(First of two parts)
HE didn’t know if he’d laugh or cry when told that recovering from Covid-19 costs him and his mother half-a-million pesos. Christan Angelo Dumalanta chose neither—it still hurts when doing either—and turned to colorful creatures, love potions and ethereum.
Dumalanta, hence, became one of 800,000 Filipinos who invested into, are playing—and earning from—Axie Infinity.
Created by Ho Chi Minh City-headquartered Sky Mavis Pte. Ltd., Axie Infinity is a Pokémon-inspired blockchain-based game that allows users to earn cryptocurrency tokens called Smooth Love Potion (SLP).
An SLP can be converted to actual cash, which a player can access via a bank account or mobile wallet. The SLP has been trading around P4 two weeks ago.
According to the coingecko website, the SLP price last November 10 is $0.077729 with a 24-hour trading volume of $522,298,049. The SLP price is up 4.9 percent in the last 24 hours, the website said.
In the game, Axies, or digital pets, battle it out in adventure mode and against other Axies as well in PVP (player vs. player) arena. The game rewards the winning player with SLP, which can be converted into Ether, a cryptocurrency.
Secured by cryptography
LAUNCHED in 2018, Sky Mavis sought to introduce blockchain technology in a “fun and educational way,” believing that a game can integrate both work and play to empower the users while providing economic opportunities. From just about 80,000 daily active users across the world in May, the figure rose to 2.2 million as of October with monthly volume amounting to $616.61 million.
While Axie Infinity was not the first cryptocurrency-based game ever, it now has 2 million players worldwide, 40 percent or 800,000 of whom are in the Philippines. This makes the Philippines the largest player base of Axie Infinity, according to Sky Mavis.
Cryptocurrency, a form of digital or virtual currency secured by cryptography, can be sold and bought in cryptocurrency exchanges. However, it is not issued by any central authority, unlike government-issued currency or fiat currency. Also, it is not considered a legal tender in the Philippines. The most known example of cryptocurrency is Bitcoin, which is currently valued at over P3 million.
Although cryptocurrency has been around since 2009, cryptocurrency-based games, including those under the play-to-earn model, only started gaining traction recently. Cryptocurrency-based games are built on blockchain technology, which is a type of database for transactions. Cryptocurrency games that have an earning component are dubbed as “play-to-earn” games.
Earning well
HOWEVER, users of Axie Infinity need to invest a certain amount of money to be able to play and earn. In Dumalanta’s case, he bought last March a team of three Axies—the minimum requirement to play—amounting to a total of P50,000, a tenth of the cost of his and his mother’s hospitalization for Covid-19.
For Dumalanta, a 22-year-old 5th-year civil engineering student, his initial investment has paid off. The earnings by Dumalanta from playing Axie contribute to paying for electricity bills, groceries and other expenses. He was also able to pursue minor renovations in the kitchen and his bedroom with his money. He even plans to buy a car next year.
Across YouTube, there are so-called “success” stories from Axie Infinity players.
According to Dumalanta, the revenue stream is helpful because his father is no longer working after also recovering from Covid-19, while his mother is about to retire from teaching.
Recoup investment
THE surge in the number of Axie players in a short period is attributed to the financial freedom the game offers, according to Luis Buenaventura II, cryptocurrency expert and co-founder of licensed cryptocurrency exchange Bloomx, operated by Singapore-based Bloom Technologies Pte. Ltd.
Buenaventura, also the country manager of Yield Guild Games (YGG), observed that the concentration of players in the Philippines is in Nueva Ecija, particularly in Cabanatuan City—Dumalanta’s hometown—where it all started to gain traction in early 2020.
“The Axie ‘thing’ is the first phenomenon that I’ve witnessed that was actually generating income for the average low-income person,” Buenaventura told the BusinessMirror. “That’s why the popularity has grown so much.” (A monthly earning is comparable to a minimum wage.)
Playing Axie Infinity has become a source of income at a time when unemployment is on the rise amid the pandemic, with Buenaventura saying that the success of the cryptocurrency game happened “organically” given its play-to-earn feature, noting that Sky Mavis doesn’t even have a unit for public relations.
Veer from entertainment
ACCORDING to Brylle Uytiepo, the pandemic also provided incentives for the Filipinos to learn the game. The 22-year-old Manila-based chef founded the Axie Alerts PH Facebook page earlier this year to inform and educate the public about the game.
“Since we’re experiencing lockdowns, we have more time to spend on our mobile phones and, of course, because of the financial effect the pandemic has brought us. That being said, those components helped the Axie-Filipino community strive and achieve its financial freedom,” Uytiepo told the BusinessMirror.
“It turned our investment, time and entertainment into something that we can earn from,” he added.
Uytiepo started playing Axie just this June, shelling out almost half of his savings for the investment. Like Dumalanta, he said he’s also able to help his family with the monthly expenses somehow from the game earnings.
