Axie Infinity is a Pokemon-inspired ‘play to earn’ game built on the Ethereum blockchain, where players can collect, raise, breed and battle digital pets called ‘Axies’.
Cryptocurrency investors can trade the two in-game currencies that are central to the Axie Infinity universe – namely Axie Infinity Shards (AXS) and Small Love Potion (SLP). Players can also profit from breeding and selling Axies on the platform’s marketplace.
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However, it is important for investors to understand how the Axie Infinity game works to get a better picture of the AXS and SLP tokens before investing in them.
What is Axie Infinity (AXS) and how does it work?
Axie Infinity crypto has its own economy, currencies, land and organisms. Creatures known as Axies can be raised, bred and sold to earn AXS. Each Axie is a non-fungible token (NFT), and the market price for an Axie depends on the rarity of its characteristics.
How does Axie Infinity work? Parent Axies can be bred together to obtain an offspring with specific traits. According to the company, the most expensive Axie sold for 300 ether (ETH), which amounts to about $1.39m, as of 13 November’s ETH price of around $4,640.
Land in Axie Infinity is tokenised and can be freely traded among players. Landowners might find Axie Infinity (AXS) tokens on their plots and will have first rights to any resources spawning on their land, according to Axie Infinity’s whitepaper.
So in simple words, Axie Infinity is a game where you breed your Axies and build your land. What makes Axie Infinity interesting is that players “play-to-earn” by trading their pets on its marketplace and can sell AXS on crypto exchanges.
AXS coin news and performance in 2021
According to CoinMarketCap, AXS have surged over 41,900% in the past one year. The token hit an all-time high of $165.37 on 6 November 2021.
In comparison to better known cryptocurrencies, the likes of bitcoin and ether have returned over 300% and over 900%, respectively, in the past 12 months.
Over the past 30 days, AXS coins have jumped over 24% on the back of a wider cryptocurrency rally and hype over the metaverse following Facebook’s rebrand into ‘Meta Platforms.’
Meanwhile, SLP token has gained 43% in the past year and is currently trading at $0.0713 (13 November), having hit an all-time high of $0.4191 on 1 May 2021, according to CoinMarketCap.
Currently, AXS is the 25th largest cryptocurrency with a market capitalisation of about $8.7bn, as of 13 November, with a monetary value of about $147.
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Comparing Axie Infinity with others
What differentiates Axie Infinity from traditional games is its ecosystem, its popular token and prized NFTs.
Axie Infinity says its game is a fun and educational way to introduce the world to blockchain technology.
When it comes to the total supply of AXS coins, the number is capped at 270 million units. As of 13 November, a total of 60.9 million AXS were in circulation, according to CoinMarketCap.
Many other cryptocurrencies including bitcoin and cardano have supply limits encoded in them. Bitcoin’s maximum supply is limited to 21 million, known as the ‘hard cap’. Cardano’s ADA token is capped at 45 billion. Meanwhile, there is no cap to Etherum’s ETH token, and Solana’s SOL token supply has a fixed inflation schedule.
Use cases of AXS and SLP
According to Axie Infinity’s white paper: “AXS holders will be able to claim rewards if they stake their tokens, play the game, and participate in key governance votes.”
Axie Infinity will transition into a decentralised governance system with its founding company, Sky Mavis, expected to lose majority vote on decisions over development of the game by October 2023. AXS stakers will have a say in how funds are spent and features to bring into the platform.
Players will need AXS coins to purchase Axies, land and items in the game. New players will need a minimum of three Axies to start playing, which can be borrowed or bought on Axie Infinity’s marketplace.
AXS and SLP are needed to breed Axies, which can later be auctioned off as NFTs.
According to data from research firm The Block, Axie Infinity has seen the highest gaming NFT trade volumes for most of 2021. Axie Infinity’s NFT trade volume came in at $125.96m during the first week of November, out of the total gaming NFT trade volume of $128.94m.
Axie Infinity price prediction: analyst commentary on cryptocurrencies and NFTs
2021 has seen some key developments in the cryptocurrency space. The adoption of bitcoin by the central American nation El Salvador and approval of bitcoin exchange traded funds (ETFs) in the US have instilled confidence among investors and speculators alike about the future of the digital asset space.
Many brokerages and investment firms have started research coverage into cryptocurrencies and other digital assets in 2021.
Investment firm Jefferies in its latest weekly note said it “remains as fundamentally bullish on the crypto space as ever” with cryptocurrencies “becoming ever more mainstream”.
US-based bank JP Morgan & Chase said: “Digital assets have emerged as a clear winner post the pandemic with retail investors joining institutional investors such as family offices, hedge funds and real money asset managers in propagating the asset class.
BofA Global Research in its first cryptocurrency coverage said: ”With a $2tn+ market value and 200mn+ users, the digital asset universe is too large to ignore. We believe crypto-based digital assets could form an entirely new asset class.”
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According to Mikhail Karkhalev, market analyst at nftgamef.com, the blockchain-based gaming projects, including Axie Infinity, may have a good potential:
Commenting on the downside risks for the Axie Infinity project, Karkhalev points out:
“1. The market regulation tightening in China, as well as the diluted laws in the US will not allow such a company to be bought out by anyone large in the coming years, because the token can be treated as a security.
“2. The project can remain local with a relatively small audience. For example, the audience of people who play computer games is 3 billion people, the audience of crypto-industry by different estimates is 150-200 mln people.
“3. The main risk, perhaps, is the decline of the crypto market, a new crypto winter, which could drag down all altcoins and even the most promising projects.”
AXS price prediction 2021-2025
At the time of writing (13 November), Wallet Investor’s Axie Infinity (AXS) coin price prediction suggested it could increase over 1,100% to about $1,809 in five years from now. The algorithm-based forecasting service believed AXS could be an “awesome” long-term investment. According to its Axie Infinity (AXS/USD) forecast, the coin could rise to an average price of $202.60 by the end of 2021 and reach an average price of $1,526.48 by the end of December 2025.
“Future price of the asset (AXS) is predicted at $448.62 (204.21%) after a year, according to our prediction system,” said GOV Capital on 13 November. It expected the price of AXS to reach $519.27 by the end of 2022, $1,096 by the end of 2023 and $2,956 by the end of December 2025.
When looking for AXS price predictions, it’s important to bear in mind that forecasts can be wrong. Algorithm-based projections for Axie Infinity are based on making a fundamental and technical study of the crypto performance. However, past performance is no guarantee of future results.
It’s important to do your own research, and always remember that your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest money that you cannot afford to lose.
Risks and challenges for Axie Infinity (AXS) investors
It is important to know that Axie Infinity is not the only “play-to-earn” blockchain game out there. More firms are showing interest in crypto-based games than ever. Animoca Brands and Blowfish Studio announced a sci-fi role-playing NFT game named Phantom Galaxies. Metaverse-focused fund Aminoca has previously invested in another “play-to-earn” blockchain game named Warena. Other popular crypto-games include Iluvium and Deathroad.
The risk of competition may render games like Axie Infinity less popular to newer releases and players could migrate elsewhere, devaluing the gaming platform, its universe and tokens.
Crypto market volatility is another risk that AXS investors might take into consideration.
Valuation is one of the biggest challenges in the NFT world. Some Axies are listed at over over $1trn on Axie Infinity’s marketplace.
Furthermore, there is always regulatory risk looming large over the cryptocurrency and digital asset space. Cryptocurrency markets are also susceptible to hacks and over-leveraged trades.
Moreover, AXS concentration among large holders, also known as whales, came in at 87%, according to blockchain analytics firm intotheblock.
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