Axie Infinity, the crypto-game where the token economy meets the market economy

Federico Bo
5 min readSep 22, 2021
Image from Axie Infinity white paper

A metaverse is a virtual place where many things happen: you play, trade, socialize, share experiences. In this cyberspace it is possible to (re)define one’s identity, shape other worlds and interact with different freedoms and constraints.

The pandemic has contracted our physical reality, separating us, distancing us and making us forced hermits. The fascination for metaverses has grown stronger: they have become an outlet for our repressed sociability, less toxic, more funny and colorful than social media.

Fortnite, Roblox, Animal Crossing and others have therefore given refuge to millions of different solitudes in the Covid era.

But one metaverse in particular, Axie Infinity, has done more: it has enabled many people to have a support income that mitigates the effects of the crisis imposed by the pandemic, especially in poorer countries.

Blockchain technology, tokens and NFTs, the “play-to-earn” mode, enable a careful and transparent design of the ecosystem and its business model; this Pokemon-inspired meta-cryptogame has captured the attention of millions of users generating a volume of daily transactions at a value of 30 million dollars and, in total, for over one billion dollars.

Cumulative total revenue in the past 90 days — Chart from

Launched on Ethereum in 2018 by the Vietnamese startup Sky Mavis, the game is based on the Axies, creatures resembling the axolotl salamanders. These characters fight each other and can be raised on plots of a territory called Lunacia. Originally developed on Loom, the game now has its own sidechain, Ronin.

Virtually every aspect of the game can become a source of income through tokens. Axies, which are NFTs, can be crossed, bred and then sold. By playing and fighting battles between Axies you earn tokens (ERC-720) called Smooth Love Potions (SLP) which is the currency of the game. Another token, the Axie Infinity Shard (AXS), acts as a governance token and can be earned in special tournaments or by selling Axies. The parcels of Lunacia are also NFTs.

Things get interesting when you find out that, encouraged by the transparency and the vision of the founders, the community has begun to generate a self-managed economic system capable of interacting with the “real” one.

One of the key factors is that, unlike other blockchain-based games, Axie allows you to easily convert your tokens into fiat currencies (even less strong ones like the Philippine peso) through popular exchanges such as Binance, reducing friction between the token economy and “real” economy.

This possibility, together with that of selling Axies as NFTs on large marketplaces such as OpenSea, gives visibility to the ecosystem, attracting users.

The community is not limited to the game. The guilds, a sort of crypto-cooperative, operate as facilitators for the entry of new users and at the same time as a holding company for the game’s assets.

Unlike in early days, when you could get access Axie Infinity almost for free, now you have to spend several hundred dollars to buy the three Axies you need to play.

The guild, among other activities, lends Axies to players in exchange for 30% of winnings; in this way, the barriers to entry due to high costs are lowered. One of the most important guilds is Yield Guild Games (YGG). Since April of this year, it has earned more than half a million dollars. YGG invests in a portfolio of tokens and stable-coins. Even though the expenses (for breeding new Axies, between $200 and $1,200 per specimen) currently exceed profits, the guild / startup has attracted investments worth several million dollars.

What actually happens in this game is that the network effect is tokenized thanks to the blockchain.

Why are so many people, especially from countries like the Philippines, Venezuela, Brazil, accessing the game? It allows them to earn a few dollars a day, which in many parts of the world is enough to support themselves or, at least, to survive in times of economic crisis. But some players in the Philippines are earning 5–10x what they were making from their previous jobs.

The game has become a tool of the gig-economy, with the difference that the employer could be, in the medium term, a DAO (Decentralized Autonomous Organization) of which you are an equal part.

The intent of Sky Mavis is in fact to guide the ecosystem towards complete self-management: through the AXS tokens — 20% of which owned by the creators — users will be able to decide on the development of the game, on the governance of the community and on the administration of the “treasure” deriving from fees. Everyone can monetize by selling their AXS. A few months after the creation of the “treasury” more than $700 million (in ETH) has already been set aside.

Sky Mavis for the moment acts as a sort of central bank, trying to maintain the balance and sustainability of the long-term economic model; it acts to avoid a too rapid growth and consequent inflation by reshaping the details of the game; it interacts with users or improper or fraudulent conduct. It is also getting substantial funding and plans to use Lunacia as an environment for creating user-developed games.

In this metaverse, embryonic economic structures are forming that link blockchains, tokens and NFTs to the outside world with reduced friction. Users can earn “real” money by playing, renting virtual goods, providing support and assistance, associating with guilds that become startups and, in the future, through user-generated software and content. This within an ecosystem which, perhaps, will govern itself.

The fact that Axie Infinity is starting to be a case study in the interrelation between classical economy and token economy is demonstrated by Government debates raised in some countries: the Philippines, for example, are considering taxing game gains.

We do not know if, as the white paper states, “Fighting and Collecting Cute Creatures Can Change the World” but watching them help their “breeders” in the strange metaverse on this side of the screen can be instructive.

update 18/09/21 A Techcrunch article questions: “Does anyone care enough about the core game itself rather than the potential market value of NFTs or earning potential through playing? More fundamentally, if real-world earnings are the point, is it truly a game or just a gamified micro-economy […]? “



Federico Bo

Computer engineer, tech-humanist hybrid. Interested in blockchain technologies and AI.