Axie Infinity after x100: Adjustment causes, solutions and development directions

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Axie Infinity used to be the trend-leading P2E project. Axie Infinity's revenue sometimes reaches millions of dollars per day. However, entering 2022, the limitations of Axie Infinity's operating model began to emerge. This causes Axie's revenue to continuously decrease, currently below $ 50,000 / day.

In this article, we will explore the main problems leading to the current underperformance of Axie Infinity and solutions and future development of Axie Infinity.

Quick summary:

  • Axie Infinity's revenue dropped to $28M million in Q1 and is on a downward trend in Q2/2022.
  • The model design of Axie Infinity began to show flaws when the market entered a saturation phase and started to have more competition.
  • The new P2E gameplay and model, emphasizing active players can be the solution for the Axie Infinity network to return to the position of the leading GameFi project.

Current status of Axie Infinity​

Play to Earn or P2E was once a "hot trend" in the crypto market in 2021, combining DeFi and entertainment to create a new category of applications that allow players to earn money by playing games. In that context, Axie Infinity is the project leading the P2E trend. In fact in the Philippines, some people have made a living playing Axie Infinity.

The gameplay of Axie Infinity revolves around creatures called Axies. In the game, players will collect and nurture, breed, trade and fight. Axie's gameplay is a turn-based card attack, with the goal of taking down the opponent with her Axies.

Each Axie has its own characteristics that determine their rarity and attributes. In general, the rarer the Axie is, the higher the price it is traded for. In the first version, players are required to have a minimum of 3 axies to play the game.

In early 2021, the Community Treasury went live, it will begin to receive the revenue generated by Axie Infinity. The Community Treasury will eventually be managed by AXS stakers.

  • Marketplace fee (4.5%): Transactions on Axie marketplace will be charged 4.5%.
  • Part breeding fee: When breeding Axie (breeding Axie), you will need 1 amount of AXS token & SLP token. Amount of SLP tokens burned from circulation. The amount of AXS tokens will be transferred to the Community Treasury.

At its peak, Axie's Treasury was pulling in $15 to $16 million a day. However, since the beginning of 2022, Axie's revenue has dropped markedly, falling to about $28 million in Q1/2022 & continuing to decline sharply in Q2/2022. What's going on with Axie Infinity?

The reason for the poor performance of Axie Infinity​

In my personal opinion, the current situation of Axie Infinity is due to a few key issues below:

  • Limitations of the P2E 1.0 model.
  • The gameplay is not attractive, many people see it as an investment vehicle instead of a pure game.
  • Competition from other P2E projects.

General limitations of the 1.0 . P2E model​

In the first design of Axie Infinity, players want to "play" to "earn", they must first "pay" first. Specifically, players are required to buy a minimum of 3 Axies to play the game.

As shown below, a new supply of new Axies is created by paying a fee in the form of SLP tokens and AXS tokens to breed 2 Axies together. During the period of strong expansion, the number of new players joining the network increased dramatically, the demand for Axie increased sharply in the secondary market, the demand was greater than the supply leading to the increase in the price of Axie in the secondary market.

The sharp increase in Axie price makes the ROI of breeding Axies and then selling them on the NFT marketplace increases and stimulates players to be more active in breeding Axies, breeding Axies requires AXS tokens and SLP tokens, which indirectly increases demand. for AXS and SLP tokens on the secondary market and make the minimum cost of creating a new Axie higher.

This is a positive feedback loop for Axie Infinity during the expansion phase. Roughly, the first phase (hyper-expansion phase) of the P2E 1.0 model is described by Phase 1 below: Supply, demand, price all go up.

In the next stage, the Axie supply is too much and the reward token (SLP) inflation is still increasing sharply while the number of buyers is not much. The problem with Axie Infinity's model is that demand needs to grow exponentially because supply grows exponentially. Even if user demand is constant, because supply of Axie & SLP is increasing exponentially, price will definitely decrease. Once prices continue to plummet and the market falls into saturation, the problems will worsen.

Game quality factor​

In web2, some “fee to play” or “pay to play” games are still profitable because they care about the quality of the game and the gaming experience. Because this is the main factor that determines whether users decide to play or pay to play the game or not.

While in the web3 environment , the P2E 1.0 design emphasizes economic factors over game quality and gaming experience.

