Ethereum, the second-largest cryptocurrency in terms of market capitalization, brings decentralization to more than just finance. Decentralized games are not as popular as finance platforms on Ethereum, but the community is growing quickly. Axie Infinity is the best example of a project on Ethereum that incorporates finance and gaming to create a play-to-earn ecosystem. Play-to-earn means exactly what you think it means. You earn cryptocurrency just by playing Axie Infinity. This scenario seems amazing on the surface, and it can be, but it isn’t free to play and it comes with plenty of risks. Many investors think of it more as an investment with a game built in.
However, Axie Infinity is not decentralized in any meaningful way at the time of writing. Sky Mavis, the game studio behind Axie Infinity, plans on relinquishing control over the platform and transferring it to users. The platform’s roadmap details the establishment of a decentralized autonomous organization (DAO) that will decide on changes to major aspects of the ecosystem. Sky Mavis says it will instate AXS staking in the near future where stakers make small governance decisions brought forward by the development team. According to the roadmap, the DAO itself will not be created until late 2023. Until then, Sky Mavis will make most if not all major decisions for Axie Infinity.
What Is Axie Infinity?
Axie Infinity has more active users than any other game on Ethereum, and it has generated more than a billion dollars in revenue as of September 2022. The game was inspired by the classic Pokemon series. Instead of Pokemon, the game is built around non-fungible tokens (NFTs) called Axies. Axies are one of the only types of NFT that can make you money beyond simple price speculation. Mix and match different types of these creatures to create the perfect team to battle other players for cryptos. They can even be bred to make offspring to add to your team or to sell on the marketplace.
The ecosystem runs off of 2 native tokens, Small Love Potion (SLP) and Axie Infinity Shard (AXS). AXS will eventually become the governance token of Axie Infinity, but as of right now it has few use cases beyond breeding Axies. SLP is also needed for breeding Axies, and Sky Mavis has even fewer plans to expand the functionality of that token. Players earn SLP by battling their Axies against other players or computer-controlled opponents. In the early stages of the game, SLP rewards are low, and they slowly increase as you gain more experience and play against better players. The game itself is extremely simple and doesn’t seem like it's the main attraction of the Axie Infinity ecosystem.
How Can You Earn Money from Axie?
You earn money in the game through a few different avenues. Unfortunately, all but 1 of these methods incur steep starting costs. The cheapest way to earn money in the game is just to play it. You need to own at least 3 Axies to play the game and start accumulating SLP and AXS tokens.
Through agreements called scholarships, it’s possible to play and earn SLP without owning Axies yourself. Anyone with extra Axies and too little time to play the game can hire players, called scholars, to earn SLP on their behalf. They allow the player to use a team of Axies and divide the rewards by an agreed-upon split, usually 70/30, 60/40, 50/50 etc. Keep in mind that it is basically a job and will likely take up a lot of your time. It’s also difficult to become a scholar because of the heavy competition for these positions.
Breeding Axies may be the most profitable way to use Axie Infinity. You need 2 Axies that haven’t been bred much before. Breeding costs 4 AXS and an amount of SLP that scales with how many times both NFTs have been used for breeding already. After breeding, it takes 5 days for the new Axie to reach maturity and hatch into an adult that can be used in the game. Because these NFTs are so expensive, you can earn a hefty amount of Ether by selling them on the Axie marketplace.
How Much Crypto Can You Earn?
Each different strategy to earn crypto in Axie Infinity has a wide range of possible profits. Playing the game for many hours a day could earn you anywhere between $8 to $40 a day, depending on your Axies, how long you play and the extra incentives available at that time. If you build up a large amount of Axies and don’t have enough time to use them all, offering scholarships may be your best source of passive income in the game. With reasonable profit splits, you could earn between 50% to 70% of the profit your scholars make. With multiple scholars, each with a set of 3 Axies, you could have a large passive revenue stream.
Breeding Axies can be significantly more profitable because of the high demand for the NFTs. When you breed a pair of Axies for the first time, it costs 4 AXS and 150 SLP (worth about $211 at the time of writing) plus transaction fees. On the marketplace, Axies currently sell for no less than 0.1 Ether (about $270 now), so there should be at least a small profit if prices of AXS, SLP and Axies stay roughly the same. If AXS and SLP prices continue to increase and Axie prices stay stagnant, breeding will become riskier and less profitable. You can mix these strategies by breeding a bunch of Axies and hiring scholars to play with them. However, be careful concentrating a large portion of your wealth in the game because if one aspect of Axie Infinity fails, the rest could collapse soon after.
