Video games are about power fantasies, the conventional wisdom goes: Fight enough dragons to reach level 99, sell enough wolf skins to buy a gaudy gold cape, and become rich or strong or accomplished in the world of the game—even if you aren’t in real life. For Catdicax, a Finnish woman now in her 30s, the online fantasy role-playing game Runescape was a place where she could obtain more and more in-game items through hard work and time. And it paid off: After 10 years of playing, she had amassed a menagerie of high-end relics.
Eventually, though, Catdicax became restless. It felt like a waste of labor, a fruitless grind, to work so hard for Runescape’s digital axes or cloaks. Then in 2019 Catdicax chanced upon Axie Infinity, a blockchain-based video game where players collect and level up collectible Pokémon-like virtual pets, called Axies. Represented by NFTs, players’ Axies battle to win cryptocurrency tokens, which can in turn be used to breed new critters. The game isn’t about the game, though; it’s about the economy. Like holographic Charizards on steroids, rarer Axies sell for eye-watering figures: In 2020, someone shelled out $130,000 in cryptocurrency to secure the ownership of a portly, winged angel Axie. The tokens earned by vanquishing opponents in Axie-fights—called Smooth Love Potion, or SLP—can be traded for cryptocurrency on online exchanges, and then for legal tender.
Catdicax describes herself as having been “poor [her] whole life.”(Catdicax goes by her screen name, declining to disclose her real name out of fear that she could be “targeted” because of her money and worries about sexist trolling.) Now she watched the value of her digital pets grow from a few dollars to as much as $500 per Axie. Suddenly, Catdicax wasn’t just a player. She was an asset-owner. And after Axie Infinity exploded in popularity in late 2020, she realized that a lot of aspiring players who couldn’t afford their own Axies would leap at the opportunity to earn money off hers. Catdicax started outsourcing the video game grind to people she met online, mostly based in the Philippines. Those gamers could take a cut of her earnings as part of a program of Axie lending—in Axie-speak, a scholarship. A new video game power fantasy absorbed Catdicax: being a manager.
“I thought, this is amazing. People in the Philippines are earning double what they could in a regular job just from playing this game,” she says. “I wanted to do that too. I wanted to help people too.” (In fact, an analysis by insights company Naavik found that as of August 2021, only the most proficient players were making more than the Philippines’ average wage of $41.49 per day, while most simply earned a bit over the $7.03 daily minimum wage, or less. And that’s before taking into account the fees paid to scholarship managers.)
A new buzzword is haunting the cryptocurrency world: play-to-earn. The term designates a category of increasingly popular games that leverage blockchain technology to reward players with digital objects of real-world—or at least crypto-world—financial value. Other titles include Alien Worlds, Splinterlands, and Uplands. Axie Infinity, the brainchild of Vietnam-based outfit Sky Mavis, is the most illustrious of the bunch. The sector is booming: Cryptocurrency analytics platform DappRadar reported that in the third quarter of 2021, gamers forked over $2.32 billion for unique gaming objects on the blockchain. The venture capital grantees at Andreessen Horowitz have doled out millions to companies in the space, including leading a $152 million investment round in Sky Mavis in October. And, importantly, hundreds of thousands of people are playing at any given moment: Axie Infinity says that as of August 2021 it had 1.8 million daily users.
When the game launched in 2018, Axie Infinity’s only crypto element boiled down to linking Axies to NFTs—unique pieces of cryptocurrency that can be minted on the Ethereum blockchain. Then, in late 2019, Sky Mavis introduced the SLP tokens and decided that rather than selling them to users, it would let players harvest them in-game. Sky Mavis cofounder and COO Aleksander Leonard Larsen says his company is trying to turn the economic paradigm of online gaming on its head, courtesy of cryptocurrency technology. “Other game studios, they always want to extract as much money as they can from players,” Larsen says, referencing games with business models predicated on selling special objects or extra features to players. In contrast, his argument goes, Axie Infinity and other play-to-earn games reward competent players with valuable digital assets.
Better still, these assets do not just exist as digits on an MMORPG server; they are kept in a cryptocurrency wallet controlled by the player. Owning an Axie means owning an NFT; SLPs and Axie Infinity’s other currency, AXS, are ERC20, a type of Ethereum token. And like a privatized central banker, Sky Mavis has been gradually crafting a monetary policy that seems aimed at ensuring there is no oversupply of tokens. The company has cracked down on people using multiple accounts, capped the number of tokens that can be obtained in non-fight mode, and generally made it harder to earn tokens. Analysts talk about “overpopulation of Axies” driving up inflation in unironic terms. (The main problem, it turns out, is that the little bastards cannot die.) And in November, Sky Mavis launched Katana, an automated cryptocurrency market-maker where Axie Infinity tokens can be swapped for ether— providing a cheap, direct conduit between the game and the burgeoning sphere of cryptocurrency-fueled decentralized finance, or DeFi.
“Providing for DeFi services was a very natural next step for us,” Larsen says. “I mean, if you have a wallet, which stores your digital items, and you can also have your fungible assets and everything else—all that leads naturally to DeFi.” Katana quickly became one of the most popular DeFi apps by user volume, according to DappRadar.
If you ask players what keeps them logging back in to Axie Infinity, few will cite its game mechanics. When Sky Mavis cofounder Jeff Zirlin asked his Twitter followers in May what their favorite thing about the game was, 48 percent of respondents were most excited about “the economy.” And like any economy, Axie Infinity’s includes a flourishing labor market.
