A lot of people stating this is a Ponzi or a pyramid scheme and using the premise that the game economy will only continue to work if new players join and put money into the economy in the form of purchasing axies for a high price. Isn't this the case for any business with employees? Seems obvious to me that if there is no repeat business/sales the economy (business) will shrink, it's up to the game developers to keep developing new and exciting reasons for the business to grow and people to re-invest into the economy which they clearly state they will try to do through community lead decisions and further game development. I wish innovation in blockchain wasn't so quick to be labelled as Ponzi and pyramid all the time. Any economy/business relies on the sale of products which is the continued injection of money. Very interesting to watch this play out, I am involved with a small investment. I think the business lessons I learn from watching this economy play out will be worth a couple of thousand dollars which is my investment, if I earn some money on top of that then fantastic but not expected. Good real-world education on economics.
This was an exceptional read. As a long-term community builder who has maybe less attention to crypto that I should have (it just got captured early in the scene I'm in by a group I don't love), thank you for helping me expand & blow my mind with the opportunities and possibilities here.
Hi Packy, thanks for the great breakdown, though I struggle to understand the long term model because it feels like Axie violates the idea that one gets paid to bring utility to the world.
Axie allows players to play-to-earn and this could be the future where many players, especially those in poverty-stricken or poorly managed countries (SEA, Venezuela, etc) can earn a living doing so.
What I struggle to wrap my head around is how this ties in to the utility of the platform - sure it's great that one could play this game and earn SLP that is 5x what I would've earned in my country, but what is the utility that I'm being paid for?
Typically, a person works towards the real economy and gets paid $x for their work to provide utility to someone else. For example, one would work in a cafe as a waiter and help distribute real world goods and services so that other users have utility such as being able to drink coffee, eat snacks. There is a trickle down effect on the economy where a user pays $5 for a drink, and of that say $1 goes to the water, $2 goes to rent, $1 to utilities and $1 to cafe owner.
Even When you talk about other game developers, users either 1) pay to play the game such as WoW, or any games you purchase on Steam/Epic etc or 2) play the game for free but get monetized another way such as ads or user data. The idea is that one enjoys the utility of the game to their lives (destressing, role-playing, adventure and excitement, or just killing boredom) and pays for that utility directly or indirectly. The game studio have to invest up front, and hopefully earn their risk-adjusted cost of capital over the lifecycle of monetizing the game.
In this Axie pay-to-earn model, the player is getting paid to play the game but it generates no real world utility for anybody else. I get that the game is skill-based, but who's providing the payment to these players? They are playing to earn money and replacing jobs that have an impact on the economy. My intuition is there must be utility created out of this game but I cannot identify what that utility is, who is enjoying it and why they are getting paid.
It circles back to the a longstanding issue in DeFi which can be summarized in the question of "where is the yield coming from?". A simple example is in a degen yield farm. Buyers who don't understand the tokenomics and token dilution end up being exit liquidity by supporting the price as the token dilutes massively. A few months ago, forking swaps was all the hype so what you get is a ABCswap offering ABCtoken if you pool your liquidity there, and giving you 99999% APR. That's effectively printing banana money and you can make a nice amount if you get out before it collapses. If there is no spill-over utility in playing Axies and it ends up effectively printing SLP to pay users to incentivize them to be onboarded and play, doesn't it end up similar to a degen yield farm but disguised another way? One way to picture it is effectively, whoever is buying SLP/AXS is supporting the dilution and supporting the yield to these players in PH (they can be thought of as the LP providers in degen yield farms)
If we assume a nice chunk of the PH population plays this game instead of working and is able to earn returns significantly above that of working in PH either informally or formally, then the PH economy suffers some removal of productive labor. Let's say 50% of the population is playing this since this earns better than base income - what happens to the PH economy? If they can cash it out and purchase goods and services that still support it, but we'll also see labor shortages and collapse of the informal economy. From my exp majority of informal economy is in distribution (what we call general trade) and that is how most goods and services penetrate outside of T1 cities. Removing those will have significant impact to all stakeholders - FMCG supplier, distribution, consumers, logistics etc.
