Axie Infinity. A World of DeFi and Monsters
As video games have developed over the years, they’ve become much more than a simple pastime to whittle away a few hours. Players now have the ability to form meaningful relationships with people across the globe who they’ve never even met.
Vast communities exist where people watch others play and comment on their favourite games. It’s not uncommon at all for some players to have professional careers from playing their chosen game.
But perhaps most interesting of all for us as crypto-enthusiasts are the emergence of virtual in-game economies. Normally these are based on some type of in-game collectible item, or perhaps even a currency.
Within mainly developing nations, people are feeding themselves and housing their families through activities like virtual gold farming. In fact, at its peak around 2010, it’s estimated that the virtual gold farming industry was valued at around $10 million USD.
The online space exploration and trading game Eve Online even allows for mechanisms to their virtual in-game cash into real-world money. In this way, a fiat value can be placed on in-game collectible items. In 2017, a $20,000 USD theft of items from other players even led to real-life threats of violence in retaliation.
However, these kinds of collectible item prices have managed to reach a natural limit. While people are buying scarce and rare items, there is no guarantee that these can’t be duplicated through in game exploits or even by game moderators. Selling a single item for say $170,000 is just not really feasible when there no guarantee it is digitally scarce.
That is unless we’re talking about blockchain games. In this world, it’s perfectly acceptable to sell a lilac coloured cat called Dragon for that exact amount. 600 ETH to be precise.
I’m sure most of you are already familiar with CryptoKitties. It’s the OG of crypto collectibles.
For those who aren’t, you essentially buy, trade, and breed collectible cats with different features. But this is old news. There’s now a new kid on the block: Axie Infinity. Let’s take a dive into the blockchain mechanics behind what is going, the economics of its marketplace, and just how these kinds of games are pushing boundaries that no others have before.
It all comes down to tokens
For something to be collectible and derive inherent value, it has to have some kind of scarcity. It’s simple economics. The more rare an in demand item, the higher its value. So for any kind of blockchain game based collectible, each item needs to be limited in a way.
To represent these unique items, non-fungible tokens (NFTs) are created which are completely individual and provably unique. Looking back to our CryptoKitties example above, there is only and will only ever be one Dragon kitty available. CryptoKitties uses tokens adhering to the Ethereum protocol ERC-721.
If you want a more detailed introduction NFTs, then head over to my previous blockchain art article here.
There’s more to Axies than just collecting them
So what is it that Axie Infinity is doing differently? There are two major points to cover.
To begin with, Axie actually functions more like a game in the traditional sense. From their beginnings, blockchain based games have placed a lot of emphasis on being a blockchain based application deeply rooted in the concepts of crypto, rather than the gaming experience itself.
Whilst Axie Infinity doesn’t shy away from this either, it’s implemented typical gaming elements such as stats, battling, and a familiar video game look. It definitely has more of a Pokémon feel going for it, rather than just rare tokens with a pretty picture.
How Axie Infinity works
The basic mechanics work like this:
Each user needs to have a compatible wallet to store their Axie Infinity NFTs and related tokens. You can user your Trust Wallet to do this.
Players must either buy 3 Axies *from the marketplace with ETH to play, or three *eggs *which then hatch into *Axies.
Each Axie is unique, with its own stats and looks. They can also battle against other *Axies *to win Small Love Potion tokens (SLP). These tokens can also be gained through an adventure mode, where players battle against the environment.
Axies *can breed to spawn new *Axies. To perform this function, players need differing amounts of SLP.
Axie Infinity Shard tokens (AXS) can also be purchased to stake and take part in governance votes. You can read more about governance in my previous article here.
As you can see, quite an economy is being built up here with various different interactions. This is one of the other key areas where Axie Infinity has begun to differentiate itself. The developers have created an economy they call play to earn. And this is perhaps the most exciting aspect of the game itself.
Gamified Decentralized Finance
In comparison to previous blockchain games, whose total in game strategy can be boiled down to cross your fingers and hope that you get a rare collectible, Axie Infinity does things differently.
First of all, breeding costs money.
Whether that’s from buying the SLP token or earning it, there is some value associated with creating a new Axie. *This means that the price of an *Axie cannot be lower than the input cost of creating it.
It’s not too dissimilar to the mining process of other cryptocurrencies.
Second of all, SLP tokens can be quickly and easily converted into ETH through Uniswap. You can play the game and cash out your points if you don’t want to breed. You can essentially earn yourself an income, something not necessarily guaranteed with games like CryptoKitties or HashPuppies.
This is where Decentralized Finance (DeFi) comes into play. Uniswap offers in their own words:
A protocol for exchanging ERC-20 tokens on Ethereum. It eliminates trusted intermediaries and unnecessary forms of rent extraction, allowing for fast, efficient trading. Where it makes tradeoffs decentralization, censorship resistance, and security are prioritized. Uniswap is open-source software licensed under GPL.
This unique combination of DeFi and a blockchain based collectible game is providing people around the world with real income. There are even guides on how you can do this yourself.
Just like the virtual gold farming rush with the advent of MMORPGs, this hasn’t gone unnoticed within the developing world. In fact, there are a number of Filipinos using Axie Infinity as a way to earn money during the COVID pandemic. Blockchain games have gone from novelty money spinners to fairly stable sources of income. This is where we are seeing real maturation in this part of the blockchain world.
Where do we go from here?
For me, the most interesting point to take from recent developments in blockchain video games is the extremely unique mix of traits they have.
There’s the simple value of play and enjoyment. Then there are unique blockchain systems behind the games for technophiles too. You can earn an income and the possibility of a big payoffs. All of these things aren’t however new in the world of video games.
What is new is the deliberate combination of all of them together, rapidly developing with increasing substance and complexity.
However, apart from the occasional foray of mainstream video games offering blockchain based trading systems for items, it’s still fairly niche. Nevertheless it’s a great progression for blockchain based games as a whole. We’ve gone from humble roots of essentially the digital version of collectible baseball cards and added more functionality.
What is missing maybe is longevity. Games rise and fall, but the DeFi aspects behind Axie Infinity might just give it that bit more staying power.