This Video Game Is Turning the Pandemic Jobless Into Crypto Traders

When Vincent Gallarte was laid off in July, the Manila IT analyst found an unusual financial lifeline: an online game that rewards players in cryptocurrency. In his first two weeks of Pokémon-like questing and battling, Gallarte earned more than 37,000 pesos ($732), three times what he would have made at his “real job.”

Like a lot of newcomers to so-called play-to-earn games, the 25-year-old Gallarte hadn’t had any particular interest in the world of Bitcoin, Ether and other cryptocurrencies. Now he imagines a lucrative side-hustle. “I started playing Axie the same day my employer terminated my contract,” he said. “I’m so grateful.”

Axie Infinity is among the biggest — and most polarizing — of these new games, which allow players to accumulate tradeable crypto coins. To investors like billionaire Mark Cuban and Reddit co-founder Alexis Ohanian, who were part of a $7.5 million funding round for Vietnamese game-maker Sky Mavis in May, it’s a gateway to crypto for people around the world. Others look at the buy-in cost, now more than $600, and the influx of newbies “working” for low-value tokens and see evidence the Axie Infinity model is unsustainable.

Axie Infinity’s daily active users swelled from 30,000 in April this year to more than 1 million in August, with most logging on from developing countries hit hard by Covid, including the Philippines, Brazil and Venezuela. Originally built on the Ethereum blockchain, Axie recorded around $30 million worth of Ether transfers a day over the past month, according to Etherscan. That’s not much in the $2.2 trillion universe of cryptocurrencies, but meaningful for players—and governments—in poorer countries. On Monday, the Philippines’ Department of Finance and the Bureau of Internal Revenue reminded players that their Axie Infinity profits are subject to income tax, local reports said.

In Axie Infinity’s virtual world, players steer creatures called Axies — based on a Mexican walking fish called axolotl — to acquire coins.Source: Sky Mavis

Sky Mavis Chief Operating Officer and co-founder Aleksander Leonard Larsen says they take their responsibility seriously, monitoring the in-game currencies and tweaking the market as needed. “Some people say we’re like the Fed,” he said in an interview. “We are ultimately the creators of this universe and are responsible for making sure that it lasts. We are always tracking the economy to make sure it stays at a healthy level.”

In Axie Infinity’s virtual world of Lunacia, players steer colorful, blob-like creatures called Axies to acquire two kinds of coins. Smooth Love Potions (SLP) are awarded for successful battles and can be cashed out or used in the game to breed new Axies. Axie Infinity Shards (AXS) can be earned in seasonal tournaments or for selling Axies in the game’s marketplace. AXS can be cashed out too, but like other governance tokens, they’re designed to function like shares: Sky Mavis says holders will eventually be able to vote on new game features or corporate spending proposals.

Gallarte heard about the game from a cousin. But players need three Axies to get started, at a minimum of around $200 apiece. That was far too much for the newly unemployed Gallarte. He sought out a sponsor, someone who lends his Axies to new players in exchange for a percentage of their in-game takings, sometimes as much as 90%. Anything a player earns with a borrowed Axie accrues to its owner, who is then supposed to wire the player his cut.

Gallarte appealed through Facebook to the Real Deal Guild, a group of Filipinos who now sponsor hundreds of players. They agreed to let him play their creatures for a small haircut: the guild would keep 30% of his earnings.

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