Joshua Padrique is on an adventure. The 21-year-old is battling tiny monsters inside a multi-billion-dollar pixelated metaverse known as Axie Infinity. Every time he completes a daily quest or wins a battle, he earns actual cash, which he uses to pay for his school books, his internet bill, and most of all, to help his parents. “I’m spending my earnings to provide something for my family because I want to help them,” he tells me.
Padrique, who lives in the Philippines, is currently on an Axie Infinity scholarship. He’s one of 12 people sponsored by 28-year-old Samir Asthana, a recent graduate from the University of Southern California’s Marshall Business School who is actively looking for work within the entertainment industry. For now, though, the scholarship program is helping him and Padrique make money inside this first-of-its-kind, play-to-earn video game and perhaps blockchain’s most revolutionary contribution to date.
To play Axie Infinity, a player needs three Axie non-fungible tokens (NFTs), or units of data stored on the blockchain. Axies, however, aren’t cheap. In fact, the most affordable ones on the marketplace cost around $250 each. That’s where scholarships come into play — they’re for those who can’t afford to buy Axies on their own.
Padrique first learned about Axie Infinity’s scholarship program from his older brother and his brother’s friends. “They let me watch them while playing and even suggested applying as a scholar in the Axie Infinity Discord,” he says. After studying some of the mechanics of the game from YouTube videos, Padrique posted his resume on Discord. If applying for jobs online feels like a hopeless proposition, then posting your information on the Axie Infinity Discord channel is like putting your resume in a glass bottle and heaving it into the ocean. That’s because everyday, hundreds of candidates bombard the Discord channel with their credentials.
It doesn’t help either that most of the resumes look pretty similar. For his part, Padrique put down his name, age, nationality, marital status, a list of his devices and the quality of his internet connection. Many resumes include cover letters that focus on their expertise in other games, and some, like Padrique’s, include the reasons why they want to earn money playing the game. But the goal for every scholar posting their resume on Discord is the same — to convince a manager like Asthana to hand over access to his Axies.
Like Pokémon, the tiny monsters inside this virtual landscape fight and fuck and go on adventures. But unlike Pokémon, Axies can earn in-game currency called Smooth Love Potion (SLP) that can be traded on a cryptocurrency exchange for real money. Last month, Padrique earned Asthana 5,000 SLP, or a little over $400. They used to split the earnings 60/40 in favor of Asthana, but recently, Padrique got a raise. “Now, I have a 60 percent cut,” he says.
Currently, Asthana has 47 Axies with plans to hit 50 over the weekend. “I’ll be breeding some more then,” he explains. Still, despite his earnings, Asthana admits that in terms of actual dollar value, the money can be “really volatile.” In early August, at the peak of how much a player could earn by playing Axie Infinity, each SLP was equivalent to about 35 cents. For perspective, if a scholar is earning 200 potions per day, half of which go to their manager, they end up with roughly 35 bucks. It’s perhaps a meager sum for those of us in the U.S., but in a country like the Philippines or Venezuela — where the average monthly wage is $53 — players are making more than mid-level managers who work regular 9-to-5 jobs.
That said, the bulk of the money is being made by managers like Asthana, who can invest in teams of scholars to play the game for them. To that end, Asthana tells me that his initial $600 investment has ballooned to between $10,000 to $13,000.
Not that this fact has deterred scholarship seekers, most of whom live in the Philippines or Venezuela. Last May, 29,000 people in the Philippines had downloaded Axie Infinity. Today, roughly 18 months later, there are over a million people on the servers at any given time. Padrique says he plays around four hours a day, leaving him with plenty of time to focus on school. (He’s currently seeking a degree in computer programming.) Asthana tells me that as he sifted through the hundreds of scholars on Discord, he was looking specifically for college students. “This kind of game works really well with a university student’s schedule,” he explains.
