3 problems that might hinder Axie Infinity’s quest for game immortality

From the looks of it, Axie Infinity doesn’t seem like a Ponzi scheme.

However, while this is one of the more sensational criticisms of the game, it’s not the only one worth looking into. There are a few other issues that we should be aware of.

The problem with scholarships

While the Axie Scholarship Program allows axie owners – called “managers” – to loan out their digital monsters to “scholars” in a bid to allow players with fewer means to still profit from the game, it has limitations.

For one, many manager-scholar relationships are premised on trust, integrity, and reputation. In other words, there are no formal structures in place to prevent managers and/or scholars from reneging on their promises or cheating the other party.

Image credit: Play Mavis

Despite being part of the scholarship program, many scholars – especially those who are earning below minimum wage or don’t have jobs – will never be able to earn from the most lucrative aspect of Axie Infinity: the sale of axies. The axies will always fully belong to managers, and scholars are merely borrowing them to play the game. Once the payout is secured and the contract closed, the axie goes back to the manager.

Therefore, unless scholars reinvest the money they’ve earned from the program back into the game by purchasing an axie (which is unlikely, given the current prices), they can’t reap the rewards of selling the digital critters.

To put this into perspective, the cheapest axies currently go for around US$350 each in the Axie Marketplace. This number has also been consistently going up. Since a player needs three axies to get started, that will mean a US$1,050 investment. Assuming scholars earn an average of 150 small love potions (SLPs) – Axie Infinity’s in-game currency – a day and that they keep 70% of it at the valuation of (US$0.26) per 1 SLP, it will take them close to four weeks to make enough money to play the game.

This is not taking into account that many scholars like Macky, a 21-year-old tricycle driver in Cotabato City, Philippines, cash out the SLPs they earn daily in order to sustain themselves. It also doesn’t consider the fact that axies that can fight well will cost more.

Macky, a tricycle driver and Axie Infinity player / Photo credit: Emfarsis Consulting

“Although there is definitely potential for abuse with this system, most managers are legitimate,” Gabby Dizon, co-founder of blockchain gaming organization Yield Guild Games (YGG), tells Tech in Asia.

YGG gives scholars a 70% cut of the profits so that they “will always earn a decent wage for their labor,” he says. This approach does not only “set the market standard for manager-scholar relations, but it will also “hopefully be a stepping stone that empowers them (scholars) to buy their own axies in future after they have secured their other needs.”

Dizon adds: “Of course, there are probably still a few instances where some people will attempt to exploit potential scholars by offering them a 30% cut of profits, but these are the minority.”

The short shelf life of games

Market manipulation

Growing pains