'A Billion-Dollar Crypto Gaming Startup Promised Riches and Delivered Disaster' (bloomberg.com) 67
"Even many Axie regulars say it's not much fun, but that hasn't stopped people from dedicating hours to researching strategies, haunting Axie-themed Discord channels and Reddit forums, and paying for specialized software that helps them build stronger teams..."
Bloomberg pays a visit to the NFT-based game Axie Infinity with a 39-year-old player who's spent $40,000 there since last August — back when you could actually triple your money in a week. ("I was actually hoping that it could become my full-time job," he says.) The reason this is possible — or at least it seemed possible for a few weird months last year — is that Axie is tied to crypto markets. Players get a few Smooth Love Potion (SLP) tokens for each game they win and can earn another cryptocurrency, Axie Infinity Shards (AXS), in larger tournaments. The characters, themselves known as Axies, are nonfungible tokens, or NFTs, whose ownership is tracked on a blockchain, allowing them to be traded like a cryptocurrency as well....
Axie's creator, a startup called Sky Mavis Inc., heralded all this as a new kind of economic phenomenon: the "play-to-earn" video game. "We believe in a world future where work and play become one," it said in a mission statement on its website. "We believe in empowering our players and giving them economic opportunities. Welcome to our revolution." By last October the company, founded in Ho Chi Minh City, Vietnam, four years ago by a group of Asian, European, and American entrepreneurs, had raised more than $160 million from investors including the venture capital firm Andreessen Horowitz and the crypto-focused firm Paradigm, at a peak valuation of about $3 billion. That same month, Axie Infinity crossed 2 million daily users, according to Sky Mavis.
If you think the entire internet should be rebuilt around the blockchain — the vision now referred to as web3 — Axie provided a useful example of what this looked like in practice. Alexis Ohanian, co-founder of Reddit and an Axie investor, predicted that 90% of the gaming market would be play-to-earn within five years. Gabby Dizon, head of crypto gaming startup Yield Guild Games, describes Axie as a way to create an "investor mindset" among new populations, who would go on to participate in the crypto economy in other ways. In a livestreamed discussion about play-to-earn gaming and crypto on March 2, former Democratic presidential contender Andrew Yang called web3 "an extraordinary opportunity to improve the human condition" and "the biggest weapon against poverty that we have."
By the time Yang made his proclamations the Axie economy was deep in crisis. It had lost about 40% of its daily users, and SLP, which had traded as high as 40 cents, was at 1.8 cents, while AXS, which had once been worth $165, was at $56. To make matters worse, on March 23 hackers robbed Sky Mavis of what at the time was roughly $620 million in cryptocurrencies. Then in May the bottom fell out of the entire crypto market. AXS dropped below $20, and SLP settled in at just over half a penny. Instead of illustrating web3's utopian potential, Axie looked like validation for crypto skeptics who believe web3 is a vision that investors and early adopters sell people to get them to pour money into sketchy financial instruments while hackers prey on everyone involved.
The article does credit the company for building its own blockchain (Ronin) to provide cheaper and faster NFT transactions. "Purists might have taken issue with the decision to abandon the core blockchain precept of decentralization, but on the other hand, the game actually worked."
But the article also chronicles a fast succession of highs and lows:
Bloomberg pays a visit to the NFT-based game Axie Infinity with a 39-year-old player who's spent $40,000 there since last August — back when you could actually triple your money in a week. ("I was actually hoping that it could become my full-time job," he says.) The reason this is possible — or at least it seemed possible for a few weird months last year — is that Axie is tied to crypto markets. Players get a few Smooth Love Potion (SLP) tokens for each game they win and can earn another cryptocurrency, Axie Infinity Shards (AXS), in larger tournaments. The characters, themselves known as Axies, are nonfungible tokens, or NFTs, whose ownership is tracked on a blockchain, allowing them to be traded like a cryptocurrency as well....
Axie's creator, a startup called Sky Mavis Inc., heralded all this as a new kind of economic phenomenon: the "play-to-earn" video game. "We believe in a world future where work and play become one," it said in a mission statement on its website. "We believe in empowering our players and giving them economic opportunities. Welcome to our revolution." By last October the company, founded in Ho Chi Minh City, Vietnam, four years ago by a group of Asian, European, and American entrepreneurs, had raised more than $160 million from investors including the venture capital firm Andreessen Horowitz and the crypto-focused firm Paradigm, at a peak valuation of about $3 billion. That same month, Axie Infinity crossed 2 million daily users, according to Sky Mavis.