“For vetting my scholars, I conduct a video interview over Zoom, which is less of an interview and more just me explaining my scholarship guidelines,” Asthana continues. “After the ‘interview,’ I give them their scholarship team if it’s already ready, otherwise they join my waiting list and take a team once I have one available for them.” Currently, Asthana has four people on his waiting list (he’s chosen not to advertise his scholarship program until he has more available teams). “Some waiting lists have well over 100 people,” he says.
Since mid-July, however, the value of SLP has plummeted from an all-time high of nearly 40 cents to its current price of eight cents. This is largely due to people using bots to earn SLP, which, in turn, causes the amount of SLP that’s minted on a given day to be far more than the amount of SLP that’s put back into the economy. In 2012, a similar issue plagued the in-game economy of Diablo III. Players could farm gold in the game and auction it off for actual cash, but people soon realized they could use bots to do so, which led to hyperinflation until Blizzard, the company behind Diablo III, shuttered the program.
To avoid the same fate, in August, the developers of Axie Infinity reduced the amount of SLP that players could earn per day by half, essentially implementing in-game austerity. Even Asthana admits that if the Axie Infinity economy were to continue along its current trajectory, “the economy would, in essence, be a pyramid scheme and would inevitably collapse in the future,” since it’s dependent on the number of new players who join the game. “The second everyone who wants to play Axie Infinity has enough Axies to earn, there would be no more demand for Axies, and the value of SLP would drop close to zero,” Asthana explains.
Nonetheless, he’s still bullish about the prospects of the game. Axie Infinity — again, like Pokémon — has the potential to be a multiverse of more than just one game. “Maybe there’s a new Axie Infinity game that operates on a subscription model, which requires you to spend a few hundred SLP per month to keep access,” Asthana theorizes. “Maybe there’s a completely free-to-play Axie Infinity game that’s released, and you can use SLP to buy new skins, customizations or even other NFT resources, which is what the developers have directly stated will be the case.”
To Asthana’s point, the developers of Axie Infinity have talked a lot about the future of the Axie economy. In an interview with the YouTube channel On Chain Gaming, co-founder Jeffrey Zirlin (aka Jiho) admits that Axie Infinity is “growth-dependent,” adding that “as long as there are more players in the world who want to get in, we can sustain the economy quite easily.” Along those lines, he believes that the total number of potential Axie players is “somewhere between two to three billion people.”
Some of these potential changes are outlined in the Axie Infinity roadmap and include a social network and marketplace where players can own digital land referred to as “landscapes.” Still, the details of how these changes will be implemented remain unclear. So too does their ability to address the current infrastructure of the near hyper-inflated Axie economy. As it currently stands, the only way that money is put back into the game is through breeding, which requires anywhere from 300 to 6,300 SLP. The amount of SLP a player needs to breed their Axies is determined by the parent Axies’ breed count.
“Each Axie is only able to breed a maximum of seven times, and the more times an Axie has bred, the more SLP is required to do another round of breeding,” says Asthana. In addition, players who want to breed their Axies need two AXS tokens that can only be purchased with real money on a cryptocurrency exchange. The current price of one of these tokens is just over $60.
The vulnerabilities of this current system — and primarily the inflated value of SLP — are what make Axie Infinity a speculative investment. But it’s important to note, Asthana says, that most start-ups begin with a business model that isn’t sustainable. “Tesla, Tinder, Bumble, even Facebook had ‘unsustainable’ business models before they transitioned into something that was,” he says. (If it’s time and resources the developers at Axie Infinity need to figure things out, they have it; in May, Mark Cuban and Reddit co-founder Alexis Ohanian gave Sky Mavis, the Vietnamese start-up behind Axie Infinity, $7.5 million in funding.)
Whatever the future holds — and despite the SLP crash — Padrique tells me that the extra money has been helpful for him and his family. He’s also been able to save some of his earnings — just not in a bank. “In my Ronin wallet,” says Padrique, who, like 25 percent of Axie Infinity players, doesn’t have a bank account. Besides, he adds, “If the Axie’s price goes down, I will surely buy [an Axie] to have a passive income of my own. I want to have passive income so bad. That’s why I’m doing my best to grind.”