Blockchain technology is mostly associated with the sphere of finance and electronic money for most people. However, it can be used for secure storage and transmission of data in other areas such as legal services, healthcare, trade, and many more.
One of the popular applications of this technology has been in video games. This has opened up new opportunities for users: not just to play but to earn from it as well. One of the first blockchain-based games was Axie Infinity, and we will discuss it and its currency in this article.
To learn more about other cryptocurrencies, their key features, the platforms they operate on, and where they stand in the rankings of digital currencies, you can read the article "Cryptocurrency rankings."
Blockchain games
The number of gamers spending hours, even whole days, playing video games is increasing. It is an entire industry that attracts both young and adult individuals. Moreover, those who have more resources have more opportunities to level up their characters or acquire certain items.
So, in the game, such a user gains certain advantages. However, what does this give them in real life? Nothing, as all bonuses and profits go to the game developers, who have full control over all the games and their components.
Blockchain games aim to change this situation. They are based on distributed ledger technology and still allow players to play in the usual manner. So what do players gain from using blockchain technology in games?
Firstly, all items acquire real value. They are purchased with real money (no different from regular video games), and the player gains ownership rights over them. They can dispose of them at their discretion, including selling them and receiving real money in return.
Thus, every character or upgrade, as well as any items purchased in games, become real assets. Players can now not only play but also earn from games.
Secondly, thanks to the application of blockchain technology, after a record of purchase or any other action is entered into the registry, these data confirm the user's ownership rights to these assets. These can be both regular gaming items and non-fungible tokens (NFTs).
Payment for all purchases within blockchain games is made with their currency, issued by each of the platforms where the games are hosted. One such platform is Axie Infinity and its currency AXS, which we will discuss further in this article.
What is NFT?
To better understand this topic, let's focus on another aspect: what is NFT? We've already mentioned that these are non-fungible tokens, but let's try to understand what that means.
In general, NFTs are unique digital assets that exist in a single instance. These tokens establish ownership rights to items such as video or music tracks, works of art, and so on.
They are quite popular digital assets for investments. The main difference from other unique items is that they exist in digital form rather than physical. In some cases, they are digital analogs of real-world items, while in others, they are specially created tokens.
The main purpose of using NFTs is collecting, but they are also used in video games, namely blockchain games. In games, NFTs provide an opportunity not only to own certain objects but also to earn from them.
For example, a user can purchase a character in the game, upgrade it, and then sell it for a significantly higher price. Or they can purchase certain items or lands, and subsequently rent them out, also earning income from that.
Another interesting direction for NFT games is related to sports. In such games, users can act as sports managers and address managerial issues in football teams, for example, selling and buying players and competing with other participants.
The key features of such games and NFT tokens include a high level of security thanks to the application of blockchain technology. All records of the transfer of ownership rights to a particular asset are entered into a special distributed ledger, and it is impossible to change or falsify these records.
Understanding Axie Infinity
What does the Axie Infinity platform and its currency – AXS cryptocurrency – represent? Let's try to figure it out. Axie is not just a gaming platform; it's a whole universe created by Sky Mavis company and inspired by Pokémon. It is built on the Play-to-Earn concept, meaning "play and earn."
The virtual environment of the platform is populated by Axie characters owned by users. These creatures can be bred with each other to produce new ones, and users can earn by selling heroes. Additionally, the game features battles, where players also receive rewards for winning.
The game also includes territories owned by users. These can be used for gameplay and item collection, as well as for resale or rental. All the aforementioned in-game assets are represented as NFTs, which can be traded on a special marketplace. This is because each character in the game is unique and cannot be replaced by another. To start playing, a user must own or rent at least three Axies. The cost of one character starts at $70 and can reach up to $100,000 or more for rare ones.
Axie Infinity is one of the most popular blockchain games in terms of user numbers. The platform's monthly trading volume exceeds $170 million. For some users, this platform has become a primary source of income, allowing it to become not only a social network but also a labor exchange.
However, not all the money earned from selling characters on the trading platform goes to the developers. Part of the tokens is shared among players and accumulates in a special "treasury" to maintain the in-game economy.
