Video gaming entails the element of liberation from the restraining boundaries of realities to make a temporal escape into an alternate dimension where players can make their own choices which would determine their fate. Similarly, at the conceptual heart of the genesis of cryptocurrency is the idea of financial democratization which is rooted in the decentralized feature of blockchain. In the eighteenth century, the Father of Economics, Adam Smith "proposed the idea of decentralized governance through the devolution of decision-making powers in his book “The Theory of Moral Sentiments”. Smith believed that decision-making is best left to the individuals themselves as they have a better understanding of their own welfare than centralized administrators.

Fast forward to the twenty-first century, Smith's vision is now a plausible reality with the advent of blockchain as a decentralized form of distributed ledger technology (DLT) which is secured using cryptographic hashing. In the financial industry, Adam Smith's vision of a decentralized future has come to life through decentralized finance (DeFi) which allows people to break free from the control of traditional finance institutions. The liberalization of the financial domain has opened the door to a host of newfound possibilities for wealth generation and income building. Standing testament to this is the conceptual birth of GameFi which allowed gamers to do what was previously merely a utopian dream, to tap into the premise of digital ownership through a content creator economy while doing what they love i.e. playing video games. In many ways, the GameFi revolution was driven in no small part by Axie Infinity.

Launched in March 2018 by Vietnam-based Sky Mavis, Axie Infinity with its in-game market which is supported by a micro economy of its own was referred by some as being akin to a "hyper-financialized version of Pokemon." Regardless of the doubters and naysayers, Axie Infinity was certainly a game-changer that broke new ground by venturing into uncharted territory through the novel use of the gamification mechanism.

As fate would have it, the world was struck by the Covid-19 pandemic just about a year and half after the launch of Axie Infinity. The ensuing lockdown which restricted large parts of the global population to the confines of their homes coupled with the resultant job losses from the ensuing economic downturn catalyzed the rise of Axie Infinity, particularly in developing countries notably the Philippines. As of June 2022, the Philippines remained the top country for Axie Infinity players followed by Venezuela in second place with the United States as a surprise package in third.

During the onset of the pandemic in January 2020, Axie Infinity's monthly average active players count stood at around 10,500+.. In the span of just 12 months, this figure had skyrocketed to about 612,800+ in December 2020 which represented an annual increase of a whopping 5,836%. The high water mark was in the third quarter i.e. Q3 2020 during which the game’s active players count recorded an astronomical Quarter-on-Quarter (QoQ) growth rate of 932%.

The upwards trend in Axie Infinity’s active players count continued in 2021 when it recorded an average QoQ growth rate of 33.9%. Whilst there may be a host of underlying factors for the rapid rise in Axie Infinity’s active players count, the primary one could be the earn factor as represented by the price of Axie Infinity Shards ($AXS) and Smooth Love Potion ($SLP) which function respectively as the game’s governance and utility token.

In 2022, data indicates that the positive correlation between the price of $AXS and Axie’s Infinity’s active players count has strengthened significantly. Additionally, there is a distinct positive correlation between the price of $AXS and $SLP from February 2022 onwards which indicates the enhanced coupling between $AXS and $SLP. The relationship between the price of the game's tokens and the number of active players indicate a distinctive positive correlation between the price of the game’s tokens and its active players count. This leads to the logical inference that the earn element is becoming an increasingly significant factor in the market appeal of the game.

From a business perspective, the reduction in Axie Infinity’s active players count due to the fall in the trading price of $AXS and $SLP has materially impacted the revenue of the game. As can be noted from the graph below, the positive correlation between Axie Infinity’s monthly active players count and the game’s monthly revenue had grown increasingly stronger as 2022 went by.

(i) First Quarter of 2022 (Q1 2022)

In the course of Q1 2022, the price of $AXS and $SLP dropped by 32.3% and 26.9% respectively. Nonetheless, the active players count of Axie Infinity bucked the trend as it increased by 7.2% despite the drop in the price of $AXS and $SLP.

A notable incident which happened in Q1 2022 is the USD540 million hack of the Ronin network, an Ethereum sidechain built for Axie Infinity. As a socially responsible corporate organisation, Sky Mavis raised USD150 million from Binance and other investors which was then combined with the funds in its Axie balance sheet to reimburse the affected users.

(ii) Second Quarter of 2022 (Q2 2022)

Following the Ronin Network hack in March 2022, Sky Mavis has had to delay the introduction of Axie Infinity: Origins. The alpha version of Origins was eventually launched in April 2022. This launch was significant because it replaced the original version of Axie Infinity after the final season (Season 21) ended on June 24, 2022.. From an economic perspective, the main difference between Axie Infinity Classic and Origins is the element of entry costs.

Unlike Classic where players have to spend money to buy their first Axies to start playing the game, new players of Origins will receive 3 free Axies to kickstart their adventure in the Axie Infinity metaverse. This effectively lowers the barriers to entry for new players which theoretically should boost the game’s rate of user acquisition. From a gameplay perspective, Origins was designed with the aim of boosting the game’s level of user engagement through improvements to gameplay elements. In this regard, Sky Mavis has incorporated some major updates through Origins in the form of a better user interface and visually sharper graphics.

As for its gameplay mechanics, Origins is similar to Classic except for a few changes as follows:-

• Sequential Turns

In contrast with Classic where the players’ order of turns to choose their cards during battles are determined based on the speed stats of their Axies, the sequential turns of Origins are determined based on Rock, Paper, Scissors (RPS). However the RPS mechanism would only come into play in Origins if both players choose to go first. If one player chose to go first, and the other chose to go second, this would be the order of the sequential turn. Alternatively, if both players choose "No Preference," then the order of the sequential turns would be determined randomly.

• Non-Accumulation of Cards and Energy

In contrast with Classic where unused cards and energy are accumulated by default during battle, this is not the case for Origins meaning that there would be no incentives for players to skip their turns during battles.

• Single Value Cards

In contrast with Classic where cards consist of attack and defense values, cards in Origins will only have one value either for attack or defence, thereby changing the dynamics when it comes to battle strategies.

• New Power Ups

Origins brings with it two new power ups in the form of Runes and Charms which when equipped would allow players to gain buffs in a manner not unlike held items in Pokemon. In addition, Runes and Charm also serve as the underlying instruments for the in-game burn mechanism for $SLP to counter the inflationary effects of the token. It should be noted however, that the burning of $SLPs would be purely on a goodwill basis as there would be no reward for this.

• New Stats

In line with Origins’ aim of being a fast-paced card battler game, it entailed a reduction in the number of relevant stats such as that of speed whereby these stats are instead collectively replaced with Hit Points (HP).

Alas, the hype surrounding the launch of Origins, albeit merely the Alpha version in March 2022 and the Beta version in May 2022, was of limited effects in stemming the drop in Axie Infinity’s active players count. The count ended up recording an intra-quarterly drop of 64.3% in Q2 2022. Nonetheless, with the price of $AXS and $SLP having dropped by 77.9% and 81.8% during the same period, the fall in the Axie Infinity’s active players count could have been worse if not for the launch of Origins.

(iii) Third Quarter of 2022 (Q3 2022)

With Axie Infinity’s active players count having fallen by more than 60% in Q2 2022, Sky Mavis decided to help Axie Infinity’s players find a place in the sun for their Axies by launching a breeding event for the Lunacian Summer in July 2022. The event which ran for 50 days allowed players to breed Axies with specific, albeit distinct body parts to obtain rare special-edition Summer body skins. As Sky Mavis start to feel the heat from Axie Infinity's dwindling active players count, it decided to harness the game's builder's program by undertaking one of the first launches of the program's 12 projects i.e. Defenders of Lunacian Land (DoLL) on 29 July 2022. In terms of its gameplay, DoLL is similar to that of Vampire Survivors where players have to level up by using skills gained from surviving multiple waves of attack from enemies.

Fallen enemies would drop crystals which when collected help players to gain experience points that enable the levelling up of skills. Combining simple gameplay with exciting action, DoLL is designed with the aim of promoting competition. The game has a leaderboard which allows highly placed players to be rewarded through monetary earnings that are dispensed via the Ronin blockchain. Tapping into the community spirit of Axie Infinity by launching DoLL which is designed by the Axie community itself may have helped stem the slide of the game’s active players count. Nonetheless, with this count further dropping by about 23% during Q3 2022 which is almost double the intra-quarterly drop of 10.8% and 12.1% in the price of $AXS and $SLP respectively, the element of community spirit did not prove to be overly handy for Sky Mavis.

