In the NFT game “Axie Infinity”, there is a strange system: rich players from the west employ players from the Philippines, Venezuela or Thailand as “scholars”. A German YouTuber explains how much money he made in August 2021: 15% return is great passive income. But now the market is collapsing.
What kind of game is it?
- Axie Infinity is a “Pokémon” type game on “SLP”, the “Smooth Love Potion”: a currency that can be exchanged for money
- In the game, there are Pokemon-like creatures called “Axie” that players can battle and breed with.
- In 2021, there was hype about Axie Infinity. The game seemed to become the flagship game of “Play2Earn” games, that is, games with which you can earn money. But now, a rude awakening is imminent.
Investors borrow Axie, want 30-70% of profits from their fellows
How do rich Westerners make money with it? To play Axie Infinity, you must purchase 3 Axies at the start. These 3 Axes cost around $1,000 at the height of the game, but prices have since dropped. But it’s still too expensive for many games. Because Axie Infinity is popular in areas where people don’t earn much (via playercounter):
- 40% of Axie Infinity players are from the Philippines
- 6.3% from Venezuela
- 5.7% from the United States
- 4.7% from Thailand
Real investors with big money buy Axies and lend their Axies to players in “poor areas” to earn “Smooth Love Potions”. They then receive their share of the income from their farmers on a monthly basis.
According to an Axie co-founder, the usual percentage is between 30% and 70% (via vice).
Investors then call themselves “managers” – their employees call them “scholars”.
German YouTuber Sw1pe Axie showed in an August 2021 video (via youtube) that 16 “scholars” played for him. The best earned 5,886 SLP (about 586 euros), the worst earned 739 SLP (about 74 €). Sw1pe explained that he leaves his fellows 50% of their profits.
Investor dreams of “passive income” – €3,000 profit per month with an investment of €20,000
why is he doing this? According to the YouTuber, he gets a great return of 15% per month this way:
“First of all, 3,000 euros is a lot of money. But if you see I only spent around 20,000 euros for all the teams together – I think it was even less, I only spent 18,000 euros, so that’s around 15% back or profit that I made from it per month.
How did it go for him? Sw1pe posted 2 more videos with their winnings. They showed that he continued to expand his program and doubled the number of scholarship recipients, while his income remained relatively constant as the price of the Smooth Love Potion had halved against the euro at the same time.
- in September 2021, 23 fellows worked for him – he earned € 2895, by then the price of an SLP had already fallen from 10 cents to 6 cents
- in October 2021, 31 scholarship holders worked for him – he earned €3,463
- However, starting in November, Sw1pe stopped posting videos about its earnings from the “stock exchange” – in November and December 2021, the value of one SLP fell from 6 cents to 2 cents
A man in Venezuela supports his family by playing a very old MMORPG
“Scholars” instead of Chinese farmers
What is the difference with “Chinese farmers”?”Chinese Farmer” is a term used in MMORPGs like World of Warcraft. It suggests that Chinese sweatshops are forced to farm an MMORPG for a pittance in order to sell the content to wealthy Western gamers.
The difference with Axie is that there is no “company” behind it, but western individuals who want to generate “passive income” as crypto investors. Moreover, their researchers are apparently not Chinese, but Thai, Venezuelan and Filipino.
Here’s what it looks like when you actually play Axie Infinity:
“Digital colonialism” or “relationship that benefits everyone”?
Isn’t this all a bit weird? Yes of course. It’s about rich people letting people in poor areas play a video game for very little money a month.
A journalist examining the strange relationship from the outside calls it “digital colonialism”.
But investors see themselves as benefactors. The Vice site cites a manager who employs up to 200 academics. He says the deal is mutually beneficial after all:
“I make money from them using my NFTs and they make money playing them. Charity is something I’ve never experienced myself. But what I get from my fellows, it’s how they use their profits to pay their bills, buy a washing machine, or buy grandma new teeth.
The market collapses and the “scholars” quit
What’s the problem? The video with Sw1pe Axie’s bill is from August 2021 – back then a “Smooth Love Potion” was still worth 10 cents. But since then, the value of a Smooth Love Potion has dropped sharply:
- At its peak on July 24, 2021, an SLP was still worth 29 cents
- On August 8, there were at least 15 cents for it – almost half
- By September 21, the price had fallen to 5 cents – about one-sixth
- Today, April 22, 2022, there are still 1.4 cents left for an SLP – only one-twentieth of the maximum price
As a result, “investors” like Axie Swipe LP are losing their cheap laborers en masse because no one wants to farm for the money anymore.
On Twitter, some investors are complaining that their “academics” are quitting and they’re now sitting on their axies. One of them says that it now takes him too long to look for new researchers because they give up faster than he can find new ones.
The managers are now discussing whether they can now sell all the Axies and live with the loss, or if they hope the price will rise again. However, the prices seem so low that “giving up” just isn’t an option for many.
The German “Sw1pe Axie” also seems to continue to bet on the match. In the last month alone, 7 new videos on the subject have appeared. But with falling prices, dreams of a career on YouTube also seem to be crumbling:
- While the video about his earnings with the “Scholar program” still has 3,300 views in August 2021
- The last videos only had between 70 and 430 views
We already talked about Axie when the game was hacked for big money:
Hackers steal 550 million euros from the NFT game – The Pokémon-like game is unfortunately too successful