AXS cryptocurrency
All transactions between players, purchases, and rewards in the game are paid with the main token of the project – the digital currency AXS. Let's take a closer look at what this token is and what purposes it serves in this section.
So, AXS is the main currency of the Axie Infinity platform. It performs several crucial functions on this platform:
- Governance and decentralization tool: Token holders can participate in platform governance and voting on further development;
- Basis of the game economy: Part of the income from selling characters and territories in the game is used to acquire and burn tokens, thus increasing their value;
- Participation in staking: Users can lock a portion of their tokens to receive passive income in the form of interest.
The main concept of the Play-to-Earn game attracts a large number of users. All earnings in the game are accrued in AXS tokens: for selling characters, winning battles between heroes, farming, and other actions.
This token follows the ERC-20 standard and was created on the Ethereum chain. However, currently, AXS operates on Ethereum's sidechain – the Ronin network. A special cross-chain bridge is used to link the main blockchain and the sidechain.
The total currency issuance of the Axie game is 270 million units, but not all tokens are in circulation, slightly over half are. Some of them are periodically burned to increase demand and their value.
The price of the AXS coin has experienced significant fluctuations, with a low of $0.1237 and a high of $164.90. At the time of writing this article, the price of one token was $7.35, and it has not changed much over the past year.
How Axie Infinity works
The Axie Infinity platform was initially created as a gaming platform, with no other purposes pursued by its developers. The AXS cryptocurrency is the primary token in this ecosystem, but not the only one.
The second currency used in the game is SLP. It is used for rewarding players and for breeding new characters. Moreover, with each subsequent breeding, users are required to pay a larger sum.
At the same time, AXS tokens serve a different function - platform governance. Accumulating them through staking allows holders to participate in voting and propose their initiatives for ecosystem development. This helps build a community of loyal and engaged individuals.
The transition of the game from the Ethereum chain to the Ronin network has expanded the capabilities and functionality of Axie Infinity. This is due to the significantly higher transaction processing speed and lower transaction costs on the latter compared to Ethereum.
The ecosystem includes its marketplace where players can purchase Axie characters, as well as lands and other objects that are converted into NFTs. Additionally, there is a decentralized exchange called Katana, where currency exchange and token purchases for the game - AXS, SLP, and other currencies - can be conducted.
However, users will need other coins, specifically ETH, to purchase characters. As mentioned earlier, to start playing Axie Infinity, one needs to acquire at least three creatures. Considering their relatively high cost, buying characters will cost a minimum of $300, but these will be the simplest ones.
Ways to earn
On the Axie Infinity platform, there are several ways to earn and obtain its native currency - the AXS cryptocurrency. Firstly, this includes earning income through the game itself, where various methods exist.
1. Breeding Axies, meaning obtaining new characters. Each creature can be bred with others up to seven times, yielding offspring. Subsequently, new characters can be resold to other players. Rare creatures are the most valuable.
2. Participating in battles. Each battle involves three characters on each side. Winning battles earns SLP tokens, necessary for breeding new creatures, and increases the player's rating.
3. Purchasing and renting out or reselling lands or items. The game platform is divided into plots, some of which can be acquired by players. Additionally, users can find various items and subsequently sell them.
Another way to earn, not directly related to the gameplay, is through staking. As mentioned, the platform's native token - AXS - is not just a means of payment; its primary function is to enable platform governance.
By staking their tokens for a certain period, users can earn additional weekly income. To participate in staking, users need to open a wallet on the Ronin blockchain, purchase AXS tokens, and transfer them to this wallet. The reward amount depends on the stake size.
Uniqueness of Axie Infinity
The game in question emerged in 2018 and became the first of its kind project to implement the "play-to-earn" principle, providing users with the opportunity not only to play but also to earn income. As a result, the game attracted users from different age groups and social backgrounds.
A large number of users were drawn to the game during the pandemic. During this time, people in many countries were in self-isolation, not going to offices, and many lost their jobs and sources of income. Thanks to the game, they had the opportunity to earn.
In some countries in the southern hemisphere, particularly in the Philippines, Axie Infinity gained enormous popularity and replaced many people's primary jobs. Due to the game's immense popularity and the involvement of people in it, government agencies even proposed imposing taxes on players.