Enlisting ‘scholars’
THOSE who can’t afford to buy their own Axie teams can apply as “scholars” under programs offered by different guilds.
These “scholars” can still earn by playing other people’s Axie team under a profit-sharing scheme the parties have agreed upon. The scheme could go as high as scholars receiving 70 percent of earnings just like the profit-sharing agreement followed by YGG that now has 3,000 Axie Infinity scholars in the country.
According to Axie Archipelago—a voluntary and self-report directory for Axie players in the Philippines—there are at least 800 guilds or groups of players across the country as of October. One guild can have an average of one to 10 members; some can have more than a thousand.
The scholarship programs are seen to expand the Axie community across the world. It also allows more individuals to attain financial freedom, according to some.
“The scholarship system helped spread the influence of Axie Infinity in the communities,” Uytiepo told the BusinessMirror. “With all that key-driven factors, I think we’re in it for the long run.
Those who need
BUENAVENTURA said that scholarship is also the “low-risk” path for those who want to play the game and earn money but don’t have the capital for entry.
Under the scholarship system, the owner, also known as a manager, of the Axies assumes all the risks as he or she is the one investing. A manager also monitors how each scholar is performing in the game.
Much like a regular job, scholars usually receive their “salary” from playing Axie Infinity every two weeks.
Dumalanta said his earnings from playing as a scholar late last year allowed him to buy his first team back in March.
Now, he has launched his own scholarship arrangement with five individuals. Dumalanta plans to have another five scholars before the year ends.
He told the BusinessMirror he offers the scholarship to those who really need money and whom he considers “responsible gamers.”
Helping others
MANILA-based entrepreneur Pat Buna also built his own guild—called “Eastern Gaming Combine”—shortly after discovering Axie Infinity.
Hailing from Eastern Samar, one of the country’s poorest provinces, Buna decided to help underprivileged students based in that area by letting them play and earn through Axie Infinity.
Buna came from a low-middle income family and graduated from the University of the Philippines’s Tacloban campus. He said he still remembers how a classmate scrimped on meals to set aside income as a student assistant – small sums that he would send to his family.
Buna said this inspired him to run a social venture through his guild, which is focused on helping underprivileged students.
“I’m a big believer in the idea [that] education is one of the things that can help out an individual take him or herself out of poverty. Parang totoo siya for me,” Buna said. [That was true for me.]
“That’s how I was able to get into where I am right now—through education. So I am strongly pushing for that, that [they don’t become] complacent,” he added. “At the same time, we’re supporting them pero hindi siya ‘yung tipong abuloy.”[But not as like alms-giving.]
Earning SLPs
BUNA, who is also co-founder and Chief Operating Officer of Makati City-based business process outsourcing company nXscale Solutions Inc., said he started playing Axie Infinity in June.
That time, he said, it only cost him P25,000 to buy a team of digital pets, or Axies. But currently, Buna said, the prices of Axies in the game’s marketplace have gone up. According to Sky Mavis, the average price of an Axie has reached $1,000 or roughly P50,000 each.
Buna said it only took him a month to earn the same amount by playing the game.
He said he initially just wanted to earn. Later on, he said he realized this could also be a way for him to help out students amid the Covid-19 pandemic.
Buna told the BusinessMirror he initially spent P400,000 from his savings to buy an Axie team for each of their scholars. He said he was able to recoup his investment in a month.
According to Buna, each scholar in his guild is given allowance for Internet expenses. He said some of them also receive additional money to buy school supplies. These are apart from a share of the earnings from playing the game, which is relative to how well they play Axie infinity.
For every SLP earned, the guild gives back P1 or P2 per SLP to each scholar, according to Buna.
Provincial roots
SINCE he’s not physically present in Eastern Samar, Buna said he sought help from relatives who were both senior high school teachers in the said province that time. Now, Buna’s brother, who left his job as a teacher, is the guild’s manager.
“So they have these contacts with these people; those who graduated. They know the background story of the family, [like their livelihood source],” Buna told the BusinessMirror. He added these graduates propose who can become a scholar.
Of the current 26 Axie Infinity “scholars” in their guild, 20 are in college, one is in senior high school and one is in high schoo, Buna said. The remaining four scholars are currently part of the out-of-school youth, he said. All students are now studying either in public high schools or state universities, Buna added.
He said he’s aware the portion of SLPs they give back to scholars in their guild are not as high as what in other guilds receive. Nonetheless, he said he needs to do this to make the social venture sustainable as well as avoid cultivating a culture of complacency that could hinder the student’s resolve to finish their studies.
Extending allowance
BUNA told the BusinessMirror their venture needs to earn “to make it sustainable.”
“That is why we are giving them something on top of the price per SLP; like Internet allowance.”