So yes it sounds nice that players play to earn and can earn more than their base line income. But what are they getting paid for, and who is keeping up this yield? I'm not sure of the answers myself but I suspect under the model of gaming and NFTs, it's basically a degen yield farm model - which BTW I understand every yield farm has to start somewhere, but one way to think is if one thinks the 99999% APRs of a degen yield farm is not sustainable, why would the profits earnable in this game through SLP be any different?
Hi! This would be my first and last time messaging you. I just want to let you know that I appreciate your hard work for axie but to be honest, I personally can't feel any different with the server situation a week ago. I play axie to earn and relieve my stress at work. But during this past few days, I feel that you also vent your anger towards your clients by telling us to shut up and not offering a decent plan to make things work. I maybe clouded with rage as of the moment since I only earned frustrations playing axie. I want to express that as a client, it doesn't help when you chose not to inter act with us and keeping us always in the dark. I pray that you make haste with your plans so that your clients can keep their sanity. I know don't care for what a new comer like me but then again I want to thank axie for the 1st month that I enjoy the game and I want to curse it because with a short span of 7 days it game me lots of stress and 0 satisfaction. As you've said earlier, axie is a marathon but running a marathon like an idiot who doesn't know where and when it will finish is just insane for my end. Thank you and sorry for venting my frustrations with you. I cannot help to do this since you're the only person I can message to atleast alleviate what's inside me.
Message to Jiho. I can't send this to your discord.
Many of the dynamics concerning this game have been misunderstood, so let me clarify and get my points across:
1) The overwhelming majority of players come from "developing" countries. They see Axie Infinity PURELY from a play-to-earn perspective. The average monthly salary in the Philippines is $200. They can't afford to buy axies - instead they earn via scholarships.
2) It's not that new people enter the ecosystem via buying 3 axies and starting to play the game. New entrants receive 3 axies from scholarships. So the supply of axies comes from people who breed their axies.
3) THE QUESTION WE SHOULD BE ASKING OURSELVES IS: At which price of SLP do all these people stop playing the game because it's not worth their time anymore? Current SLP minted (supply) vs burnt (demand) dynamics are driving the price of SLP down. As of September, 27th, we are at 0.07 cents / SLP. So an average player makes about 0.07*150SLP = 10.50USD per day. Most of the players are scholars, so they get a 50%-70% cut, e.g. 5.25-7.35USD.
> As Howard mentioned, this is a strategic game. It depends more on skill than luck of the draw.
I think it mainly depends on which Axies you buy. In fact, Axie is very much play-to-win. There's only so far skill can take you—if you spend more money on Axies with better stats and abilities, you have a huge advantage.
> 48% said they played for the economy, forming a solid base of people building livings on the platform, but 37% said that their main motivation is the community
Would love a source for this.
> People buy Axies as pets. There are two billion pet owners worldwide, 99.99999% of whom buy pets knowing that they’ll lose a lot of money. Axie is already attracting many people who just buy their Axies as pets with no expectation of return.
Great piece thank you. Lots of smart technologies and innovating problem-solving. It does feel like this is the beginning of something new that has the potential to be big, most likely for beyond Axie.
Color me as skeptical as far as this being the solution to long term money generation for 3rd world citizens goes. I don't doubt one bit there is quite a lot of money to be made here, but that doesn't mean this is a sound and long term financial solution or plan. With the little knowledge I gathered from the article I see 2 potential issues, I'd love to hear other people's feedback on this.
1. This is a pyramid or ponzi scheme, not a value generator. This system works only as long as new players are willing to lay many hundreds of dollars to get into the game. New players pay existing players to enter the game and you can see already the pyramid drawing itself. I'm sure a lot of money can be made here for quite some time, but one day there'll be more existing players than new players willing to lay cash to get in, and the law of supply and demand will apply and prices will fall to eventually be close to zero when supply will far exceed demand. Players don't create or generate anything new or valuable here, they basically just sell an access to the game.
Also, selling digital land is an interesting concept, as speculators will be able to invest, buy and sell properties and just like in real life and with digital currencies, some could make a lot of money and some could lose a lot of money too. But this is nothing like having a job and generating a steady cash flow by generating some output and have Mr. market reward you with some dollars. Nothing wrong with that, but again, I'd question the long term sustainability of it or the wisdom to rely on it as everyday income.
