Crypto Gloss

Axie Infinity / AXS

Axie Infinity is a blockchain-based game where players collect, breed, and battle NFT creatures called “Axies.” Created by Vietnamese company Sky Mavis (CEO Trung Thanh Nguyen), Axie Infinity became the defining play-to-earn (P2E) game of the 2021 bull market — at peak, generating $1B+ in monthly NFT trading volume and enabling Filipino, Venezuelan, and Indonesian players to earn $300-1,500/month in SLP tokens simply by playing. It then became one of crypto’s most dramatic implosions: the $625 million Ronin bridge hack in March 2022 was the largest DeFi theft in history at the time; SLP (the in-game reward token) collapsed 99%+ from peak as inflation overwhelmed demand.

Game Mechanics

The Axie economy (simplified):

  • Axies: NFT creatures with traits/genes; required to play (minimum 3 Axies to build a team)
  • SLP (Smooth Love Potion): Earned by playing (battles, quests); required for breeding
  • AXS (Axie Infinity Shards): Governance/staking token; also required for breeding

The P2E loop:

  1. Buy 3 Axies (peak price: $300-$1500+ per Axie in late 2021)
  2. Play battles to earn SLP
  3. Breed Axies using SLP + AXS → create new Axies with better traits (or sell on marketplace)
  4. Sell bred Axies or SLP for USD/ETH

Why it worked (briefly):

At peak, the SLP/AXS income from playing exceeded minimum wage in the Philippines, Vietnam, Indonesia. Scholarship programs (lending Axies to players who cannot afford them, splitting earnings) enabled millions of people without capital to play.

Peak Metrics (2021)

  • Daily active users: 2.7 million (August 2021 peak)
  • Monthly NFT trading volume: $1B+ (August 2021)
  • SLP price peak: ~$0.39 (July 2021)
  • AXS price peak: $165 (November 2021)
  • Axie NFT floor price peak: 2+ ETH per Axie (~$8,000 at ETH prices)
  • Ronin network transactions: Millions daily — forced Sky Mavis to build its own blockchain (Ronin)

Why the Economy Collapsed

The fundamental problem: Axie Infinity was a sink problem economy:

  1. Players earn SLP by playing
  2. SLP is needed to breed Axies
  3. Breeding creates new Axies → more supply on market
  4. New players need only to buy Axies, not generate demand for SLP meaningfully beyond breeding

When user growth stopped:

  • SLP supply (from player earnings) continued to grow exponentially
  • SLP demand (breeding) required new players to buy Axies and use SLP
  • When new player inflow slowed (market saturation, rising USD prices), SLP demand collapsed
  • SLP price fell from $0.39 → $0.003 (99% collapse) by 2022

Lessons learned:

Axie’s collapse became the core academic and industry case study cited against unsustainable play-to-earn tokenomics — any model where earning tokens is the product creates hyperinflation pressure unless there’s equivalent consumption demand.

Ronin Bridge Hack (March 29, 2022)

The largest crypto hack at the time ($625 million):

What happened:

  • Sky Mavis built the Ronin sidechain (Ethereum sidechain, not a rollup) for cheap Axie transactions
  • Ronin used a 5/9 multi-sig validator for the bridge — only 5 of 9 validators needed to sign
  • Sky Mavis itself controlled 4 of 9 validator nodes — plus Sky Mavis had approved a 3rd party (Axie DAO) to temporarily use Sky Mavis’s keys months earlier, never revoked
  • North Korea’s Lazarus Group compromised 4 Sky Mavis nodes + the Axie DAO node via spear phishing attacks
  • 5 of 9 validators compromised → drained 173,600 ETH + 25.5M USDC = $625M

Response:

  • Sky Mavis didn’t notice for 7 days (found out when a user tried to withdraw)
  • Binance invested $150M+ to help compensate affected users
  • Sky Mavis paid back affected users over 2022-2023
  • Ronin upgraded to 9 independent validators with major geographic and organizational diversity

Lesson: Validator concentration in multi-sig bridges is catastrophic — 4 nodes at a single company creates a single organization attack surface.

Sky Mavis and Ronin Evolution

Post-collapse, Sky Mavis rebuilt:

  • Ronin as platform: Ronin opened to third-party game developers (not just Axie)
  • New game economics: Origin (Axie Infinity: Origin) redesigned with free starter Axies and removed pay-to-progress gates
  • Ronin processed millions of NFT trades for non-Axie games (Pixels, Apeiron, etc.)
  • RON token: Ronin’s native gas/staking token launched separately from AXS

AXS Token

  • Utility: Governance, staking (earn RON + AXS staking rewards), breeding (burned)
  • Staking treasury: Initially funded with 20% of marketplace revenue; distributed to stakers
  • Supply: 270 million AXS total; significant team and treasury allocations
  • AXS peak price: $165 → 2023 bear: ~$4-7 (>95% decline)

Schema Guild Programs

During peak 2021, “gaming guilds” emerged to manage scholarship programs:

  • Yield Guild Games (YGG): Philippines-based; acquired thousands of Axies to scholarship players
  • Merit Circle: DAO-based guild
  • Guilds took 20-30% of scholarship players’ earnings
  • The guild model spread to other P2E games; YGG token launched as the first “gaming guild DAO token”

This entire infrastructure (guilds, scholarship managers) evaporated when SLP collapsed.

How to Access Axie Infinity

  1. Download the Axie Infinity app (axieinfinity.com) — PC/Mac/Android
  2. Create a Ronin wallet (ronin.axie.technology)
  3. Bridge ETH to Ronin via Ronin Bridge
  4. Purchase Axies from the Axie marketplace (starting lineup: 3 Axies required)
  5. Begin battling to earn SLP; or breed to create new Axies

New players: Axie Origin provides free starter “egg” Axies to reduce barrier to entry.

Acquire ETH for Axie purchases via . For large NFT/token positions on Ronin, consider securing with .

Social Media Sentiment

Axie Infinity occupies a special place in crypto history as both the greatest P2E success and the most spectacular P2E failure. It genuinely changed lives for Filipino and Vietnamese players in 2021 — stories of families buying homes or covering tuition from Axie earnings were real and widely circulated. The collapse erased those gains and more for players who reinvested. Sky Mavis is respected for rebuilding after the hack and genuinely compensating users despite legal obligation being unclear. The Ronin chain’s evolution into a gaming platform is seen as a credible pivot. The broader P2E category is permanently tainted by Axie’s economic failure — games must now credibly explain why their economy won’t hyperinflate to attract serious player investment.

Sources