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Axie Infinity
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Axie Infinity
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Axie Infinity
DeveloperSky Mavis
Engine
PlatformsWindows
Android
macOS
iOS
ReleaseMarch 2018
GenresNFT
Online game
Strategy game
ModesSingle player, PvP

Axie Infinity is a blockchain game developed by Vietnamese studio Sky Mavis in 2018,[1] known for its in-game economy[2] which uses Ethereum-based cryptocurrencies.[3] It has been called "a pyramid scheme that relies on cheap labor from countries like the Philippines to fuel its growth."[4]

Players collect and mint non-fungible tokens (NFTs) which represent axolotl-inspired digital pets known as Axies.[5] These creatures can be bred and battled with each other within the game.[6] Sky Mavis charges a 4.25% fee to players when they trade Axies on its marketplace.[5][7]

Axie Infinity is built on the Ronin Network, an Ethereum-linked sidechain developed by Sky Mavis. The game's official cryptocurrency is "Axie Infinity Shards/Token" or AXS for short.[8] The game's secondary token, SLP, crashed in February 2022 amid a wider NFT and cryptocurrency crash, losing over 99% of its peak value.[9] In March 2022, hackers compromised the Ronin Network, stealing approximately US$620 million worth of cryptocurrency from the project.[10][11][12][13] The hackers were linked to Lazarus Group, funded by North Korea.[14]

Gameplay

[edit]

According to the company's website, Axie Infinity is a competitive game with an "idle battle" system derived from games like Final Fantasy Tactics and Idle Heroes.[15] The game's setting is filled with creatures called Axies that players can collect as pets. Players aim to battle, breed, collect, raise, and build kingdoms for their Axies. The game has an in-game economy where players can buy, sell, and trade resources they earn in the game.[16]

Sky Mavis marketed the game with a play-to-earn model (also called "pay-to-play-to-earn" model) where after participants pay the starting costs, they can earn an Ethereum-based in-game cryptocurrency by playing. Axie Infinity allows users to cash-out their tokens every fourteen days.[citation needed] This model has been described as a form of gambling,[17][18] and one with an unstable market that is overly reliant on the inflow of new players.[2]

In February 2020, Sky Mavis estimated that a new player would need to spend around US$400 to meet this starting requirement.[1] By August 2020, the cheapest Axie cost approximately US$307, although reports as of March 2022 suggest the floor price of an Axie has dipped to around US$20.[19]

As of June 2021, some people in the Philippines had begun to treat the game as their main source of income,[20] although earning rates from playing Axie Infinity fell below the national minimum wage by September 2021. The Philippine Department of Finance also clarified that income from playing Axie Infinity is taxable, and suggested that the SEC and BSP may classify its cryptocurrency as a currency or a security.[21]

Players of Axie Infinity can also purchase virtual land and other in-game assets as NFTs. The record sale of a plot of virtual land was priced at US$2.3 million, as of 25 November 2021.[22] Gameplay related to purchased virtual land was intended to be introduced by 2020, but this has been pushed back twice as of April 2022. The delays have prompted complaints from users coinciding with a sharp decline in the profitability of the in-game economy.[23][4]

Development and history

[edit]

Development of Axie Infinity started in 2017, led by its co-founder and CEO, Nguyen Thanh Trung, alongside Tu Doan, Aleksander Larsen, Jeffrey Zirlin, and Andy Ho.[24][25] Nguyen had previously spent money on the game CryptoKitties before he began work on his own blockchain-based game, combining elements of CryptoKitties with gameplay from the Pokémon series or Neopets.[25][26]

In October 2018, the development team released Axie Infinity's first battle system. Development of the real-time card battle system and application commenced in March 2019, and an alpha was released in December 2019.[27]

Sky Mavis launched Ronin wallet in February 2021, which in addition to speeding up transactions and eliminating expensive gas fees for gamers offers the opportunity to play Axie Infinity or any other dApp that run on the Ronin sidechain.[28] According to data published on Statista, in 2022 around 40% of Axie Infinity players were from the Philippines.[29][better source needed]

While the project had generated US$21 million in the first two to three years since its inception, it raised $485 million between July and August 2021 alone.[30]

The value of the game's associated token, Smooth Love Potion (SLP) (formerly known as Small Love Potion by the community), crashed in February 2022 amid a wider NFT and cryptocurrency crash, losing over 99% of its peak value. Sky Mavis attempted to stabilize the price by introducing new features to the game, but these attempts were ineffective. The low exchange value of SLP has caused a massive exodus of players, leaving guild leaders without their cheap third-world labor force to grind on their behalf.[9] Sky Mavis removed references to "play-to-earn" on its websites and marketing as its tokens plummeted in value.[25]

On 23 March 2022, hackers compromised the Ronin Network, stealing approximately US$620 million in Ether and USDC.[10][11][12] A total of 173,600 Ether and 25.5 million USDC tokens were stolen in two transactions.[13] It took the company six days to notice the hack.[13] As of May 2023, the hack is the largest breach in the cryptocurrency sector by dollar value.[31] It further damaged the value of SLP.[9] On 8 April 2022, Sky Mavis said it expected it would be able to recover some of the funds, but it would take several years.[32] The company raised additional venture capital and reimbursed all users affected in the hack.[33] On 14 April 2022, the FBI issued a statement that the Lazarus Group and APT38, which are North Korean state-sponsored hacker groups, were responsible for the theft.[34][35] Accordingly, the US Treasury has sanctioned the cryptocurrency address. Some of the cryptocurrency has been laundered through a cryptocurrency tumbler known as "Tornado Cash".[35][4]

According to an April 2023 report from Reuters, the price of Axie Infinity's cryptocurrency token had fallen by 99% from its all-time-high in February 2022, coinciding with the 2021–2023 cryptocurrency crash. This crash led to decline of average daily players from a high of 2.7 million to approximately 250,000.[36]

As a source of income in the Philippines

[edit]

Starting around August 2020, during the COVID-19 pandemic in the Philippines, Axie Infinity was becoming a source of income in the country.[37] The cryptocurrency's volatility strongly affected the game's viability as a source of income. By July 2021, during a high-point in the cost of the game's cryptocurrency, some full-time users of the app in the Philippines were making significantly more than the national monthly average, but by April 3, 2022, the price of the cryptocurrency had dropped by 94%.[38]

The game's popularity in the country stemmed from the economic hardship caused by the pandemic, during which many residents lost their original source of income.[39] The main motivation behind playing the game was primarily to receive approximately the same amount of income within a few hours a day as with full-time employment.[40][6]

In the Philippines, the prohibitive cost of entry led to both individuals and gaming guilds renting out assets to allow new players to meet the minimum requirements.[19] These new players, known as "scholars", are often required to meet a quota of in-game earning to continue using the rented assets, and must pay the owners a commission. These commissions vary greatly but can be as high as 75%.[41][42] The resulting dependency of lower-income individuals has been described as potentially exploitative, lacking in safeguards, and has often been compared to gold farming.[6]

The Philippine Department of Finance clarified that income from playing Axie Infinity is taxable, and suggested that the SEC and BSP may classify its cryptocurrency as a currency or a security.[21]

Limitations and associated risks

[edit]

Academics and journalists have pointed out risks associated with playing the game as well as limitations of it, focusing primarily on the game's high financial barrier to entry, questions about the project's long-term durability, including accusations of a ponzi or pyramid scheme, as well as possible negative effects of the game on the players' mental health.

