Last year, the Axie Infinity (AXS) “Play to Earn” game broke all records, with trading volumes reaching record highs. But then the momentum ran out, and AXS and SLP prices failed to recover. This will require changes to the business model, according to the project teams.
Axie Infinity rethinks its business model
The popularity of Axie Infinity had exploded last year, when it launched on the Ronin sidechain. The game had in fact been around since 2018 on the Ethereum blockchain (ETH), and it wasn’t until it was able to cut its costs that it really found its audience. But Axie Infinity’s business model may have been too generous, according to a publication by the project teams.
That’s what the announcement for season 20, which was published at the end of last week, says. It looks back at the last few months of the project:
“We’ve all felt euphoria with this incredible growth and prosperity, but we’ve also more recently entered a period of economic uncertainty. [This] has made the last few months difficult for everyone. “
Volumes have plummeted
Looking at Axie Infinity’s daily revenue on the Ronin blockchain, it is indeed clear that the last few months have been far from laughable for the game:
Axie Infinity’s daily income on Ronin (Source: Nansen)
The project’s governance token, AXS, had also seen its price plunge recently. It reached $47 in early February, down from an all-time high of $164 just three months earlier. This was also the case for the SLP, the reward token that is distributed to players, which is currently hovering around $0.014.
The average price of Axie Infinity NFTs, on which the game’s economy is based, has also fallen sharply.
According to the project team’s statement, Axie Infinity’s economic crash is mainly due to SLP inflation. Every day, four times as many SLPs are created as are burned, which is a problem :
“We are creating more burn mechanisms […] and we are also looking at ways to strategically reduce supply to balance the economy. “
Reducing supply in SLP
Axie Infinity is revising its business model as follows: SLP tokens will no longer be distributed in single player adventure mode. They will also disappear from the daily quests. The change will also affect the PvP mode, with SLP rewards not being removed, but reduced.
The project teams also confirm that other burn mechanisms will be introduced, and that these are not the only changes that will be made to Axie Infinity’s business model:
“The supply reductions will not be enough to regain the full power of our economic engine, but they are a necessary step to build a fully functional and sustainable economy. “
Axie Infinity is experiencing the backlash from the considerable enthusiasm it unleashed during 2021. This will be a crucial time for the game to determine whether it will be economically viable in the long term, once the first wave of interest has passed.