(iv) Fourth Quarter of 2022 (Q4 2022)

In the first three quarters of 2022, Axie Infinity’s active players count had fallen by about three quarters (73.4%). As the saying goes, “desperate time calls for desperate measures,” and so Sky Mavis decides to tap into what is arguably the most precious resource of any place i.e. land, or more precisely land in the Axie metaverse. This led to the launch in October 2022 of Axie Infinity: Raylights as the first land-based game for the Axie ecosystem.

The gameplay of Raylights involves players sowing minerals in their land to grow plants. There are 10 types of minerals though players would only have access to 3 when they initially start playing with the rest to be unlocked as the players progress along the game. The element of surprise is provided by the fact that combining different minerals could result in the growth of different plants. After assigning an Axie to be in-charge of attending to the plant, players would have to wait for the growth timer to tick by. Once the timer rings, players can find their plant in the inventory which can then be placed onto a land plot.

In many ways, Raylights through its concept of land cultivation served as a precursor to the launch of Axie Infinity: Homeland, whose early alpha build went live for Axie landowners in December 2022. The aim of the launch of the Alpha build is to allow players to explore the game's features and to provide feedback for its development. According to Sky Mavis’ roadmap for the development of Homeland, we are currently only at the first phase. The upcoming phases would entail the introduction of among other things, Avatar Axies and NFT Axies in the second phase, Land Tokens in the third phase as well as the inclusion of gameplay elements in the fourth and final phase for those who are Axie Infinity players but who are not Axie landowners.

Homeland which is currently only available to Axie landowners involves these landowners guiding their Axies to optimize the production and harvesting of resources from their land. As Homeland is still in its early stage of development, there are few details available as at the time of writing. Nonetheless, according to Sky Mavis, the interconnected gaming loops of Homeland entail the mastery by players of the following tasks:-

• "Gather and store natural resources with expert precision.

• Optimize the task assignments and workflows of your worker Axies for maximum efficiency.

• Build structures that enable storage, item production, and growth of your settlement’s population.

• Craft supplies, weapons, armor, and items that aid native adventurers in their battles.

• Trade with both native Adventurers and other landowners for in-game currency

• Arm native adventurers with the best equipment and send them into battle against waves of monsters

• Compete in the leaderboard against fellow owners on both the maturity of your land and how successful your armed adventurers have performed in battle.

• Show off your creativity and style by designing and decorating your plot.

• Explore the world and marvel at the real-time growth of Lunacia as players upgrade and enhance their Land."

As Homeland was only introduced on 28 December 2022, the jury is still out as to the extent to which it would be able to stop the tide of the dwindling numbers of Axie Infinity’s active players count. A worrying sign is that during the course of Q4 2022, this count had dropped by a further 36.6% though it should be noted that the price of $SLP had dropped by a similar extent, and the price of $AXS had dropped by more than half during the same period.

Back in March 2018 when Sky Mavis launched Axie Infinity, GameFi had yet to even be conceptualized. Nonetheless. It is CryptoKitties which predated Axie Infinity by about half a year that is generally regarded as the progenitor of GameFi. That said, Axie Infinity which is in many ways the prime catalyst of the GameFi revolution, is and will always be synonymous with GameFi, at least for the 1.0 version.

As things stand, Axie Infinity’s 2022 metrics do not bode well for the game’s future. Despite the quadruple launches of Origins, DoLL, Raylights and Homeland, Axie Infinity’s active players count recorded an intra-yearly drop of about 83% in 2022. Towards the end of January 2022, the count was at an all-time high monthly average peak of 2.78+ million but by the end of December 2022, this count had dropped to 468,000+. Although this count is considered low by Axie Infinity's standards, it still ranks among the top tiers in the echelon of the players counts for video games. Using the players count of Steam games in December 2022 for benchmarking purposes, Axie Infinity's count of 468,000+ comes in third, behind only those of Counter Strike: Global Offensive and Dota 2.

Only time will tell whether Homeland could help Sky Mavis reinvent Axie Infinity and turn the tide for the game’s active players count. What is clear however, is that true-blue GameFi enthusiasts would be keeping their fingers crossed that Homeland would bring Axie Infinity back to where it belongs.