High barrier to entry limiting availability

[edit]

In order to play Axie Infinity one needs to purchase at least three Axies in the form of NFTs for the price of several hundred dollars at the peak of the project. Access to the game may, depending on the market situation, be tied to a significantly higher price than traditional video games, the price of which is usually limited to less than US$100.[30] According to Delic and Delfabbro (2022) in the International Journal of Mental Health and Addiction, the monetization of such games prioritizes a player's financial capacities over their actual skill, thus increasingly excluding individuals of lesser means from playing the game:[6]

(...) when players can pay money to improve their in-game performance, skilled play may no longer be the sole determinant of player success. It also means that income and affordability could potentially advantage wealthier players and make the game less accessible to lower income groups.

— Amelia Delic and Paul Delfabbro, Profiling the Potential Risks and Benefits of Emerging “Play to Earn” Games: a Qualitative Analysis of Players’ Experiences with Axie Infinity, [6]

The earlier an individual invests in and starts to play the game to more of an advantage that person has over those who have started at a later date, since the chances of high winnings become smaller the later one enters the game.[43]

Sustainability of the project

[edit]

Researchers have questioned the game's longevity,[43] as there have been repeated accusations that Axie Infinity is a Ponzi or pyramid scheme. Per this accusation, Axie Infinity lacks long-term economic durability since it has to rely on players continuing to invest in the game. The in-game economy depends on the existing number of actively involved players:[43]

Like the majority of P2E models, [Axie Infinity] relies on players financial input/output to regulate the value of the in-game currency. In other words, the games [sic] economy is influenced by the number of players investing into [Axie Infinity] (...)

— Paul Delfabbro et al., Understanding the mechanics and consumer risks associated with play-to-earn (P2E) gaming, [43]

Axie Infinity's basic economic design has been described as a speculative bubble since the game creates a gig economy where they have to invest more and more to make a profit.[44] Andreas Hackethal of the Goethe Business School has referred to the concept as pump and dump, maintaining that players are only willing to spend money and time playing the game because of their hope that the prices will increase and speaking of a pay-to-earn rather than play-to-earn game.[44] Bernd Richter of Fidelity National Information Services considers the game a pyramid scheme.[44]

Potential negative psychological effects

[edit]

Games like Axie Infinity are often associated with psychological problems on the part of their players.[6] In this context the main point of argument is the suspicion that players might play the game primarily for monetary reasons rather than for the purpose of entertainment: The extrinsic motivation to play outweighs the pure entertainment factor.[45] According to critics,[neutrality is disputed] this leads to a sunk-cost-fallacy where players primarily play the game due to the fact that they have already invested a lot of money and time into it.[6] Furthermore, the combination of financial speculation and a video game is said to potentially worsen the condition of gambling addicts involved in the game.[6]

See also

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References

[edit]

Further reading

[edit]
Revisions and contributorsEdit on WikipediaRead on Wikipedia

Axie Infinity

View on Grokipedia
from Grokipedia
Axie Infinity is a blockchain-based video game developed by the Vietnamese studio Sky Mavis and launched in 2018, in which players collect, breed, battle, and trade digital creatures known as Axies, which are non-fungible tokens (NFTs) on the Ethereum blockchain and its Ronin sidechain, utilizing a play-to-earn model where participants earn cryptocurrencies such as Smooth Love Potion (SLP) and Axie Infinity Shards (AXS) through gameplay activities. The game drew inspiration from Pokémon and initially aimed to introduce blockchain technology via accessible pet collection mechanics, achieving rapid growth during the COVID-19 pandemic with peak daily active users exceeding 2 million, particularly in regions like the Philippines where it served as an income source amid economic hardship. However, its dual-token economy proved unsustainable, fostering speculative breeding and gameplay driven by token inflation rather than enduring fun, leading to a sharp decline post-2021 bull market. A pivotal controversy arose in March 2022 when hackers, later linked to North Korea's Lazarus Group, exploited the Ronin bridge to steal approximately $625 million in Ethereum and USDC, marking one of the largest cryptocurrency heists and exposing vulnerabilities in centralized validator controls. Despite recovery efforts including fundraising and network upgrades, Axie Infinity's player base has contracted significantly by 2025, with ongoing developments like the card-based Axie Infinity Origins focusing on improved real-time combat and sustainability over pure earning incentives.

Core Concept and Gameplay

Game Overview

Axie Infinity is a blockchain-based game developed by the Vietnamese studio Sky Mavis, in which players collect, breed, and battle digital creatures called Axies that function as non-fungible tokens (NFTs). Launched in 2018, the game operates on the Ronin sidechain, a Ethereum-compatible network designed for scalability, allowing players full ownership of in-game assets that can be traded on integrated marketplaces. Core gameplay revolves around strategic turn-based battles, where players assemble teams of three Axies, each composed of six body parts that determine available cards, attributes such as attack power and health, and special abilities. Battles emphasize , with players drawing from a deck of cards tied to their Axies' parts, managing energy points that regenerate each turn, and positioning units on a lane-based to optimize targeting and defenses. Victory in arena modes or adventure quests yields rewards, including the Smooth Love Potion (SLP) token, which serves as the primary in-game currency for breeding and can be exchanged for . Breeding mechanics enable the creation of new Axies by pairing two parents, limited to seven offspring per pair due to genetic purity rules, with costs paid in SLP and the governance token Axie Infinity Shards (AXS). This play-to-earn model incentivizes participation, though entry requires purchasing at least three Axies to form a viable team. The game's economy integrates NFTs for true asset ownership, distinguishing it from traditional games by allowing players to speculate on or monetize their Axies and outside the platform. Over time, updates have introduced modes like Origins for simplified entry and for competitive play, alongside features such as plots for kingdom-building, though core collection and combat remain central.

