The $625 million hack on Axie Infinity’s Ronin Bridge was seen as the beginning of its woes as hundreds of thousands of players started leaving the platform. However, the cracks had started showing way before the hack, and as a new report reveals, thousands of players were plunging into debt playing the game, many of them from the Philippines.
The report by Time cited interviews with over a dozen Filipino Axie players, many of whom have had their lives wrecked by the game. Most were introduced by friends with the promise that they would earn five times more playing the game than they did with their day jobs. For some, this was true, but Axie’s unsustainable (even Ponzi-like) model finally caught up with them, and they lost way more than they ever made.
One of them, 26-year-old Samerson Orias, told Time he was lured by promises that he could make up to $600 a month, up from the PHP4,000 ($80) he was making from selling takoyaki (octopus balls).
Soon, he got into the game and spent hours playing with his cartoon monster. For some time, he earned some good money and started playing into the wee hours of the night after selling his takoyaki. His battles with other cartoon monsters resulted in him earning Smooth Love Potions (SLP), the native token of the platform, which he would then trade for pesos.
However, it would later go downhill for Orias, as it has for hundreds of thousands others in the Philippines and beyond.
For one, the entire model was based on SLP and its ability to stay up. For this, new players had to ape in every so often, creating, essentially, a Ponzi scheme. Even Sky Mavis, the Vietnamese company that created the game, pointed out in the white paper that the game depended on new entrants.
Sky Mavis, however, disputes that the game is a Ponzi.
“Focusing on growing a network through early incentives does not make a Ponzi scheme. Axie Infinity’s main purpose is to provide entertainment,” a spokesperson for the company told Time.
And while it’s now saying that entertainment is the main purpose, Sky Mavis has been branding the game for years as the new way to work. “We believe in a world future where work and play become one,” its website claimed last year.
With the game dependent on the value of SLP rising continuously, the bear market was yet another blow to the ecosystem. Exactly one year ago, SLP was trading 98% higher than it is today, where it’s changing hands for $0.004.
In addition, with more players joining the game and earning SLP (active players peaked at 2.7 million in November), the supply of the token went up, and its price consequently crashed.
Sky Mavis knew earlier this year that it had to do something or risk players leaving en masse. However, in March, an even bigger disaster struck, with hackers targeting its Ronin-Ethereum bridge (which it has to rely on as Ethereum can’t scale) and taking off with $625 million in ETH and USDC, most of which belonged to the players.
The latest reports have revealed that the hackers hoodwinked staff from Sky Mavis through fake job offers on LinkedIn. Once they clicked on the links to apply, the hackers, believed to be from North Korea’s Lazarus Group, were able to attack them and take off with the funds.
Sky Mavis has been trying to rebrand itself as a gaming company first and an avenue to make money second. Its latest effort is Axie Infinity: Origin, a free-to-play game that doesn’t involve digital assets at all. And while it may never be able to recover the momentum it lost, that won’t be the only catastrophe. As Chainalysis economist Ethan McMahon notes, this high-profile screw-up has tainted the future of the fast-rising play-to-earn games.
For those that are still addicted to Axie, Orias, who has since quit the game, has advice for them:
“For those having a hard time, for those pushed to their wit’s end, [simply] stop playing.”
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