Happy Holidays to everyone, and I hope our fellow Lunacians in the Philipines are safe after the recent natural disaster.
It is always a good time to hug loved ones and tell them you appreciate them being in your life. Our time is limited, and life is short. I often remind myself to take time away from being online and trying to stay up to date with everything happening in crypto to be with the people around me. It is refreshing to go outside, go on a walk, bond with those that are more important than 5 minute charts or flipping NFTs. I’m not perfect at it, just serving as a reminder that there is more to life.
One of the main topics of discussion, or the main topic of discussion, that has surrounded the Axie Infinity community over the last months has been the price action of $SLP. Many members of the community constantly call upon the devs to “do something” to pump the price of $SLP and make numba go up. Or others calling for instant developments where burn mechanisms are magically integrated into the game as additional ways of burning $SLP to keep up with the constant minting. On the other side of the same coin, we see skeptics speculating on the downfall of Axie Infinity as they label the growth of the game “ponzinomics” that aren’t sustainable for the long term. I want to lay out what both of these groups fail to see, and lay claim that their rallying call around $SLP is short-sighted and misguided. Whether you agree with my thoughts is entirely up to you.
I think the best place to start, is to take a step back and understand what the purpose of $SLP was in the first place. I’m pretty sure I have touched on this before in one of my articles, but for new followers I will address it again. Before $SLP, the way that players bred Axies was via ‘exp’. Exp was earned on Axies that battled in the arena. For some time it was 36 exp a win and 18 for a loss (if you used Bean’s blessing for an extra 20% boost). The $SLP token was introduced as a replacement of exp and an experiment to gauge if an in-game token earned through winning both PvE and PvP matches could be used for breeding new Axies. The original intention and design of $SLP was solely as a token meant to be earned and burnt for breeding new Axies into the game. Instead of players automating battles to farm exp and breed, the team designed a system for “proof of human” or “proof of skill”, where your direct human effort and time was rewarded in $SLP and the opportunity to breed more Axies. A tertiary consequence of this was that a secondary market could originate, where players could by-pass spending their own time for $SLP and buy it directly from players who did.
The reason I lay all of this out is that the original design for $SLP was meant to be a utility token for breeding, nothing more. However, out of this design, grew a development where players could rent out, or lend, their Axies to other players to earn this in-game currency–as there was a natural demand for buying $SLP instead of playing and earning, especially if you are a breeder. Players being able to earn from playing the game–the newly and better termed–play and earn model, was a positive consequence from a properly designed utility token. Players that earned more in-game than they did in their primary occupation was an obvious growth area for the game, and why the Philippines has provided a vital spark in energy and growth in the game itself.
There is a current subset of players, though, that think the team is responsible for making the price of $SLP go up, as people now depend on it for a source of income. While I respect, and understand the concerns of those that play the game as a source of income, I think the focus should instead be on the fact that they are able to earn, not on the amount that they are able to earn. Creating value from 0 -> 1 is not easy, especially in an infant industry where everything is new, and nothing has been built before. People are now able to play a fun game, a couple hours a day, and earn money from playing. This, in and of itself, is revolutionary, as the current gaming model makes you spend $60 on a new game every year with a 100% take rate and no secondary market to sell, or even own, anything you do in game. What we are seeing now is something that has never been done before, and will take iterations to get right over time. While creating other burn mechanisms for $SLP may seem trivial, changing the issuance rate of $SLP is non trivial.
In the image above, the team listed out all the considerations they make before implementing changes to the $SLP mint and burn rate. It is not as simple as people make it out to be. Balancing an economy has consequences that, if not taken into consideration, can provide real harm to the overall economic system (see what is going on with inflation right now). In a response to this, I wrote the tweet below:
Essentially saying that the team is privy to key data points that they are watching in order to monitor the overall health of the economy. One particular point I mentioned are the “supply shocks” that the team has to be wary of with future developments and onboarded users. As the team produces developments, there will be “supply shocks” that impact the price of $SLP, floor price of Axies, and Axie population growth rate. As hundreds of thousands or millions or people all try to join the game over a period of time, like we saw pre-June/July, the floor prices of Axies and $SLP is directly impacted, causing fast, and significant price movements that make it difficult for new players to join, but more profitable for current players to farm. This creates an interesting dynamic where playing is very profitable but onboarding gets more and more difficult over time. This scenario is not sustainable for the growth of the game.
