In brief

  • Axie Infinity surged in popularity last year, but has seen declining token price, NFT valuations, and trading volume lately.
  • Ethereum NFT game Axie Infinity will institute a number of economic changes.

The Ethereum game Axie Infinity has been a smash hit, popularizing the play-to-earn gaming model while racking up nearly $4 billion in NFT trading volume.

But last summer’s surge has given way to tumbling token and NFT prices of late, calling the entire play-to-earn model into question. Now, Axie's creators have announced changes designed to resuscitate its flagging economy.

On Thursday, Sky Mavis announced a series of economic changes that will launch with Axie’s upcoming 20th in-game season. Essentially, the PC and mobile game will hand out far fewer SLP reward tokens and shift more of the focus on rewarding online arena battles.

Axie Infinity is a monster-battling game based around NFT assets. NFTs are the blockchain-based receipts that prove ownership to a digital item—in Axie, that primarily takes the form of colorful monsters that you can breed and battle. Each Axie NFT costs money, and you need to buy three of them just to play the game, but then you’ll earn token rewards for playing.


That unique “play-to-earn” model was established when Axie Infinity launched in 2018, but the Ethereum-based game exploded in popularity last summer after launching its Ronin sidechain, which made transactions faster and cheaper.

The play-to-earn model led to community-led “scholarship” programs, which see NFT holders rent Axies to players—particularly those in developing countries—in exchange for a cut of the reward token profits. That growth boosted interest in and demand for the game, which resulted in an explosion of hype around Axie Infinity last summer.

Quickly, Axie Infinity was generating well over half a billion dollars in NFT trading volume each month, with the SLP reward token jumping to a peak of nearly $0.40 in August, and the AXS governance token reaching an all-time high of about $165 in November. With nearly $4 billion in total NFT trading volume to date, Axie Infinity is the most successful NFT project of all time.


However, momentum started rapidly fading late last year.

SLP fell below $0.10 in September and kept sinking, recently trading for about a penny or less. That put significant strain on the various community-driven scholarship programs and the guilds that operate them. AXS is also down nearly 70% from its peak, at a current price of about $50.

And NFT trading volume fell off a cliff the last couple months, dropping from almost $754 million in November to $301 million in December and $126 million in January. That’s with the wider NFT market on the upswing. Meanwhile, Axie Infinity’s marketplace shows that entry-level Axie NFTs are selling for about $30, compared to $200 or more last summer.

Sky Mavis’ own data shows a drop in daily players in recent weeks, but it’s not as dramatic as the other numbers suggest. As of January 31, Axie Infinity had just under 2.2 million daily active users, per Sky Mavis, compared to a peak above 2.7 million in November. (Axie Infinity founder Jeff Zirlin clarified to Decrypt that the internal player numbers are pulled from the Unity game engine, and are thus based on the average number of users who open the game each day.)

Why is Axie Infinity’s economy cratering? Sky Mavis believes it’s primarily due to SLP token inflation, with four times the amount of SLP created each day as opposed to burned through the Axie breeding process. To address that, Axie Infinity will give out far less SLP, removing it entirely from the single-player adventure mode and cutting out rewards for daily quests.

“We believe that these economic changes will allow us to start righting the ship and getting the economy moving in the right direction,” Sky Mavis wrote on Thursday.

In a Twitter Spaces discussion on Friday, Zirlin suggested that the significantly expanded development team hasn’t been nimble enough to address such issues lately. “This change should have been made much sooner,” he tweeted Thursday.


Brycent, a popular play-to-earn Twitch streamer and founder of the Loot Squad guild, told Decrypt that the game’s rapid growth and “positive momentum” last year proved to be too much, too soon. “That momentum ended up being its undoing,” Brycent explained. “Axie, from a gameplay and economy perspective, wasn't ready for this level of mass adoption.”

There’s a lot of emotion wrapped up in Axie Infinity, and while that’s often true with gaming communities, the monetary investment only appears to amplify things with crypto games. Players have invested money in NFT assets that have quickly depreciated in value, while others may have relied on the play-to-earn model to make a living.

Brycent said that he’s optimistic that the changes will help turn around Axie’s economic decline, but that it’s essential to think longer-term about the game and its expanding ecosystem.

“Axie revolutionized the play-to-earn movement, and I believe the team will ensure they do what is best for the long-term sustainability of the economy, the players, and the overall community at large,” he said. “I’m a long-term thinker and builder, so short-term price movements don’t change what we are building at Loot.”

Axie Infinity has a sizable roadmap ahead, which includes launching a more robust “Origin” battle system, adding gameplay around NFT land plots, and launching free “starter Axies” to onboard people into the game without an upfront investment. Sky Mavis also has billions of dollars in AXS tokens to potentially incentivize players for years to come.

Rich Cabrera, the founder of Axie scholarship guild Ready Player DAO, told Decrypt that he sees the newly-announced changes as a first of multiple steps needed to address the game’s economic woes. “I don't believe the changes will fix the issues as-is, but step one is to cut issuance—so I agree with that,” he said.

He points to a need for further utility for SLP tokens beyond breeding, so that more tokens are burned and removed from circulation. Sky Mavis teased a number of burning-related ideas on the roadmap yesterday, including new in-game options and buy-in tournaments. Cabrera believes that such features will ultimately “determine the future of the economy.”

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