The project has a powerful community of users who are interested in the further development of the platform. This simultaneously strengthens relationships and competitive spirit among players.
Axie Infinity also has strategic partnerships with several major companies worldwide, such as Samsung and HTC, and the largest gaming corporation Ubisoft, further solidifying the project's position.
Each character in the game is unique and possesses a set of specific qualities, both strengths and weaknesses. But more importantly, each of them is an NFT token owned by the player and can be disposed of at their discretion.
Advantages and Disadvantages
Like any other blockchain platform, Axie Infinity has its positives and negatives, just as its native currency - the AXS cryptocurrency. Let's take a closer look at the pros and cons of this ecosystem in this section.
So, the key advantages of the platform under consideration are:
Income-generating opportunity - the first and foremost advantage of the platform. Moreover, there are plenty of earning opportunities: breeding and selling characters, selling and leasing lands and items, and more. This allowed the game to become the main source of income for some users;
Asset management outside the game. In regular video games, all acquired items or characters lose any value in the real world. In contrast, all purchases in Axie Infinity are converted into NFT tokens that can be traded on other platforms;
Decentralization. Thanks to blockchain technology, this platform allows for platform management without any central authority. This ensures that users can fully control their assets;
Expansion potential. The platform has open-source code, and all community members can participate in its further development. This increases their engagement and interest and contributes to the further expansion of the ecosystem;
Ecological concern. The community pays great attention to ecological initiatives and awareness-raising, supporting projects aimed at social impact on society.
Among the main disadvantages of Axie Infinity, the following can be noted:
High competition. The blockchain gaming sector is very promising, thus attracting more users. Along with the growing interest in this area, new projects emerge that could "steal the spotlight";
Technological aspects. Along with the attractiveness of this sector, it also has some technical complexities. To succeed in such games, one needs to understand the nuances of blockchain technology;
Regulatory risk. Since the issue of government regulation of the cryptocurrency industry remains ambiguous, blockchain games could be subject to prohibition at any time.
Prospects
We have already learned a lot about the Axie Infinity project itself and its native token - the AXS cryptocurrency. Now let's try to understand what prospects this platform has and whether it is worth it for users to invest in its cryptocurrency.
Interest in the decentralized finance sector is constantly growing, attracting more and more users. A plus of the platform under consideration is that it is a game, but at the same time, it allows players to earn real money by playing it.
However, it is worth remembering that the more attractive the industry becomes to users, the stronger the competition within it grows. There are already and will continue to be similar blockchain games on this market, which will attract players by all possible means.
The key problem that creators need to work on is security. After the platform was moved to the Ethereum sidechain Ronin, the network was hacked, and users' losses amounted to around $540 million. Despite the company's promise to compensate for all losses, there was a user exodus.
Therefore, to continue the active growth of the platform, developers will have to offer users new options. For example, adding new wallets and NFTs as well as interesting collaborations with other companies.
In addition to this, features attractive to users include having a mobile application, which the developers have already implemented. Furthermore, the idea of community-driven platform management is appealing, as it creates greater user loyalty and engagement.
The price of the AXS currency is influenced by a large number of factors, including the overall state of the cryptocurrency market. Moreover, this token is more volatile than other coins, so its price may react more strongly to changes: it may rise more during uptrends and fall more during downturns.
Conclusion
In this article, we have acquainted ourselves with one of the brightest representatives from the world of blockchain games - Axie Infinity, and the native token of this project - the AXS cryptocurrency. This platform became the first project where the "play-to-earn" principle was fully implemented.
It allowed many people to gain an additional source of income, and for some, it even replaced their main job. This became possible because the game offers several earning opportunities: buying and breeding characters, buying lands and items, as well as participating in battles.
An important aspect is that any aspect, be it a creature or a plot of land, acquires the status of an NFT token. This confirms the user's ownership rights and means that such objects have value beyond this platform and can be sold for money to other users.
The project's native currency is used mostly not for payments, but for platform governance. AXS token holders can participate in voting and determine the project's further development. Additionally, using AXS, one can participate in staking and receive rewards for it.
Back to articles