Battle and Breeding Mechanics

Battles in Axie Infinity utilize a turn-based card battler system where players assemble teams of three Axies to compete against opponents in the . Each Axie possesses six body parts—horn, back, tail, mouth, ears, and eyes—that determine the cards available for play, with two cards generated per part for a total of twelve cards per Axie. Players manage to deploy these cards, starting with three energy points that increase by one each turn, while cards typically cost one or two energy to activate, emphasizing strategic and aggressive playstyles as energy and cards reset per turn. The battle mode, launched in December 2019, features deterministic turn order, positioning (front and rear rows affecting targeting and vulnerabilities), and win conditions met by reducing all enemy Axies' health to zero. A subsequent iteration, Axie Infinity: Origins, released in on April 6, 2022, incorporates real-time elements alongside card play for varied pacing. Breeding mechanics enable players to produce new Axies by pairing two eligible parents, with each Axie limited to a maximum of seven lifetime breeds before becoming sterile. Breeding is prohibited between siblings or parent and offspring to prevent inbreeding. Costs consist of Axie Infinity Shard (AXS) tokens, whose quantity varies, and Smooth Love Potion (SLP) tokens that escalate based on prior breed counts for each parent, as outlined below:
Breed CountSLP Cost per Parent
1900
21,350
32,250
43,600
55,850
69,450
715,300
The resulting offspring emerges as an egg requiring five days to hatch and mature into a fully functional Axie. follows probabilistic : the child's class is selected from one parent's with 50% chance or a random class otherwise, while each of the six body parts draws from parental genes (dominant at 37.5% transmission rate, recessive variants at lower probabilities of 9.375% and 3.125%), potentially yielding that introduce rare or novel parts not present in parents.

NFT and Asset Ownership

In Axie Infinity, the core in-game assets, known as Axies, are represented as non-fungible tokens (NFTs) adhering to the ERC-721 standard on the , enabling players to hold verifiable, exclusive ownership through cryptographic keys. This structure contrasts with traditional games, where asset control resides in centralized databases subject to developer revocation; here, ownership is decentralized and immutable once recorded on-chain, allowing transfers via functions like transferFrom without intermediary approval. Players manage these NFTs via compatible wallets, such as , which interact directly with the to confirm and —each Axie possesses unique attributes like parts, stats, and breeding history encoded in its metadata. Additional assets, including Land plots introduced in the Homeland expansion on December 28, 2022, also function as NFTs, permitting owners to deploy them for in-game utilities like building and resource generation while retaining full transferability. These Land NFTs support on-chain mechanics for placement and management, ensuring persistent ownership even amid game updates, as transactions are validated by the Ronin sidechain—a purpose-built Ethereum-compatible network launched by Sky Mavis to reduce fees and latency for high-volume interactions. Ownership transfers occur peer-to-peer on the Axie Marketplace, where buyers acquire NFTs by sending , with the updating the public ledger to reflect new custodianship instantaneously upon confirmation. To enhance without relinquishing control, Axie Infinity implemented features on October 17, 2024, allowing owners to lend Axies for by others while maintaining legal and economic rights, subject to a 24-hour cooldown on earnings post-delegation to prevent rapid exploitation. This mechanic underscores the 's role in granular permissioning, where smart contracts enforce rules like breeding limits (e.g., seven per Axie lifetime) to preserve asset value, all verifiable via explorers like RoninScan. Overall, this NFT framework promotes player sovereignty, as assets derive value from network effects and utility rather than publisher , though it exposes holders to risks like transaction failures during congestion.

Economic Model

Play-to-Earn Framework

The play-to-earn framework in Axie Infinity centers on distributing tokens as rewards for participation, enabling players to monetize time and skill invested in battling, breeding, and ecosystem interactions. Players assemble teams of three Axie NFTs to engage in turn-based card battles, earning Smooth Love Potion (SLP) tokens primarily through Adventure mode (player-versus-environment missions and daily quests) and Arena mode (player-versus-player matches). SLP serves as an ERC-20 utility token for breeding new Axies and can be sold on decentralized exchanges for or equivalents, creating a direct pathway to real-world value extraction. Complementing SLP, Axie Infinity Shards (AXS)—the and staking token—are allocated via a dedicated play-to-earn pool representing 20% of the total 270 million AXS supply, or 54 million tokens, vested gradually over 4.5 years to sustain long-term incentives. AXS rewards are granted for high-performance activities, including arena victories, tournament wins, leaderboard rankings, land plot interactions in Lunacia, transactions, and breeding, with distributions adjusted seasonally to prioritize competitive skill and ecosystem contributions. This dual-token system balances short-term consumable rewards (SLP) with longer-term value accrual (AXS staking yields and voting power). Initial entry requires purchasing at least three Axies (historically costing $50–$500 each depending on rarity and market conditions as of 2023–2025), imposing an upfront barrier that filters casual players while enabling "" arrangements where managers lend Axies to players in exchange for a revenue split (typically 50–70% to scholars). Breeding mechanics further integrate earning potential: two Axies consumes 2 SLP and 0.2 AXS per , but rare trait combinations can yield sellable progeny valued higher than input costs, though success rates diminish with overuse due to limits (each Axie has 20 energy daily for actions). Emissions of SLP have been dynamically reduced since 2022 to curb , tying to player retention and token demand rather than unbounded farming. This framework leverages ownership to align player efforts with network growth, as aggregated activity bolsters Axie scarcity and token utility, but empirical data from 2021–2022 peaks showed earnings volatility tied to crypto markets and new user inflows, with average daily SLP yields dropping from 100–300 per active player to under 50 by mid-2023 amid reduced subsidies. AXS play-to-earn serves as a mechanism, potentially expandable via community governance for new modes, emphasizing skill-based progression over passive grinding to foster genuine economic value creation.

Governance and Utility Tokens

Axie Infinity operates a dual-token economy featuring Axie Infinity Shards (AXS) as the primary token and Smooth Love Potion (SLP) as the token. AXS, an ERC-20 token launched in November 2020 with a maximum supply of 270 million, enables holders to participate in decentralized , stake for rewards, and access premium features such as discounted breeding fees. Staked AXS provides voting power in the Axie system, where decisions on development, fund allocation, and protocol upgrades are determined by weighted contributions from stakers and active players, as measured by metrics like Axie Score. This structure aims to align long-term holder interests with , though early token distribution allocated 29% to the development team and funds. SLP serves as the in-game utility token, primarily used for breeding new Axies by covering costs in the process, which consumes tokens that are subsequently burned to manage supply dynamics. Players earn SLP through , such as completing battles in Adventure or Arena modes, with yields historically tied to team performance and matchmaking efficiency prior to economic adjustments. As an ERC-20 token with no hard cap but a circulating supply exceeding 41 billion as of 2025, SLP's inflationary mechanics have led to volatility, particularly during peak adoption in 2021 when daily emissions reached millions, prompting later reforms like reduced rewards to curb devaluation. Governance proposals are submitted and voted on via the official portal, requiring a of staked AXS and often integrating community feedback from forums and ; for instance, major updates like Ronin chain integrations have been ratified through this process to enhance scalability. While AXS empowers strategic oversight, SLP's role remains operational, decoupling short-term earning incentives from long-term to mitigate risks of over-centralization in player-driven economies. This separation has been credited with fostering resilience, as evidenced by post-2022 recovery efforts where votes prioritized deflationary measures for SLP alongside AXS staking incentives.