2. The whole system works for as long as people perceive this as being a good solution to their financial problems. The day something else pops and has better return and more flashy features, people will move to that new thing. I doubt the moat is as big as you seem to think. If I have an egg farm, as long as people eat eggs I should do relatively well, independent on whether you think I'm the next big thing or not. If you buy eggs, out of necessity, I'll be making money. Whereas here, I should be ok for as long as people think this is the next big thing. The perception of people is what creates it's value as it doesn't really generate any value on its own.
That's not to say it'll be impossible to make a living on these platforms, but I just don't see this as the Eden garden, but just the best place to make money while playing a game until the next big thing is out and replaces it.
With all that said, I think this is still good news as it's innovating and bringing a lot of new concepts that could be the basis the next big thing will be an iteration of this, most likely.
Nice ponzi. This is so simple... SLP price will crash sooner or later due this massive and ridiculous inflation. People gets paid on SLP by giving nothing on exchange which in the long run will make this coin near to 0. As the price of SLP goes lower people won't find any excuse on playing this game
Hope they can solve the issue about old ronin address disconnection to our axie account>>>and connect to another new ronin wallet—reason for the issue-to have again an access for transaction in the marketplace because of lost seed phrase>also make the migration of axie appear :/
Фantastic read, Packy! Learned something new and got hungry for more own research! I also agree that while there are structural risks (crypto-related), Axies major risks is boredom - how to create and amuse customers?
At which point I started to recall my adolences and countless hours spent with Final Fantasy. Wouldnt that be also a logical move to Play2Earn for SquareEnix?
The read is deep yet captivating. The data is also impressive. While some statements disguise themselves as deductive conclusions instead of speculation it is clearly a well written & informative piece.
If you get a scholarship you can start playing, but right now that is the only way unless you have at least $600usd. I dont see myself playing this game for that reason, its price is just too high.
A lot of people stating this is a Ponzi or a pyramid scheme and using the premise that the game economy will only continue to work if new players join and put money into the economy in the form of purchasing axies for a high price. Isn't this the case for any business with employees? Seems obvious to me that if there is no repeat business/sales the economy (business) will shrink, it's up to the game developers to keep developing new and exciting reasons for the business to grow and people to re-invest into the economy which they clearly state they will try to do through community lead decisions and further game development. I wish innovation in blockchain wasn't so quick to be labelled as Ponzi and pyramid all the time. Any economy/business relies on the sale of products which is the continued injection of money. Very interesting to watch this play out, I am involved with a small investment. I think the business lessons I learn from watching this economy play out will be worth a couple of thousand dollars which is my investment, if I earn some money on top of that then fantastic but not expected. Good real-world education on economics.
This was an exceptional read. As a long-term community builder who has maybe less attention to crypto that I should have (it just got captured early in the scene I'm in by a group I don't love), thank you for helping me expand & blow my mind with the opportunities and possibilities here.
Hi Packy, thanks for the great breakdown, though I struggle to understand the long term model because it feels like Axie violates the idea that one gets paid to bring utility to the world.
Axie allows players to play-to-earn and this could be the future where many players, especially those in poverty-stricken or poorly managed countries (SEA, Venezuela, etc) can earn a living doing so.
What I struggle to wrap my head around is how this ties in to the utility of the platform - sure it's great that one could play this game and earn SLP that is 5x what I would've earned in my country, but what is the utility that I'm being paid for?
Typically, a person works towards the real economy and gets paid $x for their work to provide utility to someone else. For example, one would work in a cafe as a waiter and help distribute real world goods and services so that other users have utility such as being able to drink coffee, eat snacks. There is a trickle down effect on the economy where a user pays $5 for a drink, and of that say $1 goes to the water, $2 goes to rent, $1 to utilities and $1 to cafe owner.
Even When you talk about other game developers, users either 1) pay to play the game such as WoW, or any games you purchase on Steam/Epic etc or 2) play the game for free but get monetized another way such as ads or user data. The idea is that one enjoys the utility of the game to their lives (destressing, role-playing, adventure and excitement, or just killing boredom) and pays for that utility directly or indirectly. The game studio have to invest up front, and hopefully earn their risk-adjusted cost of capital over the lifecycle of monetizing the game.
