Axie Infinity's new season revitalizes the token economy, causing the in-game reward token SLP to double in price rapidly!

Axie Infinity, a leading blockchain game, made significant adjustments in the new quarter to balance the economy of its governance token AXS and in-game reward token SLP. The most important change is the burning mechanism of SLP, where SLP rewards will no longer be distributed for daily quests and adventure mode. Following the balance adjustments, the price of SLP surged rapidly, increasing by over 100%.

Axie Infinity Token Economy Collapse

In 2021, the blockchain gaming industry, led by Axie Infinity, has garnered attention from the public. The introduction of the Play-to-Earn (P2E) mechanism and the establishment of a game guild system have increased people's interest and demand for this game. During the peak period of gameplay, the monthly trading volume of game NFTs even exceeded $500 million, and the price of the reward token SLP approached $0.4.

However, this prosperity did not last. In the past few months, the NFT trading volume has sharply declined from around $754 million in November to $301 million in December, and as low as $126 million in January. The prices of SLP and AXS also continue to decline, with SLP dropping over 90% from its peak to around $0.1, and AXS dropping about 60% to around $48.

Token Economy Balancing Adjustments

As for the reasons behind this situation, the development company Sky Mavis believes that the main cause is the severe inflation of the SLP token, with the daily output of SLP being about 4 times the amount of tokens destroyed through Axie breeding. To address the continuous decline in token value, Sky Mavis has made a series of balancing adjustments, with the following key points.

1. Removal of SLP Rewards for Adventure Mode PvE and Daily Quests

By eliminating token rewards for these two activities, around 54% of SLP output can be reduced, and only PvP battles will provide rewards in the future. Although this change may cause dissatisfaction among players, it aligns with Sky Mavis' goals:

• Game rewards should be used to incentivize social activities that improve the ecosystem.
• Game rewards must be obtained through activities within the ecosystem.

"We know this is a very bitter pill to swallow. But the Axie economy needs decisive action now, or we face the risk of complete and permanent economic collapse, which would be even more painful." Sky Mavis stated.

2. Increase in the Number of Players Eligible for AXS Rewards on the Leaderboard

As mentioned in the first point, to enhance PvP gameplay and reduce SLP output, the number of players eligible for AXS rewards on the PvP leaderboard will increase to 300,000, with a prize pool of up to $6 million per season.

3. Introduction of Additional Token Burning Methods

Future gameplay will introduce more interesting token burning mechanisms, possibly through:

• Special decorations and appearances
• Upgrading Axie body parts
• In-game expression emojis
• Breeding activities
• Tournament purchases
• Axie naming

With the introduction of new token burning mechanisms, the utility of the SLP token will be further enhanced, reducing inflationary pressures.

Token Prices Witness Surge

Following the announcement of these balancing adjustments, both SLP and AXS prices have surged, with SLP increasing by over 100% to around $0.02 and AXS also experiencing nearly a 30% surge to approximately $64.

While the rise in token prices is favorable for the community and development team, whether forcefully changing the familiar game modes of millions of players through aggressive means can achieve long-term success remains to be seen.

"The new burning mechanisms to be introduced this year will be crucial. Decreasing the supply alone is not enough to restore full strength to our economic engine, but they are necessary steps in building a fully functional and sustainable economy." Sky Mavis stated.