To some extent, players' gaming motives are almost entirely motivated by the pursuit of profit. The question of quality in P2E games in general: “Real games or disguised investment vehicles?”.

Personally, I'm not a fan of Axie Infinity's turn-based gameplay. What about you, if Axie Infinity gradually loses the "earn" part of the "P2E" model, will the "game" element of Axie Infinity be enough to attract you to this ecosystem?

Competition from other P2E projects​

As I mentioned above, P2E 1.0 designs emphasize economic factors over game quality and gaming experience. This has resulted in “ Vampire Attacks ” similar to those in the DeFi market.

The basic problem can be understood as follows, players come to the Game for the sole purpose of making profit, when the profit factor decreases or no longer exists, players will tend to leave that platform to come to other games. Similar platform to make money.

The current GameFi market is full of low-quality games. They are purely camouflaged investment vehicles. Similar to DeFi platforms, their source of profit comes from token inflation. This source of profit is completely unsustainable and only leads to a single result of collapse when the market gradually enters the saturation phase.

Solutions and development direction of Axie Infinity​

Axie Infinity recognizes the limitations of the P2E 1.0 model and is working on several suitable workarounds:

  • Transitioning from P2E 1.0 to P2E 2.0: Power Creep.
  • Build a more engaging Gameplay from available “materials”.

P2E 2.0: Power Creep model​

Currently, Axie Infinity is in phase 2 of the P2E 1.0 model. In a rather dire situation, the Axie supply inflation and the reward token increased high while the market began to saturate.

Axie Infinity tweaks around the issue:

  • Cut SLP tokens from playing with P2E machines and daily quests.
  • Increased fees for breeding Axies.
These changes have two purposes, limiting reward token inflation and increasing the game's token reward burn. In addition, this indirectly limits the growth of Axie's new sources by increasing breeding costs.

Axie Infinity also implemented a new design called the Power Creep model. Basically, Axie Infinity stopped inflating rewards for PvE players and passive players. Instead, the rewards will go to the PvP players and will largely go to the active player pool. Overall, the rewards will be and are being focused on the “quality” players that help Axie create a stronger community.

Axie also introduces a higher upgrade route to get more SLP. Player axies are still generating revenue for them. But that won't last forever, they need to be upgraded to stay competitive with the common ground.

It's like you play League of Legends, all players start at the same starting point. Players must use personal skills to farm soldiers and kill enemy generals to earn gold and continuously upgrade themselves through advanced equipment.

Future versions of Axie Infinity will be similar, there will be more difficult copies and players will need more advanced items to make a profit. Simply put, skill alone is not enough.

So how does this strategy work for Axie Infinity in practice?

The image above is a comparison of the SLP token mint/burn ratio in the 2 periods:

  • Phase 1: April - December 2021.
  • Phase 2: January - May 2022.
Overall, the Total SLP token minted has a decreasing trend but the SLP burn/mint ratio does not seem to increase, but on the contrary, decreases. The steady decline in Axie Infinity's revenue shows that Axie players leave as the game cuts the "earn" element to its game. Apparently, P2E 2.0 is not enough to revive Axies.

Land Gameplay: From a turn-based game to an MMORPG​

Take advantage of the materials available from the turn-based platform game "Axies", "Lands" and "Items". Axie Infinity is developing a new game.

Gameplay Land is an MMORPG (online role-playing game). At the moment, gameplay Land is still under active development and will be released in phases:

  • Phase 1 of this experience will focus more on simulation and land management (production, resource gathering, construction, and trading).
  • Phase 2 will build more management game elements (such as skill trees, jobs, and social/cooperative activities).
  • Phase 3 will focus more on team strategy gameplay (defend, fight, conquer). During continuous development, features will be added and Axies will have an ever-expanding range of experiences.


A few key points about the article that everyone should grasp:

  • P2E 1.0 works on inflation of the token supply for players.
  • P2E 1.0 is described as two main phases. Axie Infinity is entering Phase 2 - the recession phase.
  • Axie Infinity's solution to the above problem: P2E 2.0 & New MMORPG gameplay.
I hope the above content will help you understand more about Axie Infinity and its limitations and development directions to improve the current operating situation of the network. If you have other questions related to the above topic, please comment below for Coin98 to support right away!

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