Marketplace Dynamics

The Axie Marketplace, operated by Sky Mavis on the Ronin sidechain, facilitates trading of non-fungible tokens (NFTs) including Axies, land parcels, and items, with transactions settled in Wrapped ETH (WETH) or other supported assets. Sellers list assets at fixed prices or accept buyer offers, while Sky Mavis serves as a limited agent to execute transfers upon payment confirmation, ensuring blockchain-verified ownership changes without intermediary custody. This structure enables global accessibility via Ronin wallets, with low gas fees compared to mainnet, though reliant on and bridge liquidity for fiat on-ramps. Supply dynamics are constrained by breeding mechanics, which require Smooth Love Potion (SLP) expenditures and access to limited "pure" Axie slots to produce offspring, capping to align with player growth targets. Initial Axie supply stemmed from genesis mints in 2018, expanding through breeding until over 4 million Axies existed by 2022, but post-2021 updates introduced sinks like token burns from failed breeds and gameplay attrition to curb oversupply. Demand originates from new players requiring a minimum of three Axies to participate in battles and earn rewards, alongside speculators and "managers" in systems where assets are leased to undercapitalized players, effectively amplifying trading velocity without proportional ownership dilution. Price formation reflects these forces, with Axie floor prices surging from under $10 in early to peaks exceeding $200 by November amid explosive user growth to 2.7 million daily , driven by play-to-earn incentives in emerging markets. Volumes peaked at millions in daily NFT trades during this period, but collapsed post-Ronin hack in March 2022—losing $625 million—and broader crypto downturns, dropping floors below $30 by February 2022 and trading volumes to under $25,000 daily by mid-2025. External factors like price fluctuations, SLP devaluation from reward halvings, and game meta shifts favoring certain Axie classes (e.g., high-damage builds) further modulated rarity premiums, with rare "Mystic" or "Origin" Axies retaining relative value amid commoditization of common variants. Sustainability hinges on balancing influxes of capital via new entrants against endogenous sinks, as unchecked breeding historically outpaced , eroding values when player acquisition slowed below 10-15% monthly growth rates targeted by developers. arrangements, comprising up to 30% of active teams by 2021, distorted effective supply by concentrating holdings among few managers, heightening risks during downturns and contributing to 90%+ drawdowns in asset values. Recent 2024-2025 updates, including Origins mode and token expansions, aimed to revive through enhanced , yet metrics indicate persistent illiquidity, with average sale prices hovering around $100 against floors near $0.40 as of October 2025.

Development History

Founding and Initial Launch (2017-2019)

Sky Mavis, the developer of Axie Infinity, began conceptualizing the game in December 2017, drawing inspiration from Pokémon and technology to create a collectible card battle game with true asset ownership via NFTs. The studio was formally established in early 2018 in , , by co-founders Trung Nguyen (CEO), Jeffrey Zirlin (known as Jihoz), and Aleksander Larsen (known as Pewku), with additional early team members including Tu Doan and Andy Ho. In February 2018, Sky Mavis initiated a presale for "Origin Axies," the initial NFTs representing the game's creatures, raising approximately 900 to fund development. This was followed in March 2018 by the launch of an in-house NFT marketplace on the , enabling users to buy, sell, and trade Axies as ERC-721 tokens. The core game entered alpha testing around May 2018, introducing basic mechanics for breeding and battling Axies in a turn-based format, where players could pit their digital pets against others for in-game rewards. During and 2019, Axie Infinity remained a niche project within the emerging gaming sector, with limited user adoption due to high Ethereum gas fees and the novelty of NFT integration in gaming. By late , an early community alpha version expanded battling features, but daily hovered in the low thousands, reflecting the challenges of non-crypto-native gamers. Sky Mavis focused on iterative improvements, such as enhancing Axie for breeding variety, while securing initial funding from investors like to sustain operations amid Ethereum's scalability constraints.

Growth and Expansion (2020-2021)

During 2020, Axie Infinity transitioned toward a play-to-earn model, enabling players to earn Smooth Love Potion (SLP) tokens through battles and breeding, which spurred initial community expansion in regions with high unemployment, such as the Philippines. The project's governance token, AXS, launched via a public sale on Binance Launchpad on November 4, 2020, raising $2.97 million at $0.10 per token and increasing token circulation to support ecosystem growth. The game's adoption accelerated in amid rising values and NFT interest, with quarterly active player growth averaging 33.9%. A pivotal expansion milestone was the migration of Axies and land assets to the Ronin sidechain in Q2 , reducing gas fees from over $100 per transaction to under $0.01, which facilitated scalable and attracted mass participation. Daily active users surged from tens of thousands to a peak of 2.7 million in November , driven by scholarship programs where managers lent Axies to players in exchange for a revenue share. Revenue from NFT sales and token fees reached $1.3 billion for 2021, with alone generating up to $800 million as trading volume exploded on the in-game . Mavis secured $7.5 million in Series A on May 11, 2021, to fuel further development, including the release of Axie Origin Alpha in Q2, an updated client enhancing battle mechanics. AXS staking launched in Q3 2021, allowing holders to lock tokens for rewards and participation, further incentivizing long-term engagement. This period marked Axie Infinity's dominance in blockchain gaming, though sustainability concerns emerged as token earnings occasionally fell below local minimum wages by late 2021.

Crisis Period (2022)

In March 2022, the Ronin Network, the sidechain powering Axie Infinity, suffered a major security breach when hackers exploited compromised nodes to steal approximately $615 million in , including 173,600 and $25.5 million in USDC, marking one of the largest exploits on record. The attack, detected on , involved the theft of private keys from five out of nine Ronin validators, facilitated by social engineering tactics targeting Axie Infinity's operations staff, rather than direct vulnerabilities in the bridge protocol. analytics firm Elliptic attributed the breach to North Korea's , a state-sponsored hacking entity known for similar thefts to fund regime activities. Sky Mavis, the developer of Axie Infinity, halted Ronin bridge operations immediately after discovering the exploit and pledged full reimbursement to affected users, drawing on company reserves and external liquidity. In April 2022, the firm raised $150 million in emergency funding led by , with participation from and others, explicitly earmarked to restore slashed funds and maintain ecosystem stability. This response mitigated immediate user losses but highlighted underlying risks in centralized validator control and the network's rapid scaling without proportional hardening. The hack compounded an already deteriorating economic environment for Axie Infinity, as the Smooth Love Potion (SLP) token, used for breeding, had plummeted over 99% from its November 2021 peak of $0.41 to fractions of a cent by February 2022, driven by token oversupply from high player activity and a broader market downturn. Axie Infinity Shard (AXS) governance token similarly crashed, falling more than 90% from its highs amid reduced trading volumes and waning investor confidence. Daily active users, which had exceeded 2.7 million in early 2022, declined sharply post-hack, dropping below 400,000 by mid-year as players in like the faced earnings evaporation and scholarship debts from guild-based play-to-earn models. These events exposed structural vulnerabilities in Axie Infinity's play-to-earn mechanics, where reliance on speculative token appreciation and continuous user influx proved unsustainable during market corrections, leading to widespread player attrition and contraction. Recovery efforts, including network upgrades and partial fund recoveries through seizures of over $30 million in stolen assets by September 2022, provided limited short-term relief but failed to reverse the momentum loss.

