The popular opinion is that video NFT games are about power fantasies: defeat enough dragons to reach level 99, sell enough wolf skins to get a flashy gold cape, and become wealthy, powerful, or successful in the game’s world—even if you aren’t in real life. Catdicax, a 30-year-old Finnish woman, saw Runescape as a location where she could earn more in-game stuff via hard work and effort. And it was profitable: She had gathered a menagerie of high-end artifacts over the course of ten years of playing NFT games.
Catdicax, on the other hand, eventually got restless. To work so diligently for Runescape’s digital axes or cloaks seemed like a waste of time, a meaningless grind. Catdicax then discovered Axie Infinity in 2019, a blockchain-based video game in which players gather and level up collectable Pokémon-style virtual creatures known as Axies. Players’ Axies, represented by NFTs, compete to earn cryptocurrency tokens, which may be used to breed additional animals.
However, the game is not about the usual NFT games hype; it is about the economics. As with holographic Charizards on steroids, rarer Axies command exorbitant prices: In 2020, someone paid $130,000 in bitcoin to acquire the rights to a stocky, winged angel named Axie. Smooth Love Potion, or SLP, tokens obtained by defeating opponents in Axie-fights may be sold for cryptocurrencies on internet exchanges and subsequently converted to legal coinage.
Catdicax identifies herself as “poverty [her] whole life.”
(Catdicax uses her screen identity because she is afraid of being “targeted” due to her wealth and concerns about sexist trolling.) She now watches as the value of her digital pets increases from a few dollars to up to $500 each Axie. Catdicax was no longer a bystander. She was a property owner. And when Axie Infinity gained popularity in late 2020, she recognized that many prospective NFT games gamers who couldn’t purchase their own Axies would jump at the chance to profit off hers.
Catdicax began outsourcing her video gaming grind to individuals she found online, the majority of whom were situated in the Philippines. These players may receive a portion of her profits as part of an Axie loan program—or, in Axie parlance, a scholarship. Catdicax was consumed by a new video game power fantasy: that of becoming a manager.
“I thought, wow, this is incredible. In the Philippines, people are earning twice what they might in a conventional job just by playing this game,” she explains. “I want to accomplish the same thing. I wanted to assist others as well.” (In reality, an investigation by analytics firm Naavik revealed that only the most skilled gamers earned more than the Philippines’ average daily pay of $41.49, while the majority earned little more than the $7.03 daily minimum wage or less.) And that’s before scholarship managers’ fees are deducted.)
The cryptocurrency industry has a new buzzword: NFT games. The word refers to a growing genre of popular NFT games that make use of blockchain technology to reward players with digital things having real-world—or, at the very least, crypto-world—monetary worth. Additionally, Alien Worlds, Splinterlands, and Uplands are included. Axie Infinity is the most notable of the three, being the brainchild of Sky Mavis from Vietnam.
The industry is thriving: According to DappRadar, a cryptocurrency analytics firm, gamers spent more than $2.32 billion in the third quarter of 2021 on blockchain-based unique gaming goods. Andreessen Horowitz’s venture capital grantees have invested millions in startups in the field, including heading a $152 million investment round in Sky Mavis in October. And, perhaps most significantly, hundreds of thousands of people play at any one time: According to Axie Infinity, it has 1.8 million daily users as of August 2021.
When Axie Infinity started in 2018, its only cryptocurrency component consisted of connecting Axies to NFTs—one-of-a-kind units of money that may be produced on the Ethereum blockchain. Then, in late 2019, Sky Mavis released the SLP tokens and opted to allow players harvest them in-game rather than selling them to users. Aleksander Leonard Larsen, cofounder and COO of Sky Mavis, claims his firm is attempting to upend the economic paradigm of online NFT games via the use of bitcoin technology. “Other NFT games companies are constantly looking to extract as much money as possible from players,” Larsen adds, referring to NFT games with business models based on users purchasing unique items or features. In contrast, Axie Infinity and other NFT games, he argues, reward capable players with valuable digital goods.
Even better, these assets do not just exist as numbers on an MMORPG server; they are stored in the player’s bitcoin wallet. Possessing an Axie entails possessing an NFT; SLPs and Axie Infinity’s other currency, AXS, are ERC20 tokens. And, much like a private central banker, Sky Mavis has been gradually establishing a monetary policy that seems to be intended towards preventing token overstock. The business has tightened down on those who create numerous accounts, limited the quantity of tokens available in non-fight mode, and overall made it more difficult to gain tokens.
Analysts speak in unironic terms about “Axie overpopulation” bringing up inflation. (The primary issue, it turns out, is that the little bastards are immortal.) And in November, Sky Mavis unveiled Katana, an automated cryptocurrency market maker where Axie Infinity tokens can be exchanged for ether, establishing a low-cost, direct link between the game and the expanding world of cryptocurrency-fueled decentralized finance, or DeFi.
“Offering DeFi services was a logical progression for us,” Larsen explains. “I mean, if you have a wallet that keeps your digital stuff and also allows for the storage of fungible assets and other objects—all of this inevitably leads to DeFi.” According to DappRadar, Katana soon became one of the most popular DeFi applications in terms of user volume.
When asked what keeps gamers coming back to Axie Infinity, few would mention the game’s gameplay. When Sky Mavis creator Jeff Zirlin polled his Twitter followers in May, 48 percent said they were most thrilled about “the economy.” And, as is the case with every economy, Axie Infinity’s has a thriving labor market.