Axie Infinity is a play-to-earn online game built on the Ethereum network, and it's inspired by Pokemon games. It's recognized as the leader in play-to-earn (P2E) gaming. It was developed in 2017 by a team from a Vietnamese studio called Sky Mavis.
What really makes Axie Infinity unique? It uses Non-Fungible Tokens (NFTs) and cryptocurrency to enable income-generation prospects on the platform. The NFTs represent unique creatures, land plots, and abilities, among other in-game assets. Generally, this P2E game allows players to own their virtual assets, and players are rewarded with cryptocurrency tokens once they reach an advanced level of skill. The game uses two distinct tokens, i.e., Axie Infinity Shards (AXS) and Smooth Love Potions (SLP).
Suppose you're looking to invest in Axie Infinity, you're reading the right post. It covers all fundamentals you need, from explaining more about Axies and the two tokens to differences between them. Read on to find out more.
Axies: The Digital Creature at the Center of Axie Infinity
Axies are the digital creatures (digital pets) that drive the Axie Infinity game. Each Axie features unique abilities linked to its genes. For this reason, each Axie is considered an NFT with different attributes like body parts, skills, stats, and breed. Notably, these are the attributes that determine an Axie's abilities, rarity, and value.
Players can collect, breed, raise, battle, and trade Axies on the platform. Notably, when players breed Axies, their offspring inherit some trait from their digital parents. Also, players can mix and match various breeds of Axies to create new ones likely to offer the desired value. However, players can only breed an Axie a maximum of seven times and cannot breed with another Axie from the same hierarchy.
Axies hatch at 1st level. However, players via Adventure Mode can use their Axies to fight against monsters which enables them to gain experience points (EXP). It also allows Axies to reach level 36. Players also get to earn Smooth Love Potion (SLP). This is called EXP farming. Higher level, rare, and pure breed Axies often sell for higher prices on the Axie marketplace.
Smooth Love Potion (SLP) Token: The Axie Infinity Metaverse Token
SLP, formerly known as Smooth Love Potion, is one of the in-game money (in the form of cryptocurrency tokens) for the Axie Infinity platform. This ER-20 token is earned by playing mini-games and battling in the Axie Infinity app. Since SLP is a utility token like most cryptocurrencies, you can buy or sell it for money and other cryptocurrencies on a decentralized exchange. Also, some players use the Axie "scholarship" program to rent out their SLP and earn money.
Is there any other SLP function besides being a reward token? Yes, it's used to breed new Axies: each breed requires a certain SLP fee based on the breed on the breed of the new Axie outcome. Usually, rare breed types tend to have higher SLP breeding fees.
It's worth noting that SLP has an uncapped number of total tokens and its circulating supply in the future. As a result, concerns around its future supply and stability often impact its value. However, the fact that SLP is being traded on exchanges and CFD brokers distinguishes it from most other in-game currencies. It has grown to be popular and competitive among traded tokens.
Axie Infinity Shards (AXS): The Governance Token of Axie Infinity
AXS is an ERC-20 token used to participate in Axie Infinity's governance and distribution of platform profits. You can think of AXS as the native cryptocurrency to the Axie Infinity game that enables holders to claim rewards if they play the game and stake their tokens.
AXS also enables users to participate in crucial governance votes regarding new features, investments, partnerships, and other related decisions. Notably, some marketplace transactions and breeding fees are transferred to the community treasury inform of AXS. Suppose you have NFTs, you could use AXS as the form of currency within the AXS marketplace.
Unlike SLP, AXS has a maximum supply cap of 270 million tokens. As of the date of writing, AXS has a current supply of about 117 million tokens.
What does AXS token staking mean? It means leaving your AXS tokens unattended (holding AXS) in the Axie Infinity network for a certain period. Consequently, the rewards will accumulate, allowing you to earn more AXS tokens. On top of that, staking allows users to take partial ownership of the game.
The Difference Between Gaming Tokens and Governance Tokens
What is a governance token?
You could define governance tokens as cryptocurrencies representing voting power or giving voting rights in a blockchain project. They aim to give users certain privileges over a specific DApp, protocol, or DeFi solution. Often, the more governance tokens you hold, the more voting power you have.
But voting power is not the only feature behind governance tokens. These tokens are also used for other purposes in the platform, like staking and creating loans. Also, you use them for yield farming to generate more income. These use cases are one of the reasons why users prefer governance tokens over gaming tokens
For instance, AXS is a governance token that gives users a say (through making or voting on other proposals) on how the Axie Infinity project runs. You could also use AXS to stake and earn more yields on the platform.
What is a gaming token?
Gaming tokens are in-game cryptocurrencies mainly used by players to buy certain in-game assets like weapons, skins, characters, ammunition, etc. Additionally, they can be used to breed in-game creatures or give you access to exclusive in-game tournaments in a Web 3 gaming platform.
You can acquire gaming tokens by playing the game, completing certain quests within a game, or buying them on certain crypto exchanges.
Governance tokens can be sold directly on the secondary market. However, you need to convert game tokens to governance tokens in a specific way before selling them on the same market.
For instance, SLP is a gaming token of Axie Infinity earned by winning battles in the Axie Infinity game. It's also used to breed Axies.
In brief, governance tokens tend to have more value than gaming tokens. Also, the value of gaming tokens is closely tied to the in-game sentiments, while the value of governance tokens is closely tied to the community with the voting power.
How do game tokens and governance tokens work together?
Usually, governance tokens and game tokens work under a dual token model. The governance mainly allows users to control how the game or the platform runs. The game tokens, on the side, power in-game activities, including enabling asset purchases and transactions. To achieve a harmonious way the two tokens work in a gaming platform like Axie Infinity, users holding the governance tokens must align with the incentives of other users (often players) holding gaming tokens.
Take a Web 3 platform like Axie Infinity to put it into perspective. It used s dual token model, i.e., AXS and SLP. AXS, the governance token, is used for voting on game-related decisions. SLP, the gaming token, powers in-game activities such as purchasing in-game items like characters and weapons to fight battles. Consequently, the two types of tokens create an efficient and broad in-game economy.
Axie Infinity Scholarship and Renting
What is the Axie Infinity scholarship?
Axie Infinity scholarship is a model that allows Axie owners to rent out Axe characters or Axie Infinity account to other players. Often these are players who don't wish to invest in buying Axies upfront. In addition, the Axie scholarship helps players who find it expensive to breed Axies and SLP.
These players who rent from Axies owners are called Scholars.
How does the Axie Infinity scholarship work?
First, a kind of interview is conducted before renting out the account, and the rules are explained to a scholar. Every so often, this kind of communication takes place on Discord. The goal of the Axie account owner is to earn money and upgrade the characters if the partnering player meets set SLP goals.
When profits are made, the Axie account owner and the scholar split profits (usually SLP tokens) in terms of percentage. It can be 70/30 or 60/40, depending on the scarcity and abilities of the Axies.
Generally, you're if you say Axie Infinity provides scholars with a way to earn SLP tokens without investing money upfront. Also, for Axie owners, it helps them maximize the SLP generation of their Axies through revenue sharing.
Axie Infinity is one the platform that has significantly impacted the play to earn gaming industry. With its battles and breeding robust economic activities, Axie Infinity presents many opportunities for generating income and trading. It's also important to understand the various assets in Axie Infinity's ecosystem that drive its economy. They include AXS, SLP, Axies, and scholarships.
More importantly, changes to breeding fees, staking rewards, and Axie attributes are critical elements a trader should regularly monitor since they affect the value of AXS and SLP. Besides, it determines how much Axie Infinity players can make over time.