In this Axie pay-to-earn model, the player is getting paid to play the game but it generates no real world utility for anybody else. I get that the game is skill-based, but who's providing the payment to these players? They are playing to earn money and replacing jobs that have an impact on the economy. My intuition is there must be utility created out of this game but I cannot identify what that utility is, who is enjoying it and why they are getting paid.
It circles back to the a longstanding issue in DeFi which can be summarized in the question of "where is the yield coming from?". A simple example is in a degen yield farm. Buyers who don't understand the tokenomics and token dilution end up being exit liquidity by supporting the price as the token dilutes massively. A few months ago, forking swaps was all the hype so what you get is a ABCswap offering ABCtoken if you pool your liquidity there, and giving you 99999% APR. That's effectively printing banana money and you can make a nice amount if you get out before it collapses. If there is no spill-over utility in playing Axies and it ends up effectively printing SLP to pay users to incentivize them to be onboarded and play, doesn't it end up similar to a degen yield farm but disguised another way? One way to picture it is effectively, whoever is buying SLP/AXS is supporting the dilution and supporting the yield to these players in PH (they can be thought of as the LP providers in degen yield farms)
If we assume a nice chunk of the PH population plays this game instead of working and is able to earn returns significantly above that of working in PH either informally or formally, then the PH economy suffers some removal of productive labor. Let's say 50% of the population is playing this since this earns better than base income - what happens to the PH economy? If they can cash it out and purchase goods and services that still support it, but we'll also see labor shortages and collapse of the informal economy. From my exp majority of informal economy is in distribution (what we call general trade) and that is how most goods and services penetrate outside of T1 cities. Removing those will have significant impact to all stakeholders - FMCG supplier, distribution, consumers, logistics etc.
So yes it sounds nice that players play to earn and can earn more than their base line income. But what are they getting paid for, and who is keeping up this yield? I'm not sure of the answers myself but I suspect under the model of gaming and NFTs, it's basically a degen yield farm model - which BTW I understand every yield farm has to start somewhere, but one way to think is if one thinks the 99999% APRs of a degen yield farm is not sustainable, why would the profits earnable in this game through SLP be any different?
Hi! This would be my first and last time messaging you. I just want to let you know that I appreciate your hard work for axie but to be honest, I personally can't feel any different with the server situation a week ago. I play axie to earn and relieve my stress at work. But during this past few days, I feel that you also vent your anger towards your clients by telling us to shut up and not offering a decent plan to make things work. I maybe clouded with rage as of the moment since I only earned frustrations playing axie. I want to express that as a client, it doesn't help when you chose not to inter act with us and keeping us always in the dark. I pray that you make haste with your plans so that your clients can keep their sanity. I know don't care for what a new comer like me but then again I want to thank axie for the 1st month that I enjoy the game and I want to curse it because with a short span of 7 days it game me lots of stress and 0 satisfaction. As you've said earlier, axie is a marathon but running a marathon like an idiot who doesn't know where and when it will finish is just insane for my end. Thank you and sorry for venting my frustrations with you. I cannot help to do this since you're the only person I can message to atleast alleviate what's inside me.
Message to Jiho. I can't send this to your discord.
This article turned out to be incredibly wrong and irresponsible. Can you please do a post mortem on what went wrong with your analysis?
Many of the dynamics concerning this game have been misunderstood, so let me clarify and get my points across:
1) The overwhelming majority of players come from "developing" countries. They see Axie Infinity PURELY from a play-to-earn perspective. The average monthly salary in the Philippines is $200. They can't afford to buy axies - instead they earn via scholarships.
2) It's not that new people enter the ecosystem via buying 3 axies and starting to play the game. New entrants receive 3 axies from scholarships. So the supply of axies comes from people who breed their axies.
3) THE QUESTION WE SHOULD BE ASKING OURSELVES IS: At which price of SLP do all these people stop playing the game because it's not worth their time anymore? Current SLP minted (supply) vs burnt (demand) dynamics are driving the price of SLP down. As of September, 27th, we are at 0.07 cents / SLP. So an average player makes about 0.07*150SLP = 10.50USD per day. Most of the players are scholars, so they get a 50%-70% cut, e.g. 5.25-7.35USD.
