Axie Infinity: What it is and How it Works

If you were to close your eyes fall asleep and wake up on July 6, 2016, you would rise to find that the price of bitcoin was trading between $670 and $681, the iPhone SE was the newest phone in town, and the soon-to-be-craze known as Pokémon Go was just being released. For many this probably sounds like a lifetime ago. it is astonishing to think about how much technological change has occurred in six short years. About one year later in December 2017, the idea to combine aspects of the crypto universe with online gaming would to come life in the minds of the people at the Vietnamese studio Sky Mavis. In the article below we’ll look at the online game known as Axie Infinity, discuss what it is and how it has been evolving since the start of development in 2017.

Axie Infinity Universe

Axie Infinity is an online game universe revolving around Pokémon-esque creatures known as Axies. Players can collect Axies as virtual pets with aspirations to battle, breed, collect, raise, and build kingdoms for their Axies. What makes Axie Infinity different than other online games is the synergy it has established between standard online gaming and blockchain. The Ethereum-based game utilizes a design that allows players to own their virtual assets, and for the game to reward players who are able to reach an advanced level of skill.

To get started, users need to work through a multi-step setup process to connect digital wallets and their Axie Infinity account, which is all detailed in the game’s onboarding guide.

Once the accounts are successfully connected, the player can interact with the digital marketplace. To play, users need 3 Axies. Once the player has 3 Axies then they can download the application and start playing. There is a lot of nuance around the cost of an Axie since the average price that is paid fluctuates based on factors such as rarity, experience, attributes, and type. At the time of writing, the least expensive Axies cost around $30, known as ‘Floor Axies’. Floor Axies are often weak in battle and likely won’t be able to earn much for its owner. At the time of writing, players can expect to pay a few hundred U.S. dollars for a usable team of Axies and upwards of $1,000 for a rare Mystic Axie.

Non Fungible Tokens (NFTs)

Axie Infinity is recognized as the leader in NFT gaming.  In-game digital assets such as the Axie creatures are represented by NFTs. These cryptographically unique tokens, as discussed, confers ownership, and allows the player to trade axis on the game’s marketplace for real money.

In the realm of NFT projects, Axie Infinity holds the record for the third-highest all-time sales. As of March 2022, Axie Infinity generated $4.17 billion in all-time NFT sales below Opensea’s $23.21 billion and LooksRare’s reported $18 billion.

Play-to-Earn Business Model (P2E)

The play-to-earn business model is new to the gaming industry and is designed to reward participants who add value in certain ways to the game’s world or ecosystem. The basis of play-to-earn is predominantly based on the freemium model, which means that it is free to get started and then the user can pay to add new features, content, gear, or simply to progress more quickly through the game. As of late February 2022, Axie Infinity does not follow the typical free-to-play model since players are required to start with 3 Axies, but according to decrypt.co, the company is reportedly planning on releasing free in-game starter monsters to appeal to new users who aren’t ready to pay the premiums needed in the current model. Granted, starter monsters will likely not be able to earn the player much in terms of reward tokens, but the shift could open the game to an even wider audience.

Governance Tokens - Axie Infinity Shards ($AXS)

One of the most significant Ethereum tokens is known as ERC-20, which emerged as a technical standard used for all smart contracts on the Ethereum blockchain. While the details go beyond the scope of this article, it is relevant here because Axie Infinity Shards (AXS) are an ERC-20 governance token for the Axie Universe. It can be thought of as the native currency to the game and holders can claim rewards if they stake their tokens, play the game, and participate in key governance votes. As of February 27, 2022, the relative to the U.S. dollar AXS has increased by over 3,000% over the past year.

The AXS tokens are an intentional move by Sky Mavis to decentralize the ownership and governance of Axie infinity so that it aligns the interests between the developers and the community of players that actually play the game.

Reward Tokens – Smooth Love Potion (SLP)

A Smooth Love Potion (SLP), formerly known as small love potion, is a reward token within Axie Infinity that can be earned by players in certain ways by playing the game in battle or adventure mode. SLP is an ERC-20 utility token that carries a value like other cryptocurrencies and can be bought and sold on a decentralized exchange. The value of an SLP relative to the U.S. dollar hasn’t performed so well when compared to AXS and is down sharply over the past year. Unlike AXS, which has a supply cap of 270 million tokens, SLP has an uncapped number of tokens that could exist in the future. The uncertainty around the future supply of SLP has greatly impacted its value and concerns around its stability have caused many to question what will happen in the future. Sky Mavis has made some adjustments to the emission rate in recent months and potential changes based on governance votes in the future will likely continue to drastically impact the value of SLP.

Virtual Land

Lunacia, the Axie homeland is tokenized plots of virtual land called Terra, and will act as home bases of operation for players’ Axies. While the gameplay is still being actively developed, the idea behind these virtual plots is that players will be able to purchase, rent, and be developed by players. Virtual landowners will be able to find AXS tokens on their plots as well as different types of resources that spawn in nodes across Lunacia. Resources can be used to upgrade Axies and land. While the concept is still in early stages, the impact on the future of the game is endless and lays out a path for continued popularity into the future.

The Bottom Line

The convergence of the crypto universe with online gaming in the form of Axie Infinity marks an interesting shift in the future of not only online gaming, but also in the growing importance of digital ownership. For many, this game is their first foray into blockchain-based games or experiences. While there are still some challenges and uncertainties around block-chain-based experiences, it is noteworthy that such a project exists and it is likely to have an impact on future trends. With the development of land-based gameplay on Lunacia, or the continued breeding of unique Axies, it will be interesting to see what the future holds for Axie Infinity.