Filipinos Earn Income Through Axie Infinity. Here Are Some Pros And Cons, According To Players, Investors

Many Filipinos keep finding unconventional ways to stay afloat while waiting out a prolonged pandemic. One of these is through “Axie Infinity,” a cryptocurrency-based online video game that adopts a play-to-earn business model.

Vietnamese startup Sky Mavis developed the game, which was released in 2018, but grew in popularity as the worldwide COVID-19 crisis drags on. Axie Infinity is anchored on blockchain technology and hopes to bring “economic freedom for gamers,” according to the company.

Filipinos said they are able to make money through this game, at times bigger than the amount they normally receive from their jobs, while only spending a few hours playing. It’s a fun way to make ends meet for some of them amid lingering issues of mass unemployment.

 The main character in the game is called an “Axie,” a non-fungible token (NFT) virtual pet that can be bred, battled, collected and used to earn the in-game cryptocurrency called SLP (smooth love potion).

Players also collect governance tokens called AXS (Axie Infinity Shards), which are used in breeding the Axies bundled with SLP. Game developers define AXS as “the glue that binds all Axie community members together.”

AXS and SLP are Ethereum-based cryptocurrencies, which are both accepted as a digital medium of exchange within the Axie NFT marketplace. They can later on be converted into real cash subject to their rates in a blockchain-controlled trading network.

But not everyone can easily participate in this hyped up trend. A team of three Axies is needed to start playing the game, and purchasing a team may cost around P60,000 to over P100,000, depending on the quality of the Axies.

However, “scholarship” in Axie Infinity is allowed. It is a profit-sharing mechanism between the managers and scholars. The managers, or those who invested money to purchase an account, may loan the Axie teams to their scholars, who would play on their behalf to earn the rewards.

The system allows more people to participate in the Axie Infinity universe without having to put a big amount of money up front – if they cannot afford it or are unwilling to do so – or without having to spend so much time to stay online and play a video game.

The Axie Infinity community channel on Discord permits aspiring players to seek scholarships. Several Facebook groups have also been created for managers to recruit scholars, and for the aspiring scholars to persuade their potential managers into hiring them.

In this scholarship scheme, managers may opt to split their total earnings from Axie Infinity between themselves and their scholars, equally or otherwise. Some offer a 60-40 or 70-30 sharing ratio.

Axie Infinity in the Philipppines

The Philippines, which remains constricted by varying levels of community quarantines, accounted for 29,000 of the 70,000 downloads of the game as of April this year, according to Sky Mavis.

Jon Brandon, a 20-year-old student from North Caloocan, became a scholar around December last year. Back then, Axie Infinity was not yet as popular, so getting qualified for scholarships was a lot easier.

Brandon said the SLP was valued at around P1 to P2 only when he started playing the game. In an interview with OneNews.PH last July 17, he said he was able to earn triple the amount of the income he used to have during his first two months.

Benedict Chavez, a 22-year-old scholar from Quezon City, began playing only in June this year, when the SLP increased its value at P5 to P6. He earns about P25,000 per month. The managers of both men implement a 60-40 split where the scholars get the bigger share.

Joseph Louie Miranda, a 29-year-old cryptocurrency miner from Valenzuela, likewise took a shot at this booming trend. He first learