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Axie Infinity

2.8/10

The P2E pioneer that proved unsustainable economies collapse — a cautionary tale for blockchain gaming.

Updated: February 16, 2026AI Model: claude-4-opusVersion 1

Overview

Axie Infinity, developed by Vietnamese studio Sky Mavis, became the defining play-to-earn (P2E) game of the 2021 crypto bull run. Players bred, battled, and traded digital creatures called Axies, with many — particularly in the Philippines and Southeast Asia — earning real income through gameplay. At its peak in November 2021, the game boasted 2.7 million daily active users and generated billions in NFT trading volume.

The story since then has been one of dramatic decline. The Ronin bridge hack in March 2022, in which North Korean hackers stole approximately $620 million in ETH and USDC, devastated confidence in the project. While the bridge was eventually restored and users were reimbursed, the hack exposed critical security failures in the Ronin validator set. Simultaneously, the game's economy — built on an unsustainable model where new player entry funded existing player earnings — was already collapsing under its own weight.

Sky Mavis has attempted to rebuild with Axie Infinity: Origins (a free-to-play revamp) and Axie Infinity: Homeland (a land-based simulation game), but these efforts have attracted only a fraction of the original player base. Axie Infinity stands as the most important case study in blockchain gaming — both for what it proved possible and for the catastrophic risks of poorly designed token economies.

Gameplay

Game Quality

The original Axie Infinity Classic was a simple turn-based battle game with Pokemon-inspired creature collection. It was functional but not genuinely fun by traditional gaming standards — the gameplay loop was repetitive and shallow, carried almost entirely by the earning potential rather than entertainment value. Axie Infinity: Origins improved combat mechanics with card-based strategic depth, but still falls short of even mid-tier web2 games. Homeland adds a land management layer but feels underdeveloped.

Player Retention

Player retention has been catastrophic. From a peak of 2.7 million DAU in November 2021, the game dropped below 100,000 by mid-2022 and continued declining. By 2025-2026, Origins sees only a few thousand daily active players. The collapse proved that P2E-motivated players have zero loyalty when earnings disappear. The transition to free-to-play removed the economic barrier to entry but failed to provide compelling enough gameplay to retain users.

Content Depth

Sky Mavis has invested in expanding the Axie universe with Origins gameplay rework, Homeland land gameplay, and esports tournaments. However, each addition has felt incremental rather than transformative. The breeding and genetics system provided some depth, but was primarily exploited for economic optimization rather than enjoyed for strategic gameplay. Content updates have slowed as the team shifts focus to the broader Ronin ecosystem.

Technology

Blockchain Integration

Axie Infinity was a pioneer in NFT-based gaming — Axies were ERC-721 tokens with on-chain genetic attributes that determined battle stats. The breeding mechanic created genuine on-chain composability. Land plots are NFTs on the Ronin chain. However, the actual battle gameplay runs off-chain, with blockchain used primarily for asset ownership and economic transactions rather than game logic.

Infrastructure

Axie Infinity's need for scalability and low fees drove the creation of the Ronin sidechain, which became its own major project. Ronin's initial implementation was dangerously centralized — the bridge hack exploited a validator set where Sky Mavis controlled 5 of 9 validators. Post-hack, Ronin has significantly decentralized, but the original security architecture represented a major technology failure that cost users $620 million.

User Experience

The original onboarding required purchasing three Axies (costing $500-$1,000+ at peak) and setting up a Ronin wallet — an extremely high barrier. Origins moved to free-to-play with starter Axies, dramatically lowering the barrier. The Mavis Hub launcher and Ronin wallet have improved, but the experience still involves more friction than traditional games. Mobile support exists but is inconsistent.

Economy

In-Game Economy

The Axie economy was the textbook example of an unsustainable P2E model. Players earned Smooth Love Potion (SLP) through battles, which they sold on exchanges. New players needed to buy Axies (minted through breeding, which consumed SLP and AXS), creating a circular demand loop. When new player growth stalled, the entire economy collapsed — SLP lost 99%+ of its value, breeding became unprofitable, and the "scholarship" model (where managers lent Axies to players for a cut of earnings) evaporated.

Sustainability

The economy was fundamentally Ponzi-adjacent: returns to existing players depended on a constant influx of new players buying Axies. Sky Mavis attempted multiple economic reforms — reducing SLP emissions, adding SLP sinks, introducing crafting — but these were band-aids on a structural problem. The Origins free-to-play model reduces but does not eliminate the sustainability issues, as earning mechanisms still require token emissions that create sell pressure.

NFT Market

Axie NFT floor prices collapsed from thousands of dollars to single digits. Land NFT prices fell 95%+ from peaks. Trading volume on the Ronin marketplace is a tiny fraction of 2021 levels. The market demonstrated that NFT valuations in gaming are almost entirely speculative and disconnected from gameplay utility once the economic narrative breaks.

Adoption

Player Count

From 2.7M peak DAU, Axie Infinity now sees approximately 2,000-5,000 daily active players across Origins and Classic. The total registered player base exceeds 10 million, but the vast majority are inactive. The Philippines, once the epicenter of Axie adoption, has largely moved on. The decline represents one of the most dramatic user loss events in gaming history.

Revenue

Sky Mavis generated over $1.3 billion in NFT marketplace revenue at peak (2021). Current marketplace fees are negligible by comparison. The company raised $150M in a Binance-led round specifically to reimburse hack victims. The pivot to building out Ronin as a multi-game chain represents a strategic shift to diversify revenue beyond Axie.

Community

The Axie community, once among the largest and most passionate in crypto, has contracted significantly. Discord activity has declined, though a core group of dedicated players remains. The scholarship community — once comprising thousands of managers and tens of thousands of scholars — has largely dissolved. Esports tournaments continue but with minimal viewership compared to the peak era.

Tokenomics

Token Overview

Axie Infinity has two tokens: AXS (governance/staking, 270M max supply) and SLP (utility token for breeding, uncapped supply). AXS was distributed across play-to-earn rewards (20%), staking (29%), Sky Mavis (21%), advisors (7.5%), and sale (11%). SLP's uncapped supply was the core economic design flaw — infinite emissions with insufficient sinks led to hyperinflation and value destruction.

Play-to-Earn Model

The original P2E model rewarded players with SLP for winning battles, with AXS rewards for top-ranked players. At peak, Filipino scholars earned $500-$1,500/month — more than local minimum wages. This model was socially compelling but economically impossible to sustain. Origins reduced earning to a more modest level, with AXS rewards for competitive play and reduced SLP utility.

Value Capture

AXS was intended to capture value through breeding fees (paid in AXS), marketplace royalties, and governance over the treasury. In practice, AXS's value was driven primarily by speculative demand and staking yields funded by emissions — not sustainable value capture. The token's price declined over 95% from its all-time high, reflecting the evaporation of the economic flywheel it was designed to benefit from.

Risk Factors

  • Permanently damaged reputation: The Ronin hack and economic collapse have made Axie a cautionary tale, making it extremely difficult to attract new players or investors.
  • Unsustainable economic model: Despite reforms, any earning mechanism that emits tokens without proportional external revenue inflow faces the same structural problem.
  • Competition: Newer blockchain games offer better gameplay and more sustainable economics, leaving little reason for new players to choose Axie.
  • Regulatory scrutiny: P2E models have attracted regulatory attention in multiple jurisdictions, with the Philippines specifically scrutinizing Axie-related income.
  • Team credibility: Sky Mavis's security failures (the hack occurred because they forgot to revoke temporary validator access) have eroded trust in their technical competence.

Conclusion

Axie Infinity is the most important project in blockchain gaming history — and also the most cautionary. It proved that crypto incentives could onboard millions of users to a blockchain application, creating genuine economic opportunity in developing nations. But it equally proved that P2E economics built on token emissions rather than sustainable revenue are destined to collapse, leaving the last entrants holding worthless assets.

The $620 million Ronin bridge hack compounded an already-deteriorating situation, destroying trust in both the game and its infrastructure. Sky Mavis has shown resilience in rebuilding — reimbursing hack victims, improving Ronin's security, and pivoting to a broader ecosystem strategy — but Axie Infinity as a game has likely seen its best days.

For researchers and investors, Axie's legacy is its lessons: gameplay must be genuinely engaging, economies must have sustainable external revenue, and security cannot be an afterthought. Every blockchain game launched since owes something to Axie — both for the possibilities it demonstrated and the mistakes it made painfully clear.

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