If you think the entire internet should be rebuilt around the blockchain — the vision now referred to as web3 — Axie provided a useful example of what this looked like in practice. Alexis Ohanian, co-founder of Reddit and an Axie investor, predicted that 90% of the gaming market would be play-to-earn within five years. Gabby Dizon, head of crypto gaming startup Yield Guild Games, describes Axie as a way to create an "investor mindset" among new populations, who would go on to participate in the crypto economy in other ways. In a livestreamed discussion about play-to-earn gaming and crypto on March 2, former Democratic presidential contender Andrew Yang called web3 "an extraordinary opportunity to improve the human condition" and "the biggest weapon against poverty that we have."
By the time Yang made his proclamations the Axie economy was deep in crisis. It had lost about 40% of its daily users, and SLP, which had traded as high as 40 cents, was at 1.8 cents, while AXS, which had once been worth $165, was at $56. To make matters worse, on March 23 hackers robbed Sky Mavis of what at the time was roughly $620 million in cryptocurrencies. Then in May the bottom fell out of the entire crypto market. AXS dropped below $20, and SLP settled in at just over half a penny. Instead of illustrating web3's utopian potential, Axie looked like validation for crypto skeptics who believe web3 is a vision that investors and early adopters sell people to get them to pour money into sketchy financial instruments while hackers prey on everyone involved.
The article does credit the company for building its own blockchain (Ronin) to provide cheaper and faster NFT transactions. "Purists might have taken issue with the decision to abandon the core blockchain precept of decentralization, but on the other hand, the game actually worked."
But the article also chronicles a fast succession of highs and lows:
- "In Axie's biggest market, the Philippines, the average daily earnings from May to October 2021 for all but the lowest-ranked players were above minimum wage, according to the gaming research and consulting firm Naavik."
- Axie raised $150 million to reimburse victims of the breach and repair its infrastructure. "But nearly two months later the systems compromised during the hack still weren't up and running, and the executives were vague about when everything would be repaired. (A company spokesperson said on June 3 that this could happen by midmonth, pending the results of an external audit....):
- Days after the breach it launched Axie: Origin, a new alternate version with better graphics/gameplay — and without a cryptocurrency element.
- About 75% of the 39-year-old gamer's co-players have "largely" stopped playing the game. "But at least one was sufficiently seduced by Axie's potential to take a significant loan to buy AXS tokens, which he saw as a way to hedge against inflation of the Argentine peso. The local currency has indeed lost value since he took out the loan, but not nearly as much as AXS."
Thanks to long-time Slashdot reader Parker Lewis for sharing the article
Ah! The promise of riches... (Score:5, Insightful)
Re:Ah! The promise of riches... (Score:5, Interesting)
Yep, so many scams are done, just by luring people with easy money... even back to the days of USENET and "make.money.fast" posts.
It is amazing that cryptocurrencies lasted this long. Even in 2013-2014, people were wondering how many people would keep running into the bottom of the pyramid, even though it was obvious with the halving of output and the original people owning so much of the currency, that they wouldn't get much.
Same with NFTs, although the tax law changes killed those after a few years.
Makes me wonder how far this will fall. Cryptocurrencies in general seem "too big to fail" with all the money thrown into them. Wonder how all this will settle out?
Re:Ah! The promise of riches... (Score:5, Insightful)
Yep, so many scams are done, just by luring people with easy money... even back to the days of USENET and "make.money.fast" posts.
It is amazing that cryptocurrencies lasted this long. Even in 2013-2014, people were wondering how many people would keep running into the bottom of the pyramid, even though it was obvious with the halving of output and the original people owning so much of the currency, that they wouldn't get much.
There is an unlimited supply of stupid people. No matter how many people lose money, no matter how obvious these scams are, stupid people just keep jumping in and getting fucked.
All we can do is sit back and laugh.
Greed not just stupidity (Score:2)
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It's "motivated reasoning". It's not *intelligence* that's wanting, it's *vigilance*.
Logic isn't in the driver's seat. Emotion is. Once you have bought into a fabulous gains scenario emotionally, logic is going to get locked in the trunk and only let out to rationalize bad decisions.
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There's not an unlimited supply of stupid people.
The reason pyramid schemes collapse is the stupid people supply line dries up.
Re: Ah! The promise of riches... (Score:2)
But we make more every day.
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There's not an unlimited supply of stupid people.
Good lord, have you ever actually met people?
They are, by and large, awful, and a huge percentage of them are dumber than a bag of hammers.
Trust me, there IS an unlimited supply of stupid people. Always has been, always will be.
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Even if 99% of people are stupid, the population itself is finite.
Therefore any pyramid scheme or ponzi which requires an actual infinite supply of stupid people will collapse.
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Even if 99% of people are stupid, the population itself is finite.
Therefore any pyramid scheme or ponzi which requires an actual infinite supply of stupid people will collapse.
Yes, but by then you'll be rich. Who cares about the suckers, you got yours. That's the end game- you have their money and they don't.
