At the height of cryptocurrency’s pandemic boom, migrant worker Gian Carlo McGlay thought he had found a way to ride out lockdowns and provide an income to dozens of jobless people from his hometown in the Philippines.
But McGlay’s dreams of leading a team of “play-to-earn” cryptocurrency gamers focused on the Axie Infinity game quickly fell apart as crypto prices crashed, leaving the 32-year-old with losses of one million Philippine pesos ($18,000).
“Nothing was left. My Axie Infinity assets became worthless so I just gave them away,” said McGlay.
One of a new breed of blockchain-based online games that blend entertainment with financial speculation, Axie Infinity also attracted investors who saw it as a way to introduce more people to cryptocurrency.
Axie players can earn cryptocurrency by cashing in tokens they win in the game – called smooth love potion (SLP). For a while, it was a lucrative business. McGlay’s “scholars” – a term used for players who cannot afford to buy the game’s characters themselves so instead rent them off so-called managers in exchange for a cut of their earnings – initially earned 5,000-10,000 pesos per week.
In contrast to other Axie managers, McGlay – who worked as a fisherman in Alaska before the pandemic – said he made zero profit from the enterprise, letting his scholars keep all of their earnings.
SCHOLARS AND MANAGERS
At its peak, Axie Infinity drew 2.7 million active daily users but those numbers have plunged to about 250,000, according to Cryptogambling.tv, a website focused on cryptocurrency games. Half of the game’s players came from the Philippines – and many others from developing countries such as Indonesia, Brazil, Venezuela and Peru.
Yield Guild Games (YGG), a group that invests in NFT games, said it “prioritized providing scholarships in emerging economies where job opportunities are lacking and government relief has been limited” during the pandemic. But many managers like McGlay were left facing big losses as the value of the game’s SLP tokens fell 99% from its February 2022 peak, mirroring a collapse in the price of cryptocurrencies.
Axie Infinity was dealt another blow in March 2022 when hackers stole about $615 million in cryptocurrency from a blockchain network that lets users transfer crypto in and out of the game.
While some Axie managers say their motives were philanthropic, other small investors were motivated by the potential gains. Christopher Cruz, 36, a Filipino businessman and cryptocurrency trader who used to manage 200 Axie scholars, said he earned as much as 600,000 pesos a day from the game by taking a 60% cut of his players’ income.
“I felt like a drug lord,” Cruz said. “I could buy everything I wanted – every item inside the mall was never too expensive – during that time.” His scholars, who were mostly high school students and gig workers from poor provinces, earned a daily income of 450 pesos, just below the minimum wage of 470 pesos in regions outside the capital, Manila.
A Filipino doctor, who asked not to be named, said it was “extremely easy” to recruit players during the pandemic and that her earnings as a manager were similar to her income from her regular job.
‘GREED GOT THE BEST OF US’
SLP tokens were worth 3 pesos each when McGlay, Cruz and the doctor joined the game. The token’s value peaked at 20 pesos, before plunging steadily in late 2021. Today, it stands at about 0.16 pesos.
“It’s no longer worth it. The gameplay also became more difficult,” Cruz said, adding that it was now difficult to earn 50 SLP per day – down from 150 in its heyday.
Losing their new income source, legions of scholars abandoned the game, turning to gig work as delivery riders or online clothes seller or taking up full-time education. “The players who were motivated purely by the financial rewards of the game have moved on to other things now,” said YGG Philippines manager Luis Buenaventura. He said YGG continues to rent out Axie’s non-fungible token (NFT) characters to interested players, “but it’s not as necessary as it once was since those NFTs are all really affordable now”.
Axie’s dizzying ups and downs should serve as a warning sign to potential investors in the volatile crypto world, said Elaine Tinio, a marketing professional in Manila who used to play the game for up to four hours a day to boost her income. Thrilled by her initial profits, she spent more and more money on Axie characters before a sharp decline in the value of the game’s SLP token left her facing a loss of 200,000 pesos, equivalent to about five months of her salary.