Submission + - A Billion-Dollar Crypto Gaming Startup Promised Riches and Delivered Disaster (bloomberg.com)
Parker Lewis writes: Axie is a game tied to crypto markets. Players get a few Smooth Love Potion (SLP) tokens for each game they win and can earn another cryptocurrency, Axie Infinity Shards (AXS), in larger tournaments. The characters, themselves known as Axies, are nonfungible tokens, or NFTs, whose ownership is tracked on a blockchain, allowing them to be traded like a cryptocurrency as well.
There are various ways to make money from Axie. Players who own Axies can create others by choosing two they already own to act as parents and paying a cost in SLP and AXS. Once they do this and wait through an obligatory gestation period, a new character appears with some combination of its parents’ traits.
Every new Axie player needs Axies to play, pushing up their price. Alejo Lopez de Armentia, 39, started breeding last August, at a time when normal economics seemed not to apply. “You would be making 300%, 400% on your money in five days, guaranteed,” he says. “It was stupid.”
Axie’s creator, a startup called Sky Mavis Inc., heralded all this as a new kind of economic phenomenon: the “play-to-earn” video game. “We believe in a world future where work and play become one,” it said in a mission statement on its website. “We believe in empowering our players and giving them economic opportunities. Welcome to our revolution.” By last October the company, founded in Ho Chi Minh City, Vietnam, four years ago by a group of Asian, European, and American entrepreneurs, had raised more than $160 million from investors including the venture capital firm Andreessen Horowitz and the crypto-focused firm Paradigm, at a peak valuation of about $3 billion. That same month, Axie Infinity crossed 2 million daily users, according to Sky Mavis.
But since March, It had lost about 40% of its daily users, and SLP, which had traded as high as 40, was at 1.8, while AXS, which had once been worth $165, was at $56. To make matters worse, on March 23 hackers robbed Sky Mavis of what at the time was roughly $620 million in cryptocurrencies. Then in May the bottom fell out of the entire crypto market. AXS dropped below $20, and SLP settled in at just over half a penny. Instead of illustrating web3’s utopian potential, Axie looked like validation for crypto skeptics who believe web3 is a vision that investors and early adopters sell people to get them to pour money into sketchy financial instruments while hackers prey on everyone involved.
There are various ways to make money from Axie. Players who own Axies can create others by choosing two they already own to act as parents and paying a cost in SLP and AXS. Once they do this and wait through an obligatory gestation period, a new character appears with some combination of its parents’ traits.
Every new Axie player needs Axies to play, pushing up their price. Alejo Lopez de Armentia, 39, started breeding last August, at a time when normal economics seemed not to apply. “You would be making 300%, 400% on your money in five days, guaranteed,” he says. “It was stupid.”
Axie’s creator, a startup called Sky Mavis Inc., heralded all this as a new kind of economic phenomenon: the “play-to-earn” video game. “We believe in a world future where work and play become one,” it said in a mission statement on its website. “We believe in empowering our players and giving them economic opportunities. Welcome to our revolution.” By last October the company, founded in Ho Chi Minh City, Vietnam, four years ago by a group of Asian, European, and American entrepreneurs, had raised more than $160 million from investors including the venture capital firm Andreessen Horowitz and the crypto-focused firm Paradigm, at a peak valuation of about $3 billion. That same month, Axie Infinity crossed 2 million daily users, according to Sky Mavis.
But since March, It had lost about 40% of its daily users, and SLP, which had traded as high as 40, was at 1.8, while AXS, which had once been worth $165, was at $56. To make matters worse, on March 23 hackers robbed Sky Mavis of what at the time was roughly $620 million in cryptocurrencies. Then in May the bottom fell out of the entire crypto market. AXS dropped below $20, and SLP settled in at just over half a penny. Instead of illustrating web3’s utopian potential, Axie looked like validation for crypto skeptics who believe web3 is a vision that investors and early adopters sell people to get them to pour money into sketchy financial instruments while hackers prey on everyone involved.
