The future of Axie Infinity is uncertain.
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Reviewing the economics of the Axie Infinity platform a little, I was able to learn about certain aspects that I found worrying in terms of the future of the gaming economy, which is affecting holders and could worsen in the near future.
There are two tokens on this platform: Axie Infinity Shards (AXS) and Smooth Love Potions (SLP).
The AXS is used to acquire the NFTs (Axies) characters while the SLP token is generated when the users complete the crossing missions and arena combat.
The SLP generation is causing an inflationary conflict that led its developers to cut the number of reward tokens in half.
The utility of this token (SLP) is to cover the Axies Breeding fees. The breeding of Axies costs 4 AXS and some SLP.
I don't want to go into the details of the breeding or crossing of axies, I just want to highlight the fact that each NFT can be breeded 7 times maximum. The first brood is the one that needs the least capital investment (AXS + SLP) until reaching the seventh brood which is the most expensive.
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To optimize this process, the player must take into account the characteristics of each axie who will act as "parents" in order to obtain a calf with specific characteristics or abilities.
The economic conflict is occurring due to the fact that axies holders are only breeding up to the 4th level, since making an investment for the 6th and 7th breeding is not profitable according to the current prices of the SLP token. .
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I must make the point that when SLPs are used for the breeding of axies, the "burning" of these tokens occurs, thus maintaining inflation levels, but since the tokens are not being burned because users are not performing the hatchlings of the upper levels, then a supernumerary amount of SLP tokens is being generated and for this reason their price is decreasing.
Axies players and holders are selling the SLPs generated by the game in the exchanges, this only represents a "change of hands", but what the game developers really expect is that the token is used (burned) and thus maintain the economy.
Conclusion
With the recent actions taken by the developers of Axie Infinity, reducing the rewards of SLP by half, they are looking to decrease the rate of accumulation of tokens, but this measure only represents a "cloth of warm water", it is not a measure of background, since SLP tokens are still being generated and according to the whitepaper this generation is unlimited.
If the SLP token burn rate does not increase, there will be hyperinflation imminently.
@juanmolina
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We must wait to see what the next changes will be, since inflation is not going up, or they have not finished to manage it, as far as I can see,
thanks for the information
Hello @juanmolina, This is a perfect explanation of the worst inflationary phenomenon in the current digital economy scenario.
I assume that this "change of hands" of the SLP token is due to the need of some users to exchange it for fiat money, it is what I think and manage to interpret, and I believe that this mass need is very difficult to control.
Hello dear @juanmolina, it seems to me an excellent explanation about what is happening in the game with its economy, this type of situation has already happened in other games, I imagine that in the future the game will stabilize but its profits will be projected in the long term. Therefore, I believe that always enter in the first instance to this type of projects to achieve great income in the first exchange and recover the capital.
See you later, have a great start of the week.
Greetings @juanmolina, excellent your explanation about the economy of Axie, it is also very true what you say about the saturation of SLP and the little burning of the same, this has generated the price decrease, the developers not only lowered the production of SLP also for the breeding they lowered from 4 AXS to 2 AXS this in order to encourage the burning.
We will wait for the results in the next few days when they estimate that the results of these measures will be reflected.