The team obviously knows of future product developments in their pipeline, and can try to predict future flows of new users. If there is not enough ‘slack’ in the $SLP production, then the prices across the board will dramatically increase in a very short period of time. It’s like a rope that needs to have the perfect tension. Too tight and any tug will snap the rope, too loose and you have no effect. It isn’t good for $SLP to have constant peaks and valleys. This isn’t ideal market conditions, breeding and growth are both unpredictable.
To sum this first point up, burn mechanisms will be added in to the game over time, and yes they will be a crucial part of the game. However, making these changes is non-trivial, and balancing the floor price of Axies, growth of Axie population, and price of $SLP is not something we should want to be changed for short-term pumps. Taking the time to make changes for short-term price action, is not sustainable over time. We will simply be reacting to market conditions, instead of being proactive about future upgrades to the game that provide better solutions.
The Future of Axie Infinity Play and Earn is More Than $SLP.
This brings me to my other point, addressing the skeptics screaming Axie growth will crash as the price of $SLP goes lower.
Before I make the point, Axie was built in the bear market, and the price of $SLP was $0.003 at one point and the game was still fine, so ponder on that for a second.
What many who criticize the growth of Axie fail to see is that there will be many, many sources of revenue or earning from playing. Beyond earning, the game is, and will be even more, fun to play. Land gameplay will have lure, bosses, crafting, and many other things that will attract players because it is an entertaining game–the total population of players will not be those solely playing to earn. $SLP is not the end all, be all of Axie Infinity. The skeptics all seem to neglect these future product developments. While some can say that these product developments will happen in the future they aren’t here now, I say, ‘and?’. This team, and this game, has been built on long term thinking. It is not a matter of ‘if’ these developments will be made, it is a matter of when. If we lose players during that time period, or if the price of $SLP goes down, I don’t necessarily think that is a bad thing. We are naturally weeding out the non-believers, those who are simply here for short term monetary gains and who don’t care about the future of the game or the community in it. While these voices may seem loud, they will slowly go away with time and we, the Axie community, will become stronger because of it.
There will be other sources of earning (I can’t find the resources that the team recently showed). From the white paper, we already know that $AXS will be distributed to land owners and through land gameplay. There is a whole budget allocated to Play And Earn that is specifically designed to go to the players…so there is another resource built-in to the future of earning.
Beyond $AXS, in the recent development update, we got a glimpse into possible other resources that players will be able to generate:
If you zoom in on bottom left, you can see a chicken coop and a chicken with 3 possible resources that can be generated. This opens up the possibility for a chicken farmer, who’s role is to manage the chickens and the resources they generate and sell them to others who want to use these resources for whatever purpose they can. We already know of stone and wood as two other resources generated in game, and now we have chickens and their resources. These are already 3 resources that we can gather, just from the current information that we have. Who knows what else they have planned–I’m sure there is a lot more they have up their sleeves.
The point is, this game will evolve over time. Product development is probably ~15% done? Battles V3 isn’t even released yet and that will flip the current game mode on its head. The current game was built with around 10 team members, with this new round of funding, the team has 75+ team members building. We haven’t seen anything close to what the final product will be, so to say a dip in $SLP price impacts the future of the game is mistaking the forest for the trees.
As we see this full economy develop, there will be various roles that need to be filled and the opportunity for the players to fill them. This will dramatically reduce the dependence that players have on $SLP and the price of $SLP. It will move people toward abundance and away from short term thinking. There will be more of a focus on the digital nation and community that we are building, and the implications this evolution has on society.
Slow and steady, WAGMI.