Since its launch in 2018, Axie Infinity has attracted more than 2 million daily active users (DAUs) and the decentralized exchange Katana has been valued at $5.5 billion, but this growth has not been without challenges.
The in-game Axie Infinity token Smooth Love Potion (SLP) is down nearly 93% from its July 13, 2021 high of $0.39 as it faced uncontrolled inflation. As such, the team announced that they will be significantly removing SLPs from the game, making farming more difficult.
Players and guilds in turn will focus on their strategic competitive advantage, and the potentially high price of SLP will inevitably lead to higher prices for Axies as the cost of breeding increases though.
SLP token price. Source: Nansen.ai
According to the data, SLP emissions have increased by more than four times the number of tokens burned, which has led to a price drop of less than a cent over the past seven days. However, Team Axie Infinity is addressing the financial flaw with game modifications that will launch on February 10 at the start of Season 20.
SLP/Coins burn rate. Source: Nansen.ai
Since the financial rebalancing plans were announced, the price of the AXS governance token and the Axie Infinity RON blockchain token has skyrocketed. Since the start of the season, the Smart Learning Program (SLP) has increased by approximately 24% in the past 24 hours.
Scaling and balancing in a rapidly growing environment is not an easy task, but can these financial rebalancing be beneficial to users?
SLP rewards decrease and AXS rewards increase
Beginning February 9, Axie Infinity will no longer issue SLPs to users who play Adventure Mode and will no longer reward users who have completed the Daily Quest. By eliminating token issuance methods, the team reduces the number of SLPs affected daily by approximately 175 million SLP.
Average daily mint in the SLP game. Source: Axi Infinity
These two distribution mechanisms account for about 84% of SLPs generated in the game, with approximately 14% of players completing their daily tasks, according to Axie Infinity Financial Development.
It is estimated that over 250 million SLPs are minted daily and only about 40 million are being burned with breeding demand dropping as players and breeders are still waiting for a new combat release called Origins.
With a significant portion of the SLP rewards removed, Axie Infinity will reward players on a daily basis, and the team is looking to refocus players on the competitive nature of the game. As such, the team has increased the leaderboard rewards, and now the top 300k players will be able to win AXS, unlike only the top 1000 players previously.
AXS Rewards Pioneer Award. Source: Axi Infinity
By increasing the AXS prize distribution to players, the team intends to award approximately 117,676 AXS worth over $7 million at the current AXS price.
By doing so, Axie Infinity distributes a large amount of its control tokens, which benefit players in terms of RON staking, breeding, and breeding.
The sudden drop in SLP emissions came as a shock not only to the system, but also to gamers, with many making similar recommendations for months. It is not yet clear whether these changes are sustainable for economic growth, but players have provided their assessments.
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Players will decide for themselves if the financial adjustments are effective.
In addition to funds and token adjustments, the team is also looking to improve their public communications and has since taken action. The Axie Infinity team acknowledged the community’s perception of a general lack of transparency and the fact that these financial issues could have been resolved much sooner.
On January 14, the team reached out to the community to suggest ways to help with the financial balance and upcoming changes.
In response, players, investors and content creators have taken to Twitter to report potential balance sheet results, some of which remain unclear but hopeful of how this will affect DAU.
At first glance, it may seem that an attempt to restore the viability of P2E may have a negative impact on colleagues, as SLP issuance has declined. However, since development began, the demand for teams for members has also increased.
It is still unclear how these changes will affect the teams in the long run, especially with planned future changes and developments, but it may be the long-term adaptation that Axie Infinity needs.
While these economic developments are necessary to contain SLP inflation, only time will tell how existing players will react to these changes and how new players will react.