Axie Infinity has had the biggest rise-and-fall of any NFT project in history. Revenue went from $350 million a month to a low of $3,000 per day in the span of a year, with most users abandoning the game due to lower rewards.
In this video I go over how this all happened, whether or not it was a pyramid scheme, and what this means for the future of play-to-earn gaming.
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0:00 START HERE
2:10 why I’m making this video
2:38 the RISE of Axie Infinity
3:50 how did people make so much money
4:39 the dream
5:53 the DECLINE
7:35 Kim Jong-un enters the chat ($600m stolen)
10:24 is play-to-earn gaming dead?
I’ve been playing axi Infinity for three Months and I’ve put about ten thousand Dollars into the game more or less you Don’t have to put that much in but in That exact time period my net worth went From negative thirty thousand dollars in Student loans to just over a million Dollars in unrealized gains August 2021 Was by most accounts one of the best Months ever for nfts for the yacht club Had reached the floor of 25 East our Collectors were spending millions of Dollars on nfts like fidenzas open C Volume was at an all-time high and Garyvee was out there absolutely losing His mind Problem but the biggest project of them All had to be the crypto game axi Infinity at its peak ax Infinity was Making 360 million dollars per month and It had 2.7 million weekly active users Okay up until that point those numbers Were inconceivable for a crypto game You’re really only expected to see that From a traditional AAA title and even Though many people were saying that this Was all maybe unsustainable and Bordering on perhaps even a pyramid Scheme when you spoke to VCS and Investors they would tell you that this Was just the beginning they would always Speak with this little twinkle in their Eye like they were projecting five years Out to the Future fantasizing about how
Much money they were gonna make and how Sick the VIP area enters these parties Was going to be and they were right this Was just the beginning but perhaps a More appropriate way to put it was this Was the beginning of the end you see axi Infinity was never able to hit those Same Revenue figures that it was making In summer 2021 and in fact it’s Basically been on a violent down only Trend since then most recently hitting a Low of just three thousand dollars in Daily revenue a ninety nine point nine Percent decline from its peak in August Beyond that it was also the victim of The biggest defy hack of all time losing Over 600 million dollars in a case that Involved a fake LinkedIn job offer sent By a hacker funded by none other than North Korea supreme leader Kim Jong-un This is truly the kind of ridiculous Story that makes you question whether or Not we do live in a simulation and so Today we’re going to get into the rise And fall of ax Infinity what this means For play to earn gaming in general and What I wish I knew when I made this Video on axe Infinity last year one Thing I do want to make clear before we Start is that this isn’t a case of me Just trying to kick a team when they’re Down okay based on all the interviews That I’ve seen I don’t believe this is a Case of any malicious intent I just
Think it’s an honest experiment that Went wrong however the reason I do think We need to cover this is because we are Going to see more of these hype trains In the near future we might even be Seeing one or two of them right now and So it’s good to learn from the past so We can keep avoiding these costly Mistakes okay so with all that said Let’s get into it so ax Infinity did Become a juggernaut in 2021 but it Wasn’t an overnight success the game Began development back in 2017 and Launched right before the bear Market in 2018 meaning that it stayed quiet up Until the nft market began to heat up Again in early 2021. now on the surface The game itself doesn’t really look that Special it’s effectively a Pokemon style Battling game where you could breed These monsters train them up and fight Against other players with turn-based Gameplay and by most accounts the game Wasn’t really that fun okay the graphics Were decent at best the gameplay was Grindy and there was all this RNG luck That isn’t a great way to build up a Competitive multiplayer and typically in The gaming space you don’t make it that Far if the game isn’t Fun okay that’s Kind of a based requirement except in This case ax Infinity wasn’t hyped up Because of its gameplay it was hyped up Because of its play to earn model you