Trust me, there are more than enough dolts and goobers out there to fund the most lavish lifestyle you can imagine.
Most religions are Ponzi schemes and look at how their head grifters live- private jets, a different Lamborghini for every day of the week, multiple mansions, etc etc etc.
Never underestimate the stupidity and gullibility of people. It's a barely-tapped resource w
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Some of the crypto stuff can get up there. For example the fact that people trusted exchanges and handed their crypto to another person's wallet, with the promise that they might be able to get their crypto back in the future. That is like handing a bar of gold to someone you don't know at all, tell them they can keep it, as long as they can get it back to you. Unlike gold depositories, there is no insurance or regulation in case something happens... or if what was deposited just walks off.
The entire cry
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For example the fact that people trusted exchanges and handed their crypto to another person's wallet, with the promise that they might be able to get their crypto back in the future. That is like handing a bar of gold to someone you don't know at all, tell them they can keep it, as long as they can get it back to you. Unlike gold depositories, there is no insurance or regulation in case something happens... or if what was deposited just walks off.
Seems ridiculous to those of us who know a bit about how this stuff works. But much of the population is used to living in a highly regulated world to the point where they don't realize just how wild-west some of this stuff is. If I were to move to a new locale, I might open an account at the credit union located closes to my house. I probably wouldn't do a lot of research to make sure that it was a real deposit-taking institution and the like as fake banks aren't really a problem.
Depositing cryptocur
Re:Ah! The promise of riches... (Score:4, Informative)
Makes me wonder how far this will fall. Cryptocurrencies in general seem "too big to fail" with all the money thrown into them. Wonder how all this will settle out?
But it’s not real money, for the most part. It’s a mostly self-contained system with a questionable claimed equivalent value set against fiat currency.
It’s not as if the huge bitcoin swings over the past couple of years have had any real impact on the actual economy, for example. All the coins could fall to zero and there’d be little-to-no impact on the vast majority of people.
Re:Ah! The promise of riches... (Score:5, Interesting)
I didn't know that Yang said this was "the biggest weapon against poverty we have." I wonder if that statement was made out of utter ignorance, or a malicious attempt at pandering to the misguided motivations of his voter base.
A new substitute for money will do nothing to combat poverty, as the basic mechanisms by which wealth flows from the poor to the rich will remain in place. If you want to combat poverty, look into microcredit [wikipedia.org], arguably the actual best weapon against poverty we have.
Investment in infrastructure is also an excellent means of wealth transfer from the rich to the poor, provided the poor are in a position to utilize the infrastructure improvements. Labor automation could be THE thing that brings about the end of poverty as we know it, but it will require an accompanying cultural and economic revolution in order to achieve this.
Cryptocurrency, on the other hand, is just another greater-fool game.
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Actually there's a study by Esther Duflo that unfortunately shows that microcredits have no impact whatsoever on poverty.
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Makes me wonder how far this will fall. Cryptocurrencies in general seem "too big to fail" with all the money thrown into them. Wonder how all this will settle out?
But it’s not real money, for the most part. It’s a mostly self-contained system with a questionable claimed equivalent value set against fiat currency.
It’s not as if the huge bitcoin swings over the past couple of years have had any real impact on the actual economy, for example. All the coins could fall to zero and there’d be little-to-no impact on the vast majority of people.
For example, the peak valuation of this company was $3 billion, but the actual money invested was only $160 million. So even though the major chunk of that $3 billion valuation is gone only that $160 million in cash was actually wasted.
The crypto market is massive based on valuations, but how much fiat currency has actually been spent on crypto?
Another aspect of "too big to fail" isn't the amount of money but the role the money is playing. The reason banks were too big to fail is they were right at the cent
Re: Ah! The promise of riches... (Score:2)
IMO there's a person on the planet that can actually value what any cryptocurrency will be in the future because there is no value the only value in a cryptocurrency is what the value is now.
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But it’s not real money, for the most part.
SHHHH!!
FFS, don't tell the noobs, we need them to keep flushing their money down the crypto-toilet into our wallets.
Errr, I mean, "we need them to keep investing their money into these amazing financial opportunities.
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Yep, so many scams are done, just by luring people with easy money... even back to the days of USENET and "make.money.fast" posts.
It was not easy money, for many in the Philippines it was a full time job to play this game.
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I imagine that there will be surges of interest in cryptocurrencies until either someone figures out how to make them work, the governments of the world generally ban them, or both. (Banning them won't end their use, but it will end their popularity.) Any time there's money to be made, people will be trying to make it.
Re: Ah! The promise of riches... (Score:2)
https://en.m.wikipedia.org/wik... [wikipedia.org]
"The Albanian Civil War in 1997 was sparked by pyramid scheme failures in Albania soon after its transition to a market economy. The government was toppled and more than 2,000 people were killed"
Re:Ah! The promise of riches... (Score:4, Insightful)
Not just the promise of riches. It's the promise of something for nothing. Get in on the ground floor! Get rich quick!
