Sweetheart of the play-to-earn gaming world Axie Infinity has hit one of its first major road bumps, as revenue on the platform fell by roughly 40% from a high in September, signaling the first backward step the game has taken since its meteoric rise began earlier this year. According to data from Axie World, the non-fungible token-based game earned 64,933.71 ether (ETH), worth US$220.32 million, in September — down from US$342 million in August.

A mobile-based game similar to Pokémon, Axie Infinity has players breed and battle small monsters called “Axies,” each represented by its own NFT, which can be purchased using Ethereum. At press time, an entry-level Axie could be bought for roughly 0.045 ETH, or US$153, but that’s down from almost US$400 would-be players forked out in July when Forkast.News first reported on the initial craze.

When players battle Axies they are rewarded with its in-game tokens known as Small Love Potion — or SLP. This token is essential for breeding more Axies and playing the game, making it more valuable the more people wanted to start playing. At its height in July, SLP was trading at US$0.3355, though has fallen steadily over 80% in the intervening few months. Though has it has seen a recent price jump to be trading at US$0.09 at press time, according to CoinMarketCap.

Due to the game’s play-to-earn function, it garnered a significant community in developing economies, where people with low buying power were able to make significant supplementary income simply by playing the game. Nowhere was this more true than in the Philippines, where enterprising people began offering “scholarships” to others looking to play the game but found the entry cost-prohibitive. As part of the scholarship, these players would then pay back their sponsors over time in a fraction on SLP until the debt was paid off and they were able to begin to play with their own Axies. 

One such player offering scholarships, who prefers to be known through his online alias “Porky,” told Forkast.News in July he was able to earn US$20,000 a month playing the game through his network of scholars. This was a great deal more than he was able to make in his day job, so he quit to play Axie Infinity and manage his scholars full time. Speaking with Forkast.News again recently, Porky said he has lost a little revenue due to the price crash, but he has been able to manage it. “I have 100+ scholars, so yes it has impacted me, but the game is still generating revenue,” he said, adding he anticipated this situation, as so was able to increase the number of scholars he sponsors to offset the changes.

Other changes to the in-game economy have taken place recently, drastically changing player’s ability to earn; in August, the game’s developers announced the amount of in-game rewards would be reduced better manage the in-game economy. While in the past players might have earned 100 SLP in a particular mode, they would now only receive 50. While some players would be understandably annoyed at this reduction in rewards, Porky described the change as a positive move.

“There was too much supply of SLP, and no one was breeding [Axies],” he said, saying the previous system disincentivized the spending of SLP from creating new Axies. “SLP is a free money, it just generates and generates. That’s why it crashed, and the [developers] had to balance it.”

SLP is only half the story, however, as the game’s native governance token AXS has only continued to break new ground. In July, at SLP’s height, AXS was trading at US$49.82, but since then it has continued to gain ground, trading 20% above that point for most of the past month. But as news broke over the weekend that Sky Mavis, the developer of the game, would be launching its own decentralized exchange for Axie Infinity, its price shot up over 100% in a matter of hours and was trading at US$141.32 at press time.

Sky Mavis says the intention for developing the DEX is to limit the friction players experience in trading between SLP, AXS and other cryptocurrencies or fiat. The DEX would be built on the same network Axie run on, the Ethereum sidechain Ronin, and will make Axie on of the first games in the world to have its own DEX.

Despite the falling price of SLP, players and investors are still able to earn significant returns through not only trading AXS, but staking it as well. Brian Lu, partner at Headline Asia and Infinity Ventures Crypto, says it is the ability to stake the token which has kept it trading at such a high price. “Staking might not [have higher returns] than you can get yield farming, but yield farming and DeFi is so hard for individuals to know that or even to keep track of it,” he said. “But buying Axie and staking it, anybody can do it so easy, and that’s what’s driving the price of AXS up.”

Porky, too, recommends staking to players looking to continue earning revenue while SLP is trading so low, as he himself stakes AXS in order to reinvest his earnings back into buying new Axies.

With the recent downturn in company revenue and game profitability, it remains to be seen if the launch of the DEX and the tweaking of the in-game economics can reset Axie’s fortunes. But in such a competitive environment, as an early investor in Yield Guild Games, another company behind Axie’s success, Lu thinks many new and upcoming blockchain-based games are going to give Axie a run for its money in the coming few months.

“Is Axie going to be still number one in six to twelve months? I doubt it,” he said. “Because for these new games that are coming out, the graphics are better. The in-game economics are going to be better because they’re going to try to attract more players onto their platform and the game play is going to be more fun. The only reason why AXS is number one now is that they’re the first to market and they’re really the only ones right now that have an extremely liquid token. That you can easily buy and sell anywhere.

“But when you think about the game industry, there are so many people out there gunning for them.”