Axie Infinity’s Latest Update Hopes to Rebalance SLP and AXS Economy

The rewards system of the popular play-to-earn NFT game Axie Infinity is about to change as developers introduce significant changes that aim to make it a more sustainable product for users. Through the collection, breeding, battling and trading of axies, players are able to earn smooth love potion (SLP) — an in-game token — as their rewards.

For certain communities, especially in the Philippines, earning SLP has created a sort of “economy” since the game’s rise to prominence over the past year. Some players have even turned to the digital coin as their primary source of income. SLP, however, has an uncapped supply which greatly influences its volatility when converted to fiat currency.

Granted this, the environment became unsustainable as countless new players entered the game. “The Axie economy requires drastic and decisive action now or we risk total and permanent economic collapse,” explained the Axie developers. The latest update — Season 20 — has reduced the emission rates of the game’s “adventure mode” and “daily quest” from over 130 million SLP to zero, which in turn drops the daily SLP token supply by 56%.

Higher SLP emissions caused the token’s prices to plummet, which is what the developers hope to address with the new updates. From late January until earlier this month, SLP fell by 94% to $0.01. This was a massive difference from its highs in July of last year which was at $0.39.

On the other hand, the token’s market capitalization increased to $312 million from $166 million during the same period, noting an increase in supply. Following the announcement of Season 20’s updates, however, SLP prices have once again started to rise alongside Axie Infinity (AXS) — the game’s governance token.

“Axie’s SLP token is based on a unique combination between game economy and token economy,” explained blockchain technology firm Kirobo CEO Asaf Naim in relation to the impact of token-based games. “Finding a sweet spot between inflation and deflation of this asset in this multi-layered structure is a very complex task, and Axie seems to have found it (for now).”

“They are obligated to do so to protect SLP holders and to ensure that the platform maintains its lucrative nature. But as this synergy between gaming and crypto grows, token economists will have to constantly be vigilant and react to the changing landscape,” added Naim.

Source: CoinDesk