Recovery and Stabilization (2023)

In 2023, Sky Mavis advanced recovery from the March 2022 Ronin hack—during which approximately $625 million was stolen—through infrastructure enhancements and partial fund reclamation efforts. On March 30, 2023, coinciding with the hack's one-year anniversary, the Ronin sidechain underwent a major upgrade, shifting from proof-of-authority to delegated proof-of-stake consensus to bolster decentralization, security, and scalability while expanding beyond Axie Infinity to support other game intellectual properties and onboarding initial studio partners. In February 2023, Norwegian authorities recovered and returned nearly $6 million in cryptocurrency traced to the exploit, contributing to ongoing asset restitution coordinated with international law enforcement and firms like Chainalysis. Product development emphasized and retention, with Axie Origins—a free-to-play battle mode launched in late 2022—advancing through Seasons 1 to 6, featuring iterative balancing updates to cards, , and charms for competitive viability. Sky Mavis introduced Part Evolution for Axie customization and progression, alongside Axie Core as a foundational toolkit for deeper engagement; the company also revived Axie Classic, rolled out Homeland Alpha Seasons 1-3, and initiated Project T as experimental titles. The Axie Game Jam in October 2023 encouraged third-party developers to build on the ecosystem, fostering innovation. These initiatives drove measurable stabilization, with monthly active users in the Axie ecosystem rising from 100,000 to 270,000—a 170% year-over-year increase—and Axie Classic alone growing from 10,000 to 160,000 MAU. Over 72,000 new wallets acquired at least one Axie, while 662,647 accounts interacted with games platform-wide. Economic mechanics supported deflation, as 1.7 billion Smooth Love Potion (SLP) tokens were burned against 0.5 billion emitted, yielding a net reduction of 1.2 billion SLP and exceeding 2.5% annual deflation. Sky Mavis co-founder Jeffrey Zirlin reported surpassing a 500% internal growth target for the year, signaling renewed momentum amid broader Web3 gaming challenges.

Recent Innovations (2024-2025)

In 2024, Axie Infinity introduced Part Evolution in Origins, allowing players to upgrade specific Axie body parts for enhanced attributes and generating 75,477 AXS in treasury revenue. The Bounty Board launched on April 15, facilitating community-driven quests that engaged over 37,000 users and boosted monthly active users through campaigns like Play-to-Rice. Axie relaunched with features including AXP earning , the Cursed Coliseum mode, and Tournaments, contributing to a 190% increase in daily active users to 45,000. Competitive Seasons in Origins distributed 225,000 AXS in rewards across Seasons 7-9, alongside Gauntlet Mode for SLP earnings and 15 new companion Axies, driving a 97.61% rise in daily active users to 52,000. The Axie Delegation feature debuted on November 1, 2024, reviving the scholarship model by enabling owners to lend Axies to other players for use in games while retaining NFT ownership and earning a share of rewards. advancements included the May 17 launch of the Axie Portal with an Axie Score prototype for voting, culminating in the passage of AIP-001 with 14.7 billion voting power. Wings of Nightmare in November added evolvable parts to Origins, yielding 12,000 AXS to the treasury, while integrated AXP earning at 10,000 per day per Axie and events with 20,000 AXS prizes. Overall, these updates supported treasury growth of $4 million, averaging $330,000 monthly revenue, amid trading volumes exceeding $30 million. Entering 2025, Sky Mavis announced Ronin's transition to an Layer-2 network in , aiming for improved , lower fees, and DeFi integration, with the hardfork targeted for Q1-Q2 2026 following . Atia's Legacy, a new MMO integrating Axies for quests, loot collection, and social features, revealed an AXS reward pool in March and conducted a seven-day playtest from September 25 to October 2, attracting over 1,000 participants and yielding a above average, with Mystic Axies granting exclusive zones and cosmetics. AXS staking emissions halved in July to promote sustainability, coinciding with 3 outcomes and ongoing tournaments. A major Lunacia update was slated for Q1, building on Origins' Battles V3 with new power-ups and visual effects.

Technical Infrastructure

Blockchain Integration and Ronin Sidechain

Axie Infinity originally operated on the mainnet, where players bred, battled, and traded Axie NFTs, but encountered significant scalability limitations due to high gas fees and slow transaction times, which hindered the play-to-earn model's accessibility for frequent micro-transactions. To address these issues, Sky Mavis, the game's developer, introduced the Ronin sidechain in June 2020 as an -compatible network tailored for gaming applications, enabling seamless asset migration while reducing costs and latency. Ronin's mainnet launched on February 1, 2021, facilitating the transfer of Axie assets, land, and items from via a bridge mechanism that preserved NFT integrity and token standards. As a fork of the Go client, Ronin maintains full Ethereum Virtual Machine (EVM) compatibility, supporting standard smart contracts, APIs, and developer tools like Hardhat and , which allowed Axie Infinity to port its decentralized applications with minimal modifications. The sidechain employs a delegated proof-of-stake (DPoS) consensus with a limited set of validators—initially controlled by Sky Mavis and trusted partners—to prioritize speed and low fees, processing thousands of transactions per second at fractions of a cent, compared to 's higher barriers during peak usage. This integration enabled Axie Infinity's marketplace and gameplay loops to scale for mass adoption, with Ronin handling over 90% of the game's on-chain activity by mid-2021, including breeding events and SLP token emissions that incentivized daily engagement. The Ronin wallet, released in February 2021, simplified user onboarding by abstracting complexities, allowing seamless bridging of assets like and AXS for in-game use. However, as advanced its scaling roadmap with layer-2 solutions, Ronin announced in August 2025 plans to transition from a sidechain to an layer-2 by 2026, aiming to leverage 's enhanced , , and DeFi while retaining gaming optimizations. This evolution reflects Ronin's adaptive architecture, initially designed for Axie's needs but now aligning with broader ecosystem maturity.

Security Protocols and Post-Hack Reforms

The Ronin sidechain implemented security through a delegated proof-of-stake consensus mechanism with nine validators—four controlled by Sky Mavis, four by the , and one independent—requiring five multisignatures to approve bridge withdrawals and transfers between Ronin and . This distributed threshold aimed to prevent single-point failures, supplemented by gas-free RPC nodes for user accessibility, though it lacked robust monitoring for outlier transactions and retained unrevoked administrative accesses from earlier deployments. Following the March 23, 2022, exploit, which compromised five validator keys via spear-phishing and enabled unauthorized drains totaling 173,600 and 25.5 million USDC, Sky Mavis promptly replaced affected validators and expanded the set to eleven nodes, raising the approval threshold to eight signatures to heighten compromise difficulty. Long-term plans targeted over 100 validators for greater , reducing reliance on entity-controlled nodes. Sky Mavis shifted to a zero-trust architecture, enforcing stricter internal access controls, continuous audits, and employee training against social engineering. External engagements included for forensic analysis and Polaris Infosec for penetration testing, alongside multiple independent audits before bridge redesign and reopening in June 2022. A launched with rewards up to 1 million USD, and the firm pursued ISO 27001 certification for standardized security management. These measures addressed key lapses in and oversight, though they did not eliminate all risks, as evidenced by isolated subsequent vulnerabilities.