Step 2? (Score:4, Insightful)
Ah, yes? So? (Score:2)
Why is this a story? Is there anything unexpected or noteworthy in what happened?
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We get the sit back and enjoy the show of stupid scammers and grifters losing money on a massive scale.
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Indeed.
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Why is this a story? Is there anything unexpected or noteworthy in what happened?
Exactly. I read the title:
A Billion-Dollar Crypto Gaming Startup Promised Riches and Delivered Disaster
And thought two things: (1) And? (2) Seems about right.
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I like a story that tells you everything you need to know in the title so you don't actually have to read the story. Like this one.
In fact, you could pare the title down quite a bit and lose nothing: 'Crypto Startup Delivered Disaster' . Maybe even remove the word 'startup'.
Re:Ah, yes? So? (Score:4, Insightful)
People are so gullible that they need to be repeatedly smacked in the face with the fact that web3 and NFTs are scams from start to finish. If the story keeps just one more dumbass from sinking their life's savings into it and then finding out that NFTs are extremely fungible, then it will have been worth it.
The constant reminders also help counter the incessant hype and bullcrap from the gaming companies. If you don't aggressively fight lies then people only see the lies and you get the incredible harm the antivaxxers have done.
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I don't think that helps. See, e.g., anti-vaxxers, flat-earthers, and other "believers" of any kind. They just dig their heels in and insist that, of course, _they_ have the truth and you are just trying to take something from them.
Well, to be fair you are: You are trying to take their false sense of certainty.
How can people play to win, unless (Score:2)
Unless other players are losing money or it's really a Ponzi scheme?
Just because there is a cryptocurrency or NFTs involved doesn't create value.
unregulated Casino does not need to pay out any th (Score:2)
unregulated Casino does not need to pay out any thing and has lot's of shills
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If you want to make
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Rich people pay, poor people grind.
Just like gold farmers in WoW, except they're trying to legitimize it.
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But you do understand why WoW and other MMOs try to discourage gold farming, yes? There's a reason beyond "but we don't get a cut".
Since the ingress and egress of gold isn't fixed, as in a real economy where there is some authority that mints coins and only so many coins exist as are minted, every time some monster dies in a MMO, money is generated. Either it drops directly or the monster drops some crap that a vendor turns into coins. Every time a player pays for something, money is destroyed. Because the
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I think I dimly remember a few games that actually wanted to make their economy run on real money. Few of them still exist.
Didn't Diablo 3 try something akin to this for a while 'til the players revolted?
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Well if you ask me, any game that involves grinding is defective. But they didn't ask me.
Wow (Score:3)
on March 2, former Democratic presidential contender Andrew Yang called web3 "an extraordinary opportunity to improve the human condition" and "the biggest weapon against poverty that we have."
TIL Andrew Yang knows nothing about crypto.
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He meant "The biggest weapon against poor people". He just misspoke.
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Nono, he's a Democrat. He's one of the "incompetence" people, not the "malice" ones.
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Alexis Ohanian, co-founder of Reddit and an Axie investor, predicted that 90% of the gaming market would be play-to-earn within five years.
In the same vein, Alexis Ohanian knows nothing about the gaming market.
Well duh (Score:2)
And this game isn't the only one by any means. There are a constant stream of MMOs relying on NFTs or crypto which are obvious scams where the game will never materialise. e.g games selling virtual plo
Amusement park for employees only (Score:2)
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In a big enough amusement park, potentially a long time.
Now imagine an amusement park where everyone is a worker and they all have the same job: to ride the rides.
lol (Score:3)
the entire internet should be rebuilt around the blockchain
No.
Wait, what? No.
'what web3 looks like in practice' (Score:4, Insightful)
From the article: 'Axie provided a useful example of what [web3] looked like in practice'.
Indeed. It's all lies and scams, and only the guys at the top get rich. Over and over and over again.
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If you spell "web3" sideways it forms the word 'scam'.
Also, how do WE become the guys at the top?
Decentralized blockchain - what's the use? (Score:2)
"Purists might have taken issue with the decision to abandon the core blockchain precept of decentralization, but on the other hand, the game actually worked."
If it is centralized, what's the advantage of a blockchain over a database except for marketing speech?
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I hope the content has been useful for the fans of this fascinating game. Thanks.
Well, it's at least useful for demonstrating how full of shit your head is. You're a laughably sad person. Thanks for sharing.
Gaming is turning into a free workforce (Score:2)
Sounds like Democrat Poltics (Score:2)
For those who lost... (Score:1)
But, you gotta take the first step and admit you have a problem.
Thanks for this article! (Score:1)