Why AXS's 51% growth in 4 days is only the beginning for this token
Over the last four days, the cryptocurrency market has come to life as total capitalisation rose by 15%, while Bitcoin shot up 18%. Out of all the altcoins, AXS has done particularly well following the Axie Infinity team's decision to reconsider its economic model in favour of reducing inflationary pressure.
Axie Infinity is an incremental online card game that allows players to earn money. The game uses NFTs (non-fungible tokens) that represent creatures (Axies). Players can enhance their Axies' skill sets through battles and even buy and sell the characters themselves on the in-game exchange using the AXS token. The game became so popular in 2021 that it was #1 in terms of transactions and #3 in terms of turnover on the NFT marketplace.
In order to attract as many new players as possible, the developers pay out in-game tokens known as Smooth Love Potion (SLPs) for completing quests, campaigns and player-vs-player battles (PVPs). Users, on the other hand, burn tokens on Reconnaissance campaigns and other in-game actions. The problem is that SLPs are generated at around four times the rate that they're burned. This leads to an economic imbalance and inflationary pressure, which threatens the token's "unavoidable economic collapse", according to the project's developers.
After discussing the problem with users, the Axie Infinity team announced on 3 February that it would be making its economic model more hawkish. As such, it will be removing the rewards for daily adventures. This measure will enable it to slash its daily token issue to 130 million SLP. A further 45 million SLP per day will be done away with by cancelling remuneration for daily quests. The update will also change how PVPs work, and rewards are reduced if bots are found to be used.
As of November 2021, SLP has been trading below its list price, reaching a low of $0.009 on 3 February. Once the announcement about these changes to its monetisation, the token's capitalisation shot up 35%, while its daily turnover skyrocketed 400%. The rise in the value of these in-game coins will increase spending on building characters and their value. If the game remains as popular as it currently is, this will, in turn, lead to increased demand for the ASX token.
StormGain analytics group
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