See this was the first popular crypto Game where players could actually earn Money while they played the game and for Those I got in early the money was Surprisingly good and it wasn’t uncommon To hear about people making even seven Figures in just a matter of months by The way if you’re new to this channel we Have something similar called like to Earn where you smash the like button and Then earn my sincere gratitude now how Exactly do you earn money in a play to Earn game like this well in this case it All revolved around the fact that new Players needed a minimum of three axes To form a team and play online and so The way people made money was by Supplying the materials needed for these Players to get those axes and I usually Took two methods you could either take Two axes and breathe them together to Create a third axi that you could then Sell to another player as an nft or you Could play games online to earn a token Called sop which was needed to breed new Axes so you could actually sell this Token to people who were breeding axes Themselves so already you start to see a Little bit of a problem right the money Depends on demand for new axes which Depends on more players joining the game So it starts to look a little bit like a We don’t want to call it a pyramid Scheme then let’s go with a triangle of
Opportunity now here’s where things Really got out of hand okay turns out That in order to farm all that SLP token You actually need to play the game right That’s kind of half of what play to earn Means but instead of spending all day Playing the game yourself people figured Out that they could actually partner With somebody else and then split the Profits with them the term for one of These players is a scholar and it didn’t Take long for players in developing Countries like Venezuela and the Philippines to figure out that they Could earn more money playing this game Than what they were making in their Local economy but some earning an In-game token called small Love Potion Or SLP for short Became their full-time job playing Around the clock to cash out three or Four hundred US Dollars within their First few weeks that might not sound Like much but in the Philippines it’s More than many would expect to earn in a Month and it’s easy to see why people Would fall in love with this idea right Not only could you make a little bit of Cash for yourself by just buying video Game assets but you could also help Somebody else get out of poverty at a Time when the whole world was going Through these covet shutdowns but for Other people there was still something
That didn’t seem quite right and Concerns over the in-game economy Sustainability began to grow so even a Slightly younger Giancarlo who knew Nothing about lighting or sound quality Pointed out that this could all be a Bubble so it’s a bit circular and the Whole thing depends on one key Assumption which is that more new Players will keep coming in to buy axes Because if players stop joining then What you’ll get is an overpopulation of Axes which will then crash the price Which in turn will affect the price of SLP and the AXS token and this is Unfortunately what happened because Whenever you have something that looks Like it starts to print money it’s going To attract speculators that figure out How to maximize the gains I mean we’re Talking about video game players that Are obsessed with speed running and Infinite money glitches this is just What they do for fun and in the case of Axi infinity it wasn’t long before People started to create complex Breeding farms with huge teams on Payroll and millions of dollars in Upfront investment the supply began to Outpace the organic demand that the game Was getting that’s like one of the worst Things that could happen to a game like This because it results in a violent Drop-off in the value of all the tokens
By the end of December the price of axis Token AXS was down 41 from its peak in November by the end of March it was down 60 percent and by the end of June the Price was down an incredible 91 in less Than a year the floor price for axes Also dropped from 340 dollars to a Recent price of six dollars and sop fell From 40 cents to .004 cents per token With that drop off in sop all of a Sudden the play players in the Philippines were earning just a fraction Of what they used to make and this chart By navic shows the blue line as the Minimum wage in the Philippines and as You can see by January 2022 players in All tiers began to make less than the Minimum wage and this has only gotten Worse since then so by Spring 2022 it Became clear that axi Infinity’s revenue And engagement were in this turbo Downward spiral but just as things were Looking darker than ever they somehow Got even worse Welcome back to Yahoo finance live Everyone it’s one of the largest hacks In cryptocurrency history over 600 Million dollars in crypto stolen from The Ronin blockchain which Powers the Popular nft game axi Infinity yeah it Turns out that during axes worst ever Moment when they were on their last legs And just looking for some relief they Got hit by an elite group of hackers