Scalability and Technological Evolutions

Ronin, the sidechain powering Axie Infinity, has pursued ongoing scalability enhancements to accommodate growing transaction volumes and user demands beyond its initial 2021 launch. In April 2024, Ronin proposed integrating an enshrined zero-knowledge (zkEVM) to further improve throughput and efficiency, addressing limitations in earlier sidechain architectures by enabling faster finality and reduced costs for gaming applications. This was formalized in June 2024 with the adoption of Polygon's Chain Development Kit (CDK) for zkEVM, allowing developers to deploy custom Layer 2 chains aligned with Ronin's mainnet, with the first deployments targeted for the first quarter of 2025; this structure incentivizes participation through staking requirements and enhances interoperability for gaming ecosystems. A pivotal evolution occurred in August 2025, when Ronin announced its transition to a full Layer 2 solution by the first half of 2026, motivated by 's matured scaling roadmap, including lower transaction fees and superior infrastructure compared to the network's state four years prior. This shift promises up to 12 times faster transaction speeds while inheriting 's security model, thereby reducing validator costs and repositioning Ronin as a "gamification engine" for broader crypto applications, with RON remaining the native gas token under a new Proof of Distribution model that rewards developers based on metrics like total value locked and user engagement. These upgrades build on Ronin's prior handling of peak loads, such as processing 15% of global NFT trading volume in 2021, to support sustained growth in Axie Infinity's user base exceeding 31 million downloads. Complementing blockchain advancements, Axie Infinity introduced gameplay-focused technological evolutions in 2023 to deepen and retention amid pressures. On December 20, 2023, the Part Evolution feature launched, enabling players to upgrade over 250 distinct Axie body parts using in-game materials gathered via Atia's flame mechanic, thereby enhancing combat attributes and visual designs in a manner akin to progressive character development systems. Concurrently, Axie Core emerged as a meta-game layer for vertical progression, allowing sustained investment in digital assets through iterative improvements that increase their long-term utility and economic value within Lunacia's . These mechanics contributed to a 170% rise in monthly active users to 270,000 by year-end, alongside deflationary where 1.7 billion SLP tokens were burned against 0.5 billion emitted, reducing circulating supply by over 2.5%. Such innovations reflect a strategic pivot toward sustainable progression models, mitigating earlier criticisms of horizontal loops that strained network resources during peak adoption.

Socioeconomic Impact

Adoption in Emerging Economies

Axie Infinity's play-to-earn model drove substantial adoption in emerging economies, where economic instability, high unemployment, and limited job opportunities during the incentivized participation as a form of remote . Players in these regions could earn cryptocurrencies like Smooth Love Potion (SLP) and Axie Infinity Shards (AXS) through , breeding, and battling, often converting earnings to local fiat currencies via exchanges or trades. This appealed particularly to low- demographics, with entry facilitated by "" systems from guilds that loaned Axies to players in exchange for a revenue share. The emerged as the epicenter of this adoption, with Filipino users comprising up to 40% of the global player base during the pandemic's height. By May 2021, over 29,000 downloads had occurred in the country, amid 10.3% unemployment rates reported by the in 2020. By February 2022, the generated about 35% of the game's traffic, supporting its peak of 2.5 million daily active users, as players treated the game as a viable alternative to traditional in a nation with widespread remittance dependency. Venezuela also saw notable uptake, with approximately 106,000 players accounting for 6.71% of the total user base, motivated by eroding local wages and the ability to earn in dollar-pegged assets. Other Southeast Asian and Latin American nations, including , , and , contributed significantly to the player pool, with daily active users surging from 30,000 in April 2021 to over 1 million by August 2021, predominantly from these markets. This adoption highlighted gaming's potential for in developing contexts but relied heavily on token incentives, exposing participants to volatility absent robust local regulations. Guilds like Yield Guild Games amplified access by managing scholarships, enabling broader participation without upfront costs exceeding $1,000 for starter Axies.

Philippines as a Key Market

The Philippines became Axie Infinity's dominant market during the COVID-19 pandemic, with Filipino players accounting for approximately 40% of the game's global user base at its 2021 peak. This surge was driven by widespread job losses and economic hardship, as lockdowns disrupted traditional employment in a nation where remittances from overseas workers typically constitute a major GDP component; Axie offered an accessible play-to-earn alternative, allowing participants to breed, battle, and trade digital creatures (Axies) for Smooth Love Potion (SLP) tokens redeemable for Philippine pesos. By May 2021, over 29,000 players had downloaded the game in the country, reflecting rapid grassroots adoption amid national minimum wages around PHP 537 daily (about $10 USD at the time). The scholarship system amplified participation by enabling low-income individuals to play without the upfront cost of purchasing three Axies (often exceeding $1,000 initially), as guilds like the Philippines-based Yield Guild Games loaned assets in exchange for a share. This model turned Axie into a virtual workforce hub, with players often dedicating 8-12 hours daily to , generating earnings that funded essentials like rent, groceries, and —sometimes surpassing local wages during token price highs in mid-2021. Community hubs emerged in urban areas like , fostering social networks and even family-based operations, which cemented the country's nickname as the "Axie Infinity Capital of the World." Axie's prominence in the extended its influence on broader adoption, with local player data informing global play-to-earn trends and highlighting gaming's potential in emerging economies reliant on informal labor. However, the model's reliance on token and new player inflows exposed vulnerabilities, as evidenced by the sharp decline in activity following the 2022 market crash, when daily globally dropped from 2.7 million to around 250,000, disproportionately affecting Filipino participants who faced token devaluation and scholarship debts. Despite this, the ' role underscored Axie's early socioeconomic experiment, where gaming intersected with survival economics in a high-unemployment context.

