Non-fungible tokens (NFT) are the newest craze in the crypto space today. One of the fastest-rising NFT gaming platforms is Axie Infinity. The massive adoption by users resulted in its meteoric rise. In recent reports, the total daily active users have now reached 1 million. AXS (Axie Infinity), the native token of the platform has now a total market cap of $7,613,700,162 and is now the leading NFT project in the crypto space.
In January, AXS (Axie Infinity) token was merely trading for an approximate price of $0.50. But over time the price of the token has increased dramatically. Today, AXS (Axie Infinity) is now at $126.50 recording an increase of more than 200 times its price early this year. On Sept. 4, the price of the skyrocketed to $94.73 recording a new all-time high. On Sept. 30, the staking of AXS, the native token of the platform was launched which has resulted in the increase of its price even more. On Oct. 4, AXS (Axie Infinity) has recorded its newest all-time high at $155.32, few days after the launching of its staking. But what could be the reason behind Axie Infinity meteoric rise?
Axie Infinity: Play, Breed, and Earn
The ethereum-built gaming platform has two tokens: AXS (Axie Infinity) and SLP (Smooth Love Potion). AXS (Axie Infinity) is the governance token and holders can stake their tokens and earn rewards. They can also use it to play the game or participate in key governance votes. SLP (Smooth Love Potion) is used as a reward token for players for every successful battle. They can either opt to cash out or use SLP in the game to breed new Axie monsters.
Initially, the price of an Axie range from $5 to $10 only but after it has gained traction, its price has tremendously increased to $200. So, for someone to build a team, he has to spend a minimum amount of around $600. The most expensive Axie was sold at 300 ETH (ethereum) or a whopping $1,062,600 as per the digital asset current value at $3,542. Users can earn SLP by playing a team of Axie.
But another way of earning is minting these blockchain creatures. A virgin or zero breed Axie can be bred a maximum of seven times before it becomes sterile. But the minting of the Axie monster through blockchain ensures the uniqueness and non-duplicability of the digital asset hence no Axie monsters are alike. In order to breed, one has to purchase an AXS (Axie Infinity) and SLP (Smooth Love Potion) tokens. As the number of breeding increases, the number of tokens needed for the process also multiplies particularly for SLP (Smooth Love Potion). But many tokens are needed and how much would it cost to breed an Axie monster? Here’s a sample guide you can refer to if you plan to breed an Axie.
Axie Infinity has embraced the headlines after recording new all-time highs in terms of trading volume and the massive increase of its active users. To date, daily active users have swelled from 30,000 in April to more than 1 million in August. But what’s remarkable about this is that most users were from countries that were hard hit by COVID 19 like Venezuela, Brazil, and the Philippines. The rise of Axie has also provided a job opportunity for a large number of people especially in a poverty-stricken country like the Philippines. And believe it or not, there are a handful of success stories behind it.
Axie: A Ray of Hope for a Financially Embattled Country
Axie was first created in 2018, it only became popular in the Philippines in May 2021. Having the concept of play-and-earn, the Pokemon-inspired blockchain game became a refuge to a large number of the country’s workforce who have lost their jobs during the pandemic.
A recent CNBC mini-documentary titled titled “Play-to-Earn” featured Filipinos who are playing Axie which includes a mother, three young entrepreneurs, a recent college graduate, a pedicab driver, and an elderly married couple. The documentary has also featured the first person who discovered Axie in Cabanatuan City. Although these individuals belong to different statuses, they have one denominator: Axie.
In order to help those who are less fortunate who want to earn in Axie, Yield Guild Games (YGG), a decentralized gaming startup started offering a scholarship. To date, YGG has already offered two funding rounds: $4M in June 2021 and another $4.6M in August. How does the Axie scholarship works?
Under the scholarship, the player referred to as the scholar gets 70% while the YGG as the investor gets 30%. But due to the popularity of Axie, more investors have started offering scholarships to qualified players.
Despite the volatility of the platform’s assets and the recent adjustment on the SLP rewards to players, it remains one of the most profitable crypto investments today. In the Philippines, the Bureau of Internal Revenue (BIR) stated that Axie players are subject to taxation. This comes to light with the rapid growth of businesses adopting SLP (Smooth Love Potion) as payment in the country. BIR Revenue Deputy Commissioner for Legal Group Marissa Cabreros stated that the tokens received by players are considered as income. She stated:
“You are earning, you are given benefits or currency that you can trade, convert and use like cash. At the end of the day, there’s a flow of income to players. So this income can be taxable.”
According to a report by the Manila Bulletin, the Central Bank of the Philippines also plans to regulate Axie Infinity. In its statement to the media outlet, CBP stated:
“Social media platform owners and gaming application providers may be required to obtain the necessary authority to conduct fintech-related services that cut across the different jurisdictions of member agencies of the Financial Sector Forum (FSF).”
Axie Infinity in its early stage is now being challenged by regulations and faced with hurdles just like BTC (bitcoin). With financial regulators in the country now threatens to tighten their rein on Axie Infinity, will other countries soon follow suit? Can Axie stay on top and survive this battle? The ray of hope may start fading soon if rigid regulations will be implemented on the ethereum-built gaming platform. And with the recent inclusion of the Department of Finance (DoF) among the regulatory bodies aiming to regulate Axie, this is not far from reality. Although most Axie followers believe that the NFT blockchain game is here to stay, experts say otherwise. Adoption and regulations will both play an important role in its survival.