Venture capitalist Yat Siu became one of Axie Infinity’s early backers last year because of the scholarship system that Axie owners like Catdicax set up. “What we saw was the relationship between combining capital and labor,” he says. Players he describes as “time-poor but capital-rich” would rent their digital assets to other players who are more “time-rich and capital-poor.” It was like the way Chinese workers (and sometimes even incarcerated people) would “farm” fancy armor and gold they’d “grinded” for in World of Warcraft and sell it on gray-market websites for cash. Except that with many NFT games, players are encouraged to farm out their assets to others, and exchanging those assets for real money down the line is totally above-board.
Thousands of wealthier Axie Infinity players have been renting out their Axies to other players in return for a 30 or 40 percent cut of their earnings. It’s the same with NFT card game Splinterlands’ digital cards, which, according to cofounder and COO Jesse Reich, straddle both an “altruistic and capitalist experience … to increase their financial status and standing.” These other players are often based in developing countries like Ecuador or the Philippines. (Over half of Axie Infinity players are Filipino, according to Sky Mavis). Many of them are part of scholarships or “guilds.” Players rent out their accounts to each other, sharing usernames and passwords, as part of manager-worker relationships organized over Discord. In Axie Infinity’s Discord, dozens of workers “apply” for positions every 10 minutes, sharing why they should be hired, what their gaming experience is, and how good their internet connection is.
After noticing Axie Infinity players sharing their usernames and passwords this way last year, Gabby Dizon, a Philippines-based mobile game CEO, decided to formalize the relationship with Yield Guild Games, a “play-to-earn gaming guild” that stretches across 15 different titles. Siu was an early investor. Dizon laid out the guild’s business model in an interview with WIRED: “We come in, buy and breed Axies en masse, and then lend them out to players.” Players receive 70 percent of earnings, while the “community managers” who recruit and manage them day-to-day on behalf of YGG get 20 percent. YGG itself receives 10 percent and might reinvest those tokens to breed more Axies. Each party receives their cut of the profits automatically, via a self-executing piece of blockchain software, or smart contract, developed by YGG.
“Right now, we have something like 5,400 Axies. Next year, this time, we want to be in the hundreds of thousands,” says Dizon. So far, his bet seems to have paid off: YGG was the recipient of an Andreessen Horowitz-led funding round of $4.6 million in August. In a blog post announcing the deal, the firm waxed philosophical about the actual definition of what a “job” is—and how the concept is evolving because of crypto and gaming. In Dizon’s opinion, Axie and similar titles are not even in the same league as other video games. “These games are actually competing [for players] with other forms of gig work—like Uber, or Grab or Gojek, where you're delivering food for someone and get paid a small amount for it,” he says. “Why not work from home, play this game, and get paid in tokens, instead?”
The rise of Axie Infinity is happening as the boundaries between investing and gaming have grown porous. Apps like Robinhood have helped turn investing into entertainment while also lowering the barriers to entry by offering commission-free trades. Cryptocurrency exchanges have also grown more mainstream, providing improved access to investors who hope to make a few bucks off crypto’s volatile prices. The idea that investing is for everybody, including people who have no experience with financial institutions, could be attributable, in part, to Covid-19 and the financial volatility many experienced over the last two years, says Jill Carlson, founder of the economic research nonprofit Open Money Initiative: “That woke people up to the system,” she says. “You’re seeing this volatility and having questions like, ‘Why shouldn’t I take more control over my financial assets?’” This past year has seen a flurry of amateur investing activity, often taking cues from online communities, from WallStreetBets’ GameStop surge to the popularity of meme coins like Dogecoin of Shiba Inu. The rising weirdness in retail investment behaviors has led the chair of the US Securities and Exchange Commission, Gary Gensler, to repeatedly denounce the “gamification of investing.”
“Play to earn” takes the idea of investotainment very literally. NFT game players are role-playing capitalism, or simulating it in a less chaotic environment: gaining capital through labor, investing that capital, and earning money off the labor of others.
Games scholars have talked about this dynamic for years—“the fantasy of labor,” and particularly, how games scratch itches—like earning a concrete rate for performing simple tasks or growing renown through hard work in a linear fashion—that have been created by modern-day capitalism but that capitalism itself can’t fulfill. “The idea of a level playing field where everyone will get to level 50 if you just work the same amount,” says Naomi Clark, chair of New York University’s Game Center, “I associate it with the sort of bootstrap mythology of early 20th-century capitalism.” In these traditional role-playing games, there is a linear relationship between work and payoff.
Clark, who has been writing about “the fantasy of labor” for 15 years, says NFT games represent another more modern philosophy ushered in by disillusionment with today’s financial systems and gamified investment. “I think the core fantasy is, ‘I'm going to be an investor. I can put my money in here and I'll just watch it grow,’” she says. For the owners of Axies or Splinterlands cards or any other digital assets, these games are fulfilling a dream befitting today’s economy: “You don't have to work anymore. You don't have to grind. You just sit back and let the money roll in in an automated way,” says Clark. For the people who are raising the value of these rented assets, NFT games represent hope outside of today’s flawed economic systems.
YGG’s Gabby Dizon is too busy to play the NFT games his life revolves around. He’s running a guild infinitely more involved and valuable than any World of Warcraft guild. “It's like I'm still playing a game, but it's not playing inside the video game,” he says. “I'm playing the meta-game of organizing people to play these games and earn money. And it's honestly more fun because the stakes are higher. I'm playing the meta-game.”
© Condé Nast Britain 2021.