Axie Infinity, a popular monster-battling video game, is attracting a lot of attention: it is now the top-rated game on Ethereum measured by active players: daily, weekly, or monthly. How do you play and, even more importantly, how do you make money from it?

On the investment side, Axie has raised a a good deal of money from private sources, including a pillar of the venture capital world, Andreessen Horowitz (A16z), which is reported to be the lead investor in the latest round. The sums involved imply a capital value of $3 billion.

But what does it all mean for you?

Getting Started on Axie Infinity

A player must begin with at least three of the game’s tokens (AXS), which can be bought on a dedicated non-fungible tokens (NFT) marketplace.

An NFT is a digital asset that is stored on a blockchain, in this case in Ethereum. The owner of an NFT owns that unique digital fingerprint which, of course, can then be sold like the digital equivalent of comic books or classic toys.

In some key respects Axie Infinity resembles Pokemon Go. Players raise and care for digital pets (Axies) and in time pit them against one another in battles. A player can initiate a battle either with another player or with a non-player character (NPC).

Each Axie (monster) brings into the battle a set of abilities that come from its genes, which is why breeding is an essential part of the game. The digital offspring inherit genes from their parents. So users create new types of Axies. There is a maximum of seven times, for the number that a particular Axie can be bred, a feature of the game that prevents a hyperinflation of digital creatures.

As a player’s pets win their matches against the other players’ pets, the players pets will be more in demand. So their prices rise. That rise in value is the key to the economics of the game. A player then can make real-world money by breeding these make-believe monsters that win fantasy-world matches.

The value of AXS hit a record level on Monday, Oct. 4, $155. 

The Economics of the Game

Axie Infinity has an all-time NFT sales volume of $2.05 billion. More than 615,000 traders have bought or sold Axie Infinity NFTs, in more than 4,880,000 transactions.

It was developed in Vietnam by Sky Mavis and a majority of its players are in the Philippines. It is the breakout within a stable of Sky Mavis games that feature virtual worlds with player owned-economies, what the company calls “marketplaces for trustless trading of unique digital assets.”

It is played each day by 1.5 million people. Some of these have become quite good at it. Indeed, in the Philippines in particular there are people who not only make money, they make their living, at Axis Infinity, raising the interest of the tax authorities there.  

It is also now a contested question in the Philippines whether the game’s NFTs should be considered assets or securities. 

Other Games and NFTs

Axies are at present outperforming other big names in the NFT space like CryptoPunks, Art Blocks, and NBA Top Shot. Axie Infinity is steadily building a lead on CryptoPunks, as the latter is lagging with an all-time volume of $1.29 billion. 

CryptoPunks is second on this league table. while Axies have a total volume of $2.05 billion, CryptoPunks come in at $1.29 billion and ArtBlocks at $789 million.

CryptoPunks, released in June 2017, are a set of NFTs, not attached to a game. They consist of as one of the first non-fungible tokens on the Ethereum blockchain. The project was developed by two Canadian software developers doing business as Larva Labs.

They were created (all 10,000 of them) so that they could be claimed for free. But they were all quickly claimed soon after release in 2018, and must now be purchased by way of the marketplace embedded in the blockchain. The current lowest price available costs 119 ETH ($409,013).

Whether generated by games or as a pure collectible play, NFTs have a big future. Any particular play on any NFT, or in any game is, of course, a speculative matter and should be risked only by those who can afford to be on its losing side.