Good piece! Here are some questions/feedback:
> As Howard mentioned, this is a strategic game. It depends more on skill than luck of the draw.
I think it mainly depends on which Axies you buy. In fact, Axie is very much play-to-win. There's only so far skill can take you—if you spend more money on Axies with better stats and abilities, you have a huge advantage.
> 48% said they played for the economy, forming a solid base of people building livings on the platform, but 37% said that their main motivation is the community
Would love a source for this.
> People buy Axies as pets. There are two billion pet owners worldwide, 99.99999% of whom buy pets knowing that they’ll lose a lot of money. Axie is already attracting many people who just buy their Axies as pets with no expectation of return.
Would also love a source for this.
Great piece thank you. Lots of smart technologies and innovating problem-solving. It does feel like this is the beginning of something new that has the potential to be big, most likely for beyond Axie.
Color me as skeptical as far as this being the solution to long term money generation for 3rd world citizens goes. I don't doubt one bit there is quite a lot of money to be made here, but that doesn't mean this is a sound and long term financial solution or plan. With the little knowledge I gathered from the article I see 2 potential issues, I'd love to hear other people's feedback on this.
1. This is a pyramid or ponzi scheme, not a value generator. This system works only as long as new players are willing to lay many hundreds of dollars to get into the game. New players pay existing players to enter the game and you can see already the pyramid drawing itself. I'm sure a lot of money can be made here for quite some time, but one day there'll be more existing players than new players willing to lay cash to get in, and the law of supply and demand will apply and prices will fall to eventually be close to zero when supply will far exceed demand. Players don't create or generate anything new or valuable here, they basically just sell an access to the game.
Also, selling digital land is an interesting concept, as speculators will be able to invest, buy and sell properties and just like in real life and with digital currencies, some could make a lot of money and some could lose a lot of money too. But this is nothing like having a job and generating a steady cash flow by generating some output and have Mr. market reward you with some dollars. Nothing wrong with that, but again, I'd question the long term sustainability of it or the wisdom to rely on it as everyday income.
2. The whole system works for as long as people perceive this as being a good solution to their financial problems. The day something else pops and has better return and more flashy features, people will move to that new thing. I doubt the moat is as big as you seem to think. If I have an egg farm, as long as people eat eggs I should do relatively well, independent on whether you think I'm the next big thing or not. If you buy eggs, out of necessity, I'll be making money. Whereas here, I should be ok for as long as people think this is the next big thing. The perception of people is what creates it's value as it doesn't really generate any value on its own.
That's not to say it'll be impossible to make a living on these platforms, but I just don't see this as the Eden garden, but just the best place to make money while playing a game until the next big thing is out and replaces it.
With all that said, I think this is still good news as it's innovating and bringing a lot of new concepts that could be the basis the next big thing will be an iteration of this, most likely.
Nice ponzi. This is so simple... SLP price will crash sooner or later due this massive and ridiculous inflation. People gets paid on SLP by giving nothing on exchange which in the long run will make this coin near to 0. As the price of SLP goes lower people won't find any excuse on playing this game
Awesome article
Smashing post
Hope they can solve the issue about old ronin address disconnection to our axie account>>>and connect to another new ronin wallet—reason for the issue-to have again an access for transaction in the marketplace because of lost seed phrase>also make the migration of axie appear :/
Good day manager,I'm willing to schoolar if choose me
Name:marycris palubon
Age:35
Location: payatas Philippines
I'm willing to schoolar if you choose me
Because helping my mother and my daughter also I'm willing to schoolar thank you
Фantastic read, Packy! Learned something new and got hungry for more own research! I also agree that while there are structural risks (crypto-related), Axies major risks is boredom - how to create and amuse customers?
At which point I started to recall my adolences and countless hours spent with Final Fantasy. Wouldnt that be also a logical move to Play2Earn for SquareEnix?
The read is deep yet captivating. The data is also impressive. While some statements disguise themselves as deductive conclusions instead of speculation it is clearly a well written & informative piece.
If you get a scholarship you can start playing, but right now that is the only way unless you have at least $600usd. I dont see myself playing this game for that reason, its price is just too high.