“On a per monthly basis, I give them, depending on the area, P300 to P500 per month in Internet allowance,” he added. Buna said the scholar also uses this to access their classes online.
He said they also give around P5,0000 to P10,000 in school supplies allowance per semester to some of scholars despite the SLP-to-Philippine peso value recently crashing to about P4. (It was at P6 when Buna first started playing Axie Infinity four months ago.)
“This [school-supplies allowance] is not applicable to everyone, because we’re not as lucrative as we would want it [compared to] previous months,” Buna told the BusinessMirror. He said the extra allowance suffice as tuition fee is already covered by the government.
Out of ‘thin air’
JUST like a cryptocurrency, a non-fungible token like the SLP is also prone to price volatility.
In the Axie Infinity economy, players generate the SLP through winning battles while breeders spend the SLP to breed Axies, Buenaventura explained.
“The SLP that is generated comes from nothing. It is generated out of thin air,” he told the BusinessMirror
According to Sky Mavis Co-Founder Aleksander Leonard Larsen, the SLP found in the game can be turned into a token and then sold on peer-to-peer markets such as Uniswap (by Universal Navigation Inc.) and/or Binance (by Binance Holdings Ltd.).
“This is what creates the ability to ‘earn.’ This economy works as long as players are interested in creating new Axies,” Larsen told the BusinessMirror in an e-mail.
Larsen said the SLP market is “player-driven and the price of SLP is determined by demand from players seeking to breed Axies, or speculate on the SLP price.”
Larsen emphasized that Sky Mavis doesn’t participate in the SLP trading market.
Price, value
BUENAVENTURA believes the SLP price is going down because players generate SLPs more than the amount consumed by Axie breeders.
“The current price is a reflection of the fact that there are more players than there are people who are buying the SLP for breeding purposes,” according to Buenaventura, who is also the manager of another Axie Infinity-guild named “CryptoPopArt,” which focuses on helping underprivileged artists.
For the SLP value to increase, Buenaventura said developers can create new opportunities for SLP to be spent or consumed inside the game.
Long-term sustainability
LARSEN said that the SLP price growth slowed down due to “concerns over an imbalance” in the amount of SLP generated and used per day.
“Ensuring long-term sustainability for the [Axie Infinity] economy will rely on a combination of player growth, new sources of demand for Axies and external organizations subsidizing play-to-earn by sponsoring leaderboard seasons and/or tournaments and more,” he told the BusinessMirror.
Despite cryptocurrency being a “high-risk-high reward” asset partly because of its price volatility, Buna said this did not stop him from pursuing the social venture.
“Regardless of how risky it is, as long as I can still support young people; say at P1 or P2 they earn, I can still give them allowance. I think it is still worth going through the hassle of venturing into this,” he told the BusinessMirror.
Buna said he even plans to purchase laptops worth around P30,000 each that students can use for studying.
Given the volatility of cryptocurrency in general, Buna also said he is trying to build a fund to sustain the social venture.
In case the Axie Infinity really dies down, I can still somehow sustain it for at least like one more year, he said.
“I’ll find another crypto game or another play-to-earn model out there where we can include them (students),” Buna added. “[My] idea is I want to make sure there’s sustainability.”
He said he doesn’t want to help young people and then see it all disappear after two months.
“I don’t like the idea of me helping, and then, after two months, it’s all gone.”
Economic freedom
BUT Larsen said they are still far from the “game-over” stage.
“Sky Mavis is on a mission to create economic freedom for gamers; and we’ve barely scratched the surface of what we can accomplish,” Larsen said.
He said while they expected Axie Infinity to succeed, they were surprised it would grow rapidly in a short period.
Of the 2 million users of Axie Infinity, he said 25 percent of their players are “unbanked” or do not own bank accounts while 50 percent have not previously used cryptocurrencies.
“This level of ownership and accessibility within the Axie economy is upending society and creating an economically viable digital nation,” Larsen told the BusinessMirror. “With regards to the Philippines, Axie Infinity became a source of income for Filipinos who lost jobs amid the pandemic, with top players earning up to $40 [roughly P2,000] within their first few weeks. For families financially-impacted by the Covid-19 lockdown, the game allowed them to earn extra income which helped them buy medicine, pay bills, connect to the internet and also provide financial assistance to others in their families and communities.”
According to Larsen, great Axie players can earn as much as $14.17 per day or $440 per month or over P22,400. Depending on the skills of the Axies and the player, Larsen said playing the game can take anywhere from two hours to six hours a day.
In the future, Sky Mavis even eyes releasing in the Axie Infinity universe several new games that are built specifically for the Axies the players own; to make the game “more fun to play and sustainable.”
“We are also working on a free version of the gameplay to reduce the barrier of entry and allow anybody to experience Axie Infinity without having to initially purchase a set of Axies,” Larsen said.
To be concluded