Risks of Investing in Axie Infinity
Investing in Axie Infinity can be extremely profitable; however, it can also be incredibly risky. Except for scholarships which are rare and highly sought after, earning cryptos in Axie Infinity has extremely high startup costs. A team of the 3 cheapest possible Axies at the time of writing costs more than 0.3 Ether (worth about $800 now).
If you only make about $10 to $15 a day playing the game, it will take 50 to 80 days of long hours to make up for the price of the NFTs. Remember that you can still sell the Axies later to recoup your investment if prices stay the same. Prices will depend on the demand of Axies and the value of AXS and SLP tokens. If the game becomes less profitable or popular, your NFTs will likely lose value. If the game completely collapses, the tokens and Axies may become completely worthless.
How to Play Axie Infinity
- Open a cryptocurrency exchange account.
If you don’t own enough Ethereum to buy the Axies you want to play with or breed, you need to buy some on an exchange. Some of the best exchanges offering Ethereum trading are Coinbase (NASDAQ: COIN), Gemini, Voyager, Crypto.com and Binance. Once you set up an account, you verify your identity with the exchange. This process usually entails providing your address, Social Security number and a picture of your driver’s license or other valid ID.
- Buy Ethereum (ETH).
As soon as your account is verified, you fund your account with fiat currency or another cryptocurrency supported by the exchange. Then you find the trading pair with Ethereum and the asset you funded the account with and complete your purchase.
- Send your Ether to an Ethereum Wallet.
Choose a software wallet to interact with the Axie Infinity marketplace. Metamask is the most popular software wallet, and it is supported by nearly every platform on Ethereum. It is available as an application on iOS or Android and as a browser extension on Google Chrome.
- Deposit Ether into your Ronin Wallet.
Sky Mavis built its own sidechain linked to Ethereum called Ronin to speed up transactions and reduce fees for Axie Infinity and future games. Download Ronin Wallet as a browser extension in addition to MetaMask to use the Axie marketplace. Next, go to the Ronin-to-Ethereum bridge, connect your MetaMask wallet, enter your Ronin address and the amount of Ether you want to send and finish the deposit.
- Buy Axies on the Axie Infinity Marketplace.
You will need to have at least 3 Axies to play the game or 2 to start breeding. The most important traits to consider are the number of times the Axie has been bred and its purity. If you want to do well in the game, try to build a strong team composition with a high health Axie and another that can deal with high damage. Once you buy your Axies, you can start playing the game or breeding them for more.
- Use your Axies.
Now just launch the game and start playing. You can play against other players or against computer-controlled monsters to earn SLP tokens. You might as well breed your Axies and sell a few off to increase your profits even more.
Playing Axie Infinity vs. Investing in AXS
Either of these strategies could be a good way for you to invest in Axie Infinity. Playing the game takes a lot of time to earn a reasonable profit and incurs high startup costs. It also depends on the prices of Axies for resale. Investing in AXS may be even riskier because it has too few use cases and Sky Mavis provides little information about its tokenomics. At least for the next few years, the core team has significant control over the supply of AXS and where it will be sent. Anyone who invested in AXS in June 2021 or earlier has made a massive profit because the price rose from about $5 to $45 at the time of writing. If the platform loses a lot of players or fails to implement more uses of the token, however, it could easily crash.
Frequently Asked Questions
Can you make money on Axie infinity?
You can make money on Axie Infinity if the tokens continue to rise in value and you play the game diligently, increasing the value of your portfolio.
Is Axie Infinity a game?
Yes, Axie Infinity is a game that you play to win cryptocurrency tokens native to the game.
About Henry Stater
Henry is an expert in all things crypto. He stays up to date with all the latest coins, platforms and technologies in the field. He has particular expertise in the burgeoning decentralized finance ecosystem and loves trying out all the new platforms. He also always follows major events in other financial markets and geopolitics as a whole, especially when an event’s effects ripple through the crypto market.