Broader Contributions to Web3 Employment

Axie Infinity's play-to-earn (P2E) model pioneered a novel form of employment by enabling participants to generate convertible through gameplay, distinct from traditional labor. At its peak in January 2022, the game attracted 2.3 million daily active users, many of whom treated it as a primary source, particularly in regions with high . This approach demonstrated the potential for games to function as decentralized job platforms, where earnings from in-game tokens like Smooth Love Potion (SLP) could exceed local minimum wages—for instance, up to $800 USD monthly for dedicated players in developing economies. The scholarship system represented a key , allowing asset owners (managers) to lend (NFT) Axies to players (scholars) in exchange for a share, typically 50-70%, thereby creating interdependent roles within the . This structure proliferated in the , where guilds like Yield Guild Games formalized operations, onboarding thousands of scholars and generating managerial positions focused on , performance tracking, and . By mid-2021, such arrangements enabled low-barrier entry for individuals lacking upfront capital (around $500-1,000 for initial Axies), fostering a gig-like economy that supplemented or replaced disrupted traditional jobs amid unemployment rates of 10.3% in the . Guilds extended this model into organizational frameworks, spawning roles such as community managers, trainers, and analysts who optimized scholar productivity and navigated token volatility, influencing broader practices. These entities aggregated capital and talent, mirroring venture-like structures and inspiring similar setups in subsequent P2E projects, thus contributing to the professionalization of blockchain gaming labor. Yield Guild Games, for example, evolved into a (DAO) that managed hundreds of scholarships, highlighting how Axie Infinity's ecosystem birthed scalable, remote employment opportunities tied to performance rather than centralized payrolls. Beyond direct participation, Axie Infinity catalyzed ancillary jobs in areas like NFT breeding, token trading advisory, and ecosystem development, positioning the platform as an early " and jobs platform" within blockchain gaming. This influence extended to Global South economies, where P2E models offered alternatives to formal , though depended on market conditions rather than intrinsic gains. The framework's emphasis on skill-based rewards and shared ownership challenged conventional work paradigms, paving the way for hybrid gaming-economy roles that prioritize verifiable on-chain contributions over credentials.

Controversies and Challenges

The Ronin Bridge Exploit (2022)

On March 23, 2022, the Ronin Network, a sidechain developed by Sky Mavis to support Axie Infinity, suffered a major security breach when attackers compromised five of its nine validator nodes, enabling unauthorized transfers totaling 173,600 Ethereum (ETH) and 25.5 million USD Coin (USDC), valued at approximately $615 million at the time. The exploit targeted the Ronin Bridge, a cross-chain mechanism facilitating asset transfers between Ronin and Ethereum, by exploiting poor private key management rather than a smart contract vulnerability; hackers gained access via social engineering, likely through a compromised gas-free RPC endpoint used for transactions, allowing them to forge validator signatures. The breach went undetected for several days until March 29, 2022, when a user reported a failed withdrawal, prompting Sky Mavis to investigate and confirm the theft; the network was immediately paused to prevent further losses, and the incident was publicly disclosed shortly thereafter. U.S. cybersecurity firm Elliptic and analytics firms like attributed the attack to North Korea's , a state-sponsored hacking entity known for prior crypto thefts funding regime activities, based on wallet tracing and operational similarities to other incidents. In response, Sky Mavis committed to fully reimbursing affected users and bridged assets, securing a $150 million emergency round led by to backstop losses while pursuing recovery through and on-chain tracing. By mid-2022, over $30 million in stolen funds were seized by authorities with assistance, though much of the remainder was laundered via mixers and exchanges, highlighting persistent challenges in crypto theft attribution and recovery. The exploit, the largest DeFi breach on record at the time, eroded player trust, contributing to a sharp decline in Axie Infinity's daily active users from over 2.7 million in early 2022 and underscoring vulnerabilities in validator-centric bridge designs reliant on centralized key custody.

Sustainability and Ponzi Scheme Allegations

Axie Infinity's faced significant sustainability challenges following its rapid growth in 2021, as the value of its Smooth Love Potion (SLP) token, used for breeding and rewards, depended heavily on continuous player influx to maintain demand. By November 2021, daily peaked at over 2.7 million, but this declined by approximately 45% to around 1.5 million by April 2022 amid the broader market downturn, leading to a sharp drop in SLP prices from highs exceeding $0.40 to below $0.005 by mid-2022. The game's play-to-earn mechanics, where players earn tokens through gameplay but must purchase assets like Axies to participate, created inflationary pressures; breeding and earning mechanisms flooded the market with SLP, eroding its value without corresponding sinks or external utility to absorb supply. Critics argued that these dynamics resembled a , with early participants profiting from token sales to newcomers while the system's viability hinged on perpetual expansion rather than intrinsic gameplay value or productive token use. Scholars and analysts, including those examining economies, highlighted how Axie Infinity required new players to sustain token markets, drawing parallels to schemes where returns to existing holders derive from fresh capital inflows rather than sustainable revenue generation. Sky Mavis, the developer, rejected these characterizations, asserting that network growth via incentives does not equate to a Ponzi structure and emphasizing ongoing reforms like token burns and utility expansions to foster long-term viability. Despite such efforts, the 2022 crash resulted in substantial losses for players, particularly in regions like the , where many had invested borrowed funds, underscoring the risks of token-dependent economies without robust deflationary or real-world anchoring mechanisms.

Scholarship System Exploitation

The scholarship system in Axie Infinity enabled capital-poor players, known as scholars, to access teams of Axie NFTs from managers or without upfront costs, in exchange for sharing a portion of earned Smooth Love Potion (SLP) tokens from , typically via a 50/50 revenue split. This decentralized, community-driven model proliferated during the game's 2021 boom, particularly in the , but lacked formal regulation by Sky Mavis, relying instead on private agreements enforceable only through mutual trust or clauses in some guild contracts. As a result, the system fostered vulnerabilities to exploitation on , with scholars and managers facing asymmetric risks due to the absence of centralized oversight or in many jurisdictions. Managers frequently exploited scholars through unfair revenue splits, offering as low as 20-30% to players despite the standard 50/50 benchmark, particularly targeting inexperienced or economically disadvantaged individuals from emerging markets who lacked or knowledge of market norms. Qualitative analyses of player experiences documented recurrent complaints of such lopsided divisions, alongside poor working conditions like mandatory long hours without compensation adjustments for token volatility. Some managers engaged in outright scams, such as withholding , falsifying data, or abruptly terminating contracts after scholars invested time, leaving players without recourse beyond community forums. These practices were exacerbated by the unregulated nature of scholarships, which Sky Mavis did not endorse or mediate, positioning the system as a high-risk proposition akin to informal labor arrangements rather than structured . Scholars, in turn, exploited the system through violations of Axie Infinity's , including multi-accounting to inflate earnings or circumvent play limits, which led to widespread bans affecting managers' assets. In November 2021, Sky Mavis banned 18,505 Axies implicated in systematic multi-account abuse, holding managers accountable for their scholars' actions per the game's rules, resulting in unrecoverable losses for investors who had no direct control over delegated accounts. Additional abuses included win-trading and match-fixing, where scholars colluded to manipulate outcomes for SLP gains, undermining competitive and prompting ongoing enforcement by developers. Reports also surfaced of scholars underperforming, quitting abruptly, or engaging in side activities that violated exclusivity clauses, further eroding trust in the model. Beyond financial disputes, the scholarship ecosystem enabled non-monetary exploitations, such as isolated cases of sexual misconduct where managers conditioned access to teams on personal favors, highlighting power imbalances in guild structures. Community-driven guilds amplified these issues by scaling scholarships to hundreds of players, but without vetting mechanisms, leading to opaque operations and heightened abuse potential. In response to persistent problems, Sky Mavis introduced Axie Delegation in November 2024, formalizing scholarships with time-bound smart contracts that limit scholars' control to gameplay while allowing managers revocable oversight, aiming to mitigate risks like unauthorized transfers or prolonged disputes. However, earlier exploitations contributed to scholars' financial precarity, with many accruing debts to family or lenders for ancillary costs during the 2022 token crash, underscoring the model's inherent instability absent robust safeguards.

