Axie Infinity — $SLP — What went “wrong” and how to “FIX” it
Lets start here — I am not a writer. I usually express myself by video and speaking, so please go easy on my poor typing grammar and spelling errors.
$SLP is the in game breeding token for P2E blockchain game Axie Infinity and has been around for 2 years now. The token launched around 3 cents but spent the first half of 2020 under a penny and majority of the year around 2–3 cents.
In 2021 — Axie went through massive growth. Personally I attribute this to a few factors. More content creators on YouTube, Twitch, new personalities on Twitter and NFTs had their breakout year in 2021. Just this would not have lead Axie to grow from 20k users Jan 2021 to 3 million by Dec 2021 for a game where the initial entry cost has varied from $300–1500 throughout the year.
The catalyst that really caused the boom in players was what most of the community calls “scholars”. A new term that I have begun to use is an apprentice. One can liken it to a music studio manager who lets new talent practice their skills mixing beats or making music where they can learn the equipment and hone their skills. That studio manager may take a small fee upfront because they are using it in off times, or they can take a cut off anything created while they are using the space. This is an Axie Apprentice — They are able to borrow someone’s Axies they are not using and either pay a fixed rental fee or a percentage of all in game currencies minted while they played the game.
Some may think that is amazing as even for most middle class families, $800 for digital pets to be used in a game, will seem like a crazy expense. Well this quickly became a new opportunity for Gig-economy workers. Instead of working low paying jobs you could subsidize your income playing a game on your time and sell the in game assets since you just wanted to profit off the tokens. As VCs and creative opportunists learned about the space, money was FLYING into Axies and creating Scholarships. This created a major bubble in the summer because there was not enough Axie’s or SLP to meet demand. This was in July/Aug when SLP was consistently around 20–30 cents per token. Fast forward 4 months and SLP has been on a steady decline currently sitting around 2.5 cents per token.
So…WHERES THE BEEF?
There are currently 2 major problems with Axie Infinity’s $SLP token.
- 48% of the $SLP created is earned through unskillful play of the game — Adventure mode — This mode can easily be done by bots on repeat, even with very “bad” axies. 22% is given for free after completing your adventure tasks (unskilled) and winning 5 PvP matches (skilled play). While this involves a skilled component — currently 70% of the SLP minted is created with no skill involved.
- The majority of “scholars” are not simply testing the game and saving $SLP so they can one day buy their own team, or decide Axie is not for them and play something else. For many, this has become a major source of income and they feel that they are doing the same amount of “work” and being compensated less.
So — 70% of the $SLP minted is minted for “free” and a total of 70%+ of all $SLP is minted only to be sold off in liquidity. This creates an easy explanation for why $SLP is 90% off its highs from the summer.
But — Can the Devs do Something?
The short answer is yes -but at what expense. The dev team Sky Mavis is busy working on Battles V3 a new battle system that will launch this year and overhaul how Axie battles work. At the same time, they are focusing on Land Play (Project K) which will allow players to roam Lunacia, battle and collect new assets and create a much more dynamic economy. The solution for the dev team needs to be easy and executable within 1–3 weeks.
WHAT IS THE SOLUTION — Dave’s🌶️Takes
- Limit the minting of $SLP in the game by removing all $SLP created in Adventure and Dailies. In this process — you can do two things. Increase the amount of $SLP created at EVERY MMR, including <800 MMR. I still think a 1500 player should be able to earn 80–100 SLP per day (if no other changes are made). So perhaps start there with 15 SLP per win — could scale by 10 per 100 mmr, but does not necessarily have to. For higher players, start to reward mAXS for their winnings. Two ways to do this, still reward them say 15 $SLP per win, but bonus them mAXS for each win above a certain MMR or reward mAXS for where you finish in ranking each day. Test it in a 4 week season and drastically increase the $AXS rewards — perhaps all the way down to even top 1 million. I think you could even go more drastic, but in this example, if there are NO bots, no players stop playing, and everyone wins 50% with their energy — you mint 80–100 million less $SLP per day. Personally I would advocate, make it a $3 million purse season: $300k+ to #1 and then float the remaining down to the top 1 million players on the season. If you do this, I think you could even lower the amount of $SLP minted per match win.
An example of how SLP per Arena win in this scenario is below (Both Current and Suggested)👇
**Special shoutout to Maxbrand99 🙏 for helping send a snapshot of rankings 1300+ to help have some realistic data of how many players are at each MMR
2. Create a higher $SLP tax on leaving the eco-system. This could be steep, say around 1-5% tax on the money leaving the eco-system but force it to be paid in $SLP to transfer in and out, for now. Now maybe — you may need to set a theoretical maximum, but if you are cashing out say 3000 SLP worth, you need to burn 150 SLP to perform the transaction. This does two things, encourages money to be mass transferred and keeps $SLP in the ecosystem longer. This may lead to more LP farming, but at a minimum less sell pressure on $SLP to simply cash out to fiat. This does NOT need to be high, even if it is a 75 SLP tax on withdrawals. If you want this to be more significant, you can implement it as a 1% fee of all assets leaving ronin pay that fee in $SLP and burn it. This will just create a burn dynamic that currently does not exist when leaving the RONIN network.
Until $RON is here, you could even implement a 1 $SLP fee per transaction just to have another small burn mechanic.
3. If emotes are too far away, create a burn mechanism for personal profile customization. Be it PFP on Ronin Wallet, Custom logos used on accounts, different banners for their title. The only challenge with these are these will require extra resources and are not a 1 week implement and fix.
Another challenge with so many player not actually having wallet ownership, perhaps the better method is a storefront for merch that they can buy with $SLP. This could be a breakeven method for Sky Mavis as merch and shipping is probably a 50% margin for the team. So Sky Mavis can burn half of the $SLP spent and save the other half for $SLP LPs or to gift back to community in future.
4. The last method may need to be built externally, but if there was a way to activate in game, it could be amazing. Since energy is an issue for “earning potential” allow players to use the $SLP not claimed, queue up and pay 5 $SLP each, 1 $SLP is burned per game and with winner receives 9 $SLP. This will create more ways for players to earn, while implementing a burn mechanism which in my opinion would be the best win!
I am not sure how many of you will make it this far and I apologize for such a long entry. I perhaps overset the stage about how we can fix $SLP, but I think it is crucial subject in the short term to at a minimum hold momentum as other games will begin to popup with more attractive short term ROI opportunities. If you did read it all the way through, tag me on twitter and share your feedback. Mainly did you like this read and how can I improve them in the future.
Cheers — DvA