human ingenuity sprung up to create a solution. Players started offering “scholarships” to newer players where they would lend out Axies for new players to use in exchange for a percentage of the SLP the newer player earned until the Axies had been paid off.

One player who spoke with Forkast.News who preferred to be referred to as his online persona “Porky”  said during the height of the price boom of SLP in July that between the more than 100 scholars he had worked for him, he was able to make US$20,000 a month from this operation — more than enough to quit his job and manage his scholars full time.

“We’ve always had these systems,” Britton said, reflecting on the natural progression for human ingenuity and enterprise to move into the digital realm once a need had been identified. “And if these same systems have been successful in the past hundreds, if not thousands of years, then they’re probably still going to be successful. Because human psychology is ‘I will give you what I don’t value … to get something that I value even more [in this case] the experience, which I think will bring me something of even greater value.”

The arrangement suits the scholars as well, according to one player who spoke with Forkast.News. “It’s really a great game to play,” said Erris Gonzales, a digital artist living in the Philippines. Gonzales has been playing Axie for about a month, trading her time making NFT art for her manager in exchange for her Axie scholarship. While the extra SLP coming in has been having a positive impact on her life, she recognizes the increase in popularity in the game has made “grinding” for SLP more difficult.

“It’s not that hard to play,” she added, “but it’s also becoming very competitive because a lot of Filipinos here play today, so they see it as a potential income to their daily needs. The SLP grind is competitive these days because … more and more people are playing Axie during the pandemic. I think there will be a long-term benefit to us [scholars] also to the managers as well.”

It’s not just the growing number of players who are changing the nature of the game; developers also recently adjusted the way in which players are rewarded with SLP to try to rebalance the game and stabilize SLP’s price. As the currency is generated by users playing the game, this led to a huge increase in the supply of SLP. This oversupply, it has been speculated, has led to a devaluation of the currency as player numbers began to level out after the explosion in popularity. Following the changes made in August, players would only earn 50 SLP playing a particular game type, whereas in the past they would have earned 100, for example.

In a blog post explaining the changes, the company said: “These changes have been made with the long-term health of the ecosystem in mind,” and that the changes incentivized more player-vs.-player combat, which is what the game was designed to be primarily about. While the changes did have a short-term positive impact on SLP’s price, the token continued to lose value steadily before plateauing around US$0.07 in late September.

While it would be risky to reduce the rewards for the game amid crashing prices, Porky told Forkast.News in an earlier report the move was necessary. “There was too much supply of SLP,” he said, explaining too many people were cashing out their SLP as opposed to using it in-game to keep the game running. “SLP is a free money, it just generates and generates. That’s why it crashed, and the [developers] had to balance it.”

Porky said that while his income had been reduced, the number of scholars he was managing meant he was still able to earn a decent income. For new players coming into the game, however, prospects would look much different now to what they did a few months ago.

But another new player told Forkast.News that didn’t bother him too much.

“I’m not really concerned with the numbers that much,” Justin Dela Cruz, another player based in the Philippines who had only been playing the game for a few months. “As long as I get paid it doesn’t really matter with me because the only investment that I do is my time per day.”

Dela Cruz’s arrangement with his manager requires him to earn 75 SLP per day as part of his contract, with profits being split 50/50 between the two parties. Despite the declining price of SLP, he hopes to pay off his contract and become a manager himself in the next few months.

“The only concerning thing is if the game goes in a bad direction, the manager will receive the brunt of whatever bad things are coming for them,” he said. “For me, it was expected for the SLP price to go down because a lot of people want to join the bandwagon, because you’re only playing a game and then you’re earning money on the side.”

Is this sustainable?

Following the explosive growth of Axie, the main question everyone is asking is, “is this model sustainable?” Using classical economics, the situation might appear as though it does not, Ché Köhler, founder of South African business directory Niche Market, told Forkast.News.

“For now, this [model] works, because the number of new players joining each month is greater than the number of current players, meaning people can make their money back due to the number of greater fools to sell to thinking that are the early ones getting in cheap,” he said.

Köhler says this model depends on people who earn SLP having enough of a market still willing to buy the tokens on the other side. Because of this, he sees the scholarship program not as a generous way of bringing people into the game, but as an essential step of ensuring there are holders in the ecosystem for people to sell SLP to. By incentivizing the leasing of Axies through locked-in contracts, the system is akin to a multi-level marketing scheme — new users are brought in through a debt to the game who are incentivized to bring more people into the game once that debt is paid off.

“The game relies on you to build your account first and then repeat the process of holding enough Axies that you can then start your own scholarship and have others pay you SLP for rental and then you sell your tokens for cash,” Kohler said, adding: “This is where the ‘ponzinomics’ comes in, the desire to turn these tokens into a market where people can make money. As soon as the new user growth slows, those who are still trying to farm will give up, [and] in turn you’ll see fewer people wanting to hold tokens and get out. More tokens hitting less demand.”

Köhler uses the term “ponzinomics” to refer to a Ponzi scheme, a scam that is structured to pay existing investors with funds collected from new investors, regardless of the performance of any legitimate investment that may have been made.

Aleksander Larsen, co-founder and COO of Sky Mavis, the company behind Axie Infinity, rejects this assessment outright, however, telling Forkast.News in a written statement: “A Ponzi scheme is a mechanism that is overtly set up to defraud people, so the few at the top will profit. Ponzi schemes have to fail because they are zero-sum and they eventually run out of new people to feed money into the system. This isn’t the case in general economics, because economic value is being created through growth.”

Larsen described Axie’s economics as distinct from this system because the more people who play the game, the more value is generated. This in turn attracts advertisers and brands, generating still more value. “When new technologies launch, the short-term growth they inherently generate is not sustainable, and we don’t expect the hockey stick growth to continue forever, but we believe we will find equilibrium,” Larsen said.

Others in the blockchain gaming space also had a more generous view of Axie’s economic situation, despite the drop-off in the price of SLP. “It’s still pretty attractive, and it needs to fall quite significantly for it to become unattractive,” Derek Lau, game director of fellow blockchain-based game Guild of Guardians, told Forkast.News, adding that even if the price has fallen considerably, SLP remains quite valuable for players in economies with weaker buying power compared globally, such as the Philippines, where one peso is worth roughly US$0.20.

Being a game developer himself, Lau is aware of the hard work that constantly runs behind the scenes to ensure the game continues to run smoothly and believes Sky Mavis is acutely aware of the deflationary challenges the game is experiencing and is working to address the problem. He also believes this issue to be common for many NFT projects, games and otherwise, where maintaining interest in the project is essential to pieces holding their value. And while some people see the cost of buying an Axie team as prohibitive and exclusionary, he sees it as an effective tool for limiting deflation.

“Axie also has a buy-in as well, effectively where you can’t earn unless you spend. Some people don’t like it, but for [the game], it’s a really effective mechanism for them to limit the number of bad actors who try to just extract from the ecosystem but not contribute anything,” he said.

Likewise, Dela Cruz remains optimistic for the game’s outlook. “I actually see the game being profitable for a few years,” he said. “The [developers] are actually listening to the player base, they’re actually taking the economy into consideration … instead of trying to make a quick scheme out of it like some other games out there I won’t mention. That’s definitely the impression [I get from a lot of things] related to cryptocurrency.”

In a game where everyone involved seems to have an opinion and is trying to guess the latest price movement, Gonzales offered a refreshingly honest view on the future price movement of SLP: “I don’t know, I’m not a psychic,” she said.