Psychological and Accessibility Risks

Axie Infinity's play-to-earn model, driven by extrinsic financial motivations, has been linked to elevated risk scores among players, though not necessarily to internet gaming disorder. Qualitative analyses of player discussions reveal associations with negative outcomes, including anxiety, stress, and fatigue from prolonged gameplay sessions, such as nonstop energy expenditure over months that neglected aspects. Competitive modes like were described as "mentally exhausting," prompting anxiety attacks for minimal rewards, with players often chasing losses by reinvesting in volatile NFTs and tokens despite . In the , where adoption surged during the , players reported compulsive behaviors akin to , including late-night grinding and aggression from grueling schedules, as exemplified by one gamer who played after midnight shifts, leading to constant and heightened . Such patterns stemmed from treating the game as a job rather than , fostering emotional distress when earnings failed to materialize, with only 44% of surveyed players profiting amid token devaluation. Accessibility barriers exacerbate these psychological strains, primarily through high entry costs requiring purchase of at least three Axie NFTs, which reached approximately $1,200 for some Filipino players in 2021, often funded by loans or family contributions. This financial threshold favored wealthier participants while exposing low-income individuals to risks, as token values like Smooth Love Potion plummeted from $0.34 in July 2021 to under $0.005 by mid-2022, rendering investments worthless post-hack and deterring new entrants. Scholarship systems mitigated initial costs by allowing rented access under managers taking 30-50% cuts or uneven splits like 20/80, but introduced dependency and exploitation vulnerabilities, particularly for players in developing economies lacking alternatives during lockdowns. Additional hurdles included reliable and devices, amplifying exclusion for rural or impoverished users, who faced amplified financial ruin when market crashes erased savings, as seen in cases of $200-190 losses tied to hacked accounts or unrecouped investments.

Reception and Legacy

Key Achievements and Milestones

Axie Infinity, developed by Sky Mavis, achieved its initial public alpha release in March 2018, introducing core gameplay mechanics centered on breeding and battling NFT-based creatures known as Axies. In November 2019, Sky Mavis secured $1.465 million in funding led by to accelerate development, marking an early validation of the play-to-earn model. A pivotal technical milestone occurred in the first quarter of 2020 with the migration of land plots and items to the Ronin sidechain, a custom Ethereum-compatible designed to reduce transaction fees and latency for high-volume gameplay. This infrastructure shift enabled scalability, paving the way for broader adoption. By mid-2021, Axie Infinity experienced explosive growth, reaching a peak of approximately 2.7 million in , driven by its system and cryptocurrency rewards amid the economic pressures in regions like the . The game generated $1.3 billion in revenue over 2021, with daily peaks up to $17.5 million from NFT sales and token transactions. In October 2021, Sky Mavis raised $152 million in a Series B funding round led by , achieving a $3 billion valuation and underscoring investor confidence in gaming's potential. Subsequent updates included the Q2 2021 migration of Axies to Ronin and the alpha release of Axie: Origin, enhancing battle mechanics and accessibility. By late 2021, the platform had amassed over 1.5 million registered players and scholars, establishing it as a pioneer in decentralized economies within gaming. Cumulative NFT trading volume exceeded $4.2 billion by mid-2022, reflecting sustained activity despite market volatility.

Criticisms from Gaming and Crypto Communities

Gaming enthusiasts have frequently criticized Axie Infinity for prioritizing economic incentives over engaging gameplay, describing it as repetitive and grind-heavy rather than enjoyable. Players often reported that battles, which involve turn-based card mechanics with creature NFTs, felt like monotonous labor driven by token earnings rather than intrinsic fun, with many admitting they participated solely for financial returns during the 2021 boom. This sentiment was echoed in reviews labeling the experience "more work than fun," highlighting how the play-to-earn model transformed gaming into a job-like chore, deterring traditional gamers who value entertainment over speculation. In the crypto community, Axie Infinity faced backlash for its , which critics argued resembled a reliant on continuous influxes of new players to sustain SLP token value and breeding profitability. The model's dependence on recruitment—via scholarships where managers lent Axies to players in exchange for a cut of earnings—exacerbated perceptions of unsustainability, as token prices plummeted over 90% from peaks in late 2021, leaving many holders with losses. Post-2022 Ronin hack, skepticism intensified, with commentators decrying the game's hype-driven rise as emblematic of broader gaming failures, where economic promises overshadowed viable long-term design. Both communities highlighted interoperability issues and high entry barriers, such as the need for initial exceeding $100 in Axies to start earning, which alienated casual participants and reinforced views of Axie as speculative rather than accessible gaming or sound . Developers' responses, emphasizing job creation in emerging markets, did little to assuage detractors who argued that conflating play with employment undermined gaming's core appeal and crypto's innovation ethos.

Influence on Play-to-Earn and Blockchain Gaming

Axie Infinity pioneered the play-to-earn (P2E) model by integrating non-fungible tokens (NFTs) as collectible creatures called Axies, alongside dual cryptocurrencies—Smooth Love Potion (SLP) for breeding and Small Love Potion (now Axie Infinity Shards, AXS) for and staking—enabling players to earn tradable assets through activities like battling and breeding. Launched in 2018 by Vietnamese studio Sky Mavis, it demonstrated a viable -based economy where participants could convert in-game efforts into real-world value, marking an early successful implementation of P2E mechanics in gaming. This approach contrasted with traditional games by granting true ownership of digital assets via the (later migrated to Ronin for scalability), influencing subsequent titles to adopt similar for player incentives. The game's rapid growth, peaking during the 2021 crypto bull market, catalyzed a surge in P2E and blockchain gaming projects, inspiring developers to replicate its —where investors fund player accounts in exchange for token shares—and guild formations for collaborative earning. Axie's success in emerging markets, particularly the , highlighted P2E's potential for income generation in underserved regions, prompting an influx of imitators and elevating blockchain gaming's visibility, with the sector's total value locked expanding significantly in its wake. However, this proliferation often resulted in low-quality clones prioritizing token extraction over engaging gameplay, diluting the model's credibility. Axie's downturn amid the 2022 crypto winter and Ronin hack exposed P2E's vulnerabilities, including reliance on continuous token inflows resembling Ponzi dynamics and sensitivity to market volatility, which eroded player earnings as SLP prices plummeted over 99% from peaks. This prompted an evolution toward "P2E 2.0" frameworks emphasizing sustainable economies, skill-based rewards over pure speculation, and hybrid models blending earning with intrinsic game fun to retain users beyond financial incentives. Post-Axie innovations, such as proof-of-play verification and reduced entry barriers, reflect lessons from its hype cycle, fostering more resilient gaming ecosystems less dependent on hype-driven recruitment. Despite criticisms, Axie's framework established P2E as a foundational paradigm, influencing over 1,000 games by mid-2022 while underscoring the need for economic balance.

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