Called Lazarus that were being funded by North Korea’s Kim Jong-un and this was Just another case of being a victim of Your own success because thanks to the Hype train last year that we spoke about Sky Mavis which is a company behind ax Infinity decided that at the pace that They were growing they were going to Quickly outgrow ethereum and as a result They needed to build their own chain Looking at one of their blog posts they Say in order for ax Infinity to reach Our second third and fourth degree Connections the friends and family of Our friends and family actually needs a Long-term solution that makes Participating in the axi game and Economy fast cheap and seamless and as a Result they created Ronin a side chain That connects to ethereum boat which let Players transact at a much faster rate And with much cheaper fees but the Problem with side chains is that in Order to get those benefits of speed and Usability you often have to make Sacrifices and what you give up is Typically security which means that You’re more likely to get hacked which Is exactly what happened here so Ronin Was targeted by this Elite group of Hackers called Lazarus which by the way I looked them up and they’re just Running rampant in the space okay just Last week they once again stole a
Hundred million dollars from yet another Side chain called Horizon bridge and in Total they’ve stolen more than two Billion dollars at this point but it Turns out that despite being this Sophisticated group of shadowy super Coders the Ronin hack came from just a Good old-fashioned fishing campaign on LinkedIn perhaps the most dry vanilla Platform of them all this whole time I Thought LinkedIn was just a place for Boomer memes and small talk but turns Out it’s a great place to get catfished As well okay I just found out about this But it’s actually the platform where Fishing campaigns happen most often in This case the hackers pose as recruiters And then approach the engineers that Were working at Sky Mavis at the time Telling them that you know with their Help they could be doing a little better In their career and according to the Block which was the site that broke this News last week after what One Source Described as multiple rounds of Interviews a sky Mavis engineer was Offered a job with an extremely generous Compensation package the fake offer was Delivered in the form of a PDF document Which the engineer downloaded allowing Spyware to infiltrate Ronin systems now To their credit Sky Mavis did recently Raise 150 million dollars to refund Everyone who lost money in this hack but
For many this was a huge blow to their Credibility Okay so play to earn gaming has been This huge buzzword for over a year now And ax Infinity was the poster child for That Trend so it’s never a good look When your best example seemingly burns Down overnight it turns out that making A game is incredibly hard but then Adding a real world money economy on top Of that is like playing underwater Blindfolded chess against Magnus Carl so Basically as soon as money gets involved You’re inviting all these speculators to Try to min max all the strategies to set Up Bots and start cheating and it’s just A constant Battle of staying ahead of The people that are trying to break your Game this is true with just even normal Games like fortnite but it gets put on Steroids when there’s real money Involved not only that but there is the Problem of investors crowding out Players and we can see that pattern Explained here in this blog post by Clockwork Labs where crypto speculators Buy up all the in-game assets hoping to Make money on them crypto speculators Aren’t interested in playing the game Because they prefer speculating Gamers Aren’t interested in playing the game And can’t afford to buy the in-game Resources even if they were so the game Has no players the bottom line is that
We still don’t have a single example of A popular sustainable play to earn game At scale okay so the idea is still very Much in beta but also keep in mind that Play to earned gaming is just one slice Of crypto gaming okay you don’t actually Need play to earn for it to have nfts And tokens you could just have for Example cosmetic skins being sold as Nfts and that doesn’t require a Full-blown economy built into the Gameplay and if you do want to emphasize Crypto that’s fine just don’t forget the Number one rule in gaming which is make Your game fun this is something that I Wish I emphasized more on the last video I made on Ax Infinity because the fact That most players weren’t actually Interested in the game itself and were Financially motivated was a huge red Flag that would tell you just how Unsustainable everything was now I still Think that nfts and crypto assets are Going to be the future of gaming and I Actually think that in five years when We talk about nfts it’s mostly going to Be within the context of gaming but it Is going to be a process of trial and Error on until we find the right balance As for axi Infinity they’re definitely Not giving up and they’re making all These changes that will hopefully make The game more sustainable and Importantly more fun so if you want to
Read about those I recommend checking This post made recently by one of their Team members and I’ll link to it below Alright guys that’s it for today thanks For watching and I’ll catch you at the Next video
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