Axie Infinity
Buyer Beware
Long Form. Skip to bottom for Short Form.
For more flavor read while listening to Que Sera Sera by Pink Martini
For those that have an interest in play-to-earn blockchain games please benefit from my experience with Axie Infinity. I think in the end you might want to consider holding off on joining their ecosystem.
How I got here (my story):
For quite some time I have listened to the Bad Crypto Podcast which does a good job at talking about crypto at a base level while injecting humor into the discussion. They have talked a lot about play-to-earn crypto games touting them as the big thing in 2022. These are games where people can earn cryptocurrency by playing the game. Sometimes the crypto is worth something. Sometimes it isn’t. And sometimes it depends on the day of the week.
One of the biggies in the market is Axie Infinity. Their game involves buying a minimum of three game characters called “Axies.” The average price of Axies purchased on April 7 was $57 each. You form a team of three Axies and use them to battle other players who have done the same thing. The battles last a few minutes at most and the winner earns a small amount of crypto. The loser does not. You have a limited amount of battles a day where you can earn crypto but can keep playing for rankings or fun if you like. The higher your ranking the more crypto you can win per victory.
Before jumping in I spent some time listening to over 30 episodes of Axie Chat, a podcast for those dedicated to the game and viewed a few websites and YouTube channels.
I made the plunge in January. I went through the process of transferring some of my existing crypto and converting it into the native Axie currency at no small cost due to Ethereum gas fees and bought my first three Axies. I made some mistakes in my Axie choices and immediately plunged into negative rankings. Yes. You can be ranked less than zero. At the time, ranking under 800 points meant that even if you won a head-to-head match you would not earn crypto.
Before I dipped down I was faithfully doing daily quests in what was known as Adventure mode. Instead of playing other players I played the computer and, while I was also poorly set up with that I earned some small amounts of crypto. I slowly corrected my mistaken purchases and started to rise back to a normal range of 1200.
Little did I know that that would be the peak.
Axie Infinty decided that people were earning too much crypto. So, even after people had invested large (and in my case small) sums of money into their game assets the company changed it so you no longer earned crypto when you played against the computer effectively eliminating half of the game. At the same time they decreased the amount earned from playing other players. There is a larger game economics discussion I could go into and might at a later date but it boils down to the company preferring that players earn a dollar bill instead of earning four quarters. Yes, both are equal but one looks better.
At the same time, they lowered play-to-earn rewards (subtly shifting their language from play-to-earn to play-AND-earn) Axies were steadily decreasing in value. I consider myself lucky though because there were plenty of people that came in earlier and literally lost 95%+ of their money invested in game assets. The losses became embarrassing enough to Axie Infinity that in their marketplace they removed the part of the page which showed the price history of each Axie. The company never really explained their reasoning but the strength of a blockchain is that this type of information is easy and quick to be accessed at little bandwidth cost. I politely requested the reasoning for the removal on the Discord (which we will discuss later) and was not so politely warned to shut up or get banned.
I continued playing and learning and doing a little better and then the bomb hit. It was reported that Axie Infinity was robbed of over $600 million worth of crypto on March 29th. This statement, however, is untrue in two very material ways.
First, Axie Infinity only discovered that the $600 million was stolen on March 29th, it was actually stolen on March 23rd. Yes, Axie Infinity did not discover the theft of over $600 million for SIX days. Please remember that these accounts are all public. I can see the contents and actions in anybody’s crypto wallet with the right address. For instance, this is a link to the hacker’s wallet. Link. So, nobody at Axie Infinity bothered to look at their crypto wallet for nearly a week.
Second, the bolded statement is incorrect in that it says the stolen money belonged to Axie Infinity. It belonged to the users of Axie Infinity. Here is how it works. Axie Infinity uses its own currency and there are some very good reasons to do this. So in order to participate in their system you basically give them your Ethereum (think Dollars) and they hold on to them and give you “wrapped Ethereum” (think Poker Chips). When you are done with the game the agreement is that you give them the Poker Chips back and they give you your Dollars. Basically, after the theft you still have your Poker Chips but someone robbed the casino so they have nothing to give you back.
This was a preventable event. Only now are they bringing in the needed expertise to do what they should have done some time ago. And they are pushing forward with a release of a new version of the game. They have worked to make things right. I do not fault most of their responses to the theft. But, I believe the future is still in doubt.
The “Community”
I’ll wrap this up with a few words on the Axie Infinity “community.” Axie Infinity has a Discord frequently at its maximum capacity of 800,000 users. They have some active content providers and other guilds and groups and Facebook pages and a reddit group. The company claims this as a strength. The problem is twofold.
First, and most importantly, whether you are on their Discord or Reddit board you must remember one thing above all others. The people in North Korea have far more freedom to express themselves than you do there. The day after the news of the $600+ million theft was made public there were mass bannings of anyone who expressed any fear, uncertainty or doubt about the future of the game That is right. People that invested hundreds and thousands of dollars into the game asking simple questions - politely and without profanity were summarily banned. This Discord ban cut players off from almost all information as Discord is how Axie Infinity disseminates. Reddit is not much different. Just look at how many comments are made and how many you can actually see.
Second, people interested in joining Axie Infinity are often shut out because the server is at capacity. The company seems unable or unwilling to add a parallel server that mirrors some key parts while creating space for users.
Conclusion/Short Form
The future of the company is still in doubt after a preventable $600+ million theft.
The company is making efforts to make things right so that people can transfer their money out of the ecosystem.
The empty barn is becoming more secure every day.
Lots of people have lost a lot of money on the value of their game assets to the point Axie Infinity no longer shows the price history of the game assets in their marketplace.
The game is fun but like any game can grow repetitive after a while. The new version, Axie Origins, looks good but has a long way to go as a replacement. Promising though.
The company has significantly reduced the amount of crypto you can earn so if you are looking at it as an investment I would be very cautious.
The “Community” on both Discord and Reddit is so tightly controlled you won’t see any viewpoint but the company line. Don’t dare to even ask questions even politely or you will be banned.
I hope this helps. If you have any questions you can e-mail me at mike@companythoughts.com/