The Rise of Axie Infinity and the P2E Phenomenon

Key Insights:

• Axie Infinity has become the highest-grossing non-fungible token game on the market. 
• Last week, the project generated $1.3 million worth of sales from a total of 23,100 buyers.
• Collective technology adoption coupled with an uptake of smart phones has fuelled an organic rise for Axie Infinity. 

It’s the chart-topping game that took the world by storm, reaching a market capitalisation of nearly $3 billion at the start of this year – Axie Infinity is the play-to-earn (P2E) phenomenon that has become the highest-grossing non-fungible token (NFT) game on the market.

Indeed, NFT-centric games have been around since 2017, with CryptoKitties being a pioneer in the field. Yet, P2E did not start gaining traction until much later when NFT games finally entered the mainstream.

In particular, the coronavirus pandemic introduced several economic, market and technological shifts, with the most pivotal being that consumers have changed the way they approach investing and asset ownership.

Collective technology adoption coupled with an uptake of smart phones has fuelled an organic rise for Axie Infinity and the play-to-earn phenomenon at large, where the amalgamation of blockchain, NFTs and digital currencies has led to complete ecosystems where assets are bought, traded, leveraged, and even borrowed against.

A New Virtual Labour Force

At its core, the P2E model enables participants to earn money by playing games but the underlying element to this is that such a framework opens up a new monetisation model that can change the way games generate revenue.

For instance, players can trade Axies for real money on the game’s marketplace and generate profit, while the project’s virtual economy is dominated by two cryptocurrencies; Smooth Love Potion (SLP) and Axie Infinity Shard (AXS). Notably, Axie quality increases in rarity with one rare mystic Angel selling for 300 Ethereum (ETH) or $130,000 in 2020 –  the most expensive Axie ever sold.

Where P2E games really excel at is in providing opportunities to low-income workers who lack financial mobility. As such, P2E has exploded in the Southeast Asia market where some Filipino or Vietnamese residents, for example, were making more money each month through blockchain-based games than they were in their pre-pandemic jobs.

The extraordinary uptake of Axie Infinity coincides with the ease of accessibility offered – all you need is a smartphone or computer with internet connection to enter into the metaverse and earn in-game rewards or engage with virtual communities that span continents.

This widespread inclusion means that even workers in low-income areas can participate in the democratisation of labour and finance. Some may even call it a new virtual manufacturer labour force.

Exponential Growth

While its virtual financial ecosystem has demonstrated demand, capability, and utility outside of traditional investing methods, Axie’s statistics speak even greater volumes. Last week, the project generated $1.3 million worth of sales from a total of 23,100 buyers – a 205% leap.

Yet, this is a small fraction of what Axie Infinity was selling last summer when it regularly topped $100 million in weekly sales.

The project launched staking support this month which would explain the recent heightened appetite for Axie Infinity Land NFTs. The staking feature enables Land owners to earn weekly rewards in the game’s native AXS token and roughly 91% of the 16,794 circulating supply has already been staked.

Another contributing factor is that the Ronin bridge relaunched on June 28. The bridge is a sidechain built for Axie Infinity which enables users to transfer assets between the game and the Ethereum mainnet.

In June 2021, the game generated nearly $780 million in sales within 30 days and the following month, it generated more fees than Bitcoin (BTC) or Ethereum during a seven day period.

In fact, further growth is expected since the project has launched its second phase of upgrades to its new game mode dubbed Origin, which boasted 600,000 sign-ups as of June. Origin is in early access mode ahead of an eventual global launch and implements a new battle system, visual upgrades, as well as other enhancements.

Origin, which enables users to collect, trade and battle each other with their playable Axie monster NFTs, has seen increased downloads with 90% of Axie Land owners having staked their NFTs to earn AXS tokens.

Overall, this model where players earn unique NFTs or cryptocurrency for participating in a game, as well as turning these rewards into real money and generating revenue, has transformed the gaming landscape. It has even given birth to the play-to-trade model where gamers earn a token and either sell or trade it for real money.

No longer can critics label P2E as a fad technology. If NFT sales figures are anything to go buy, Axie Infinity is only set to rise further. The game has opened doors to a new world of financial inclusion that did not exist a few years ago and as its metaverse ecosystem continues to expand with a transition to Origin, Axie Infinity will leave its imprint on the gaming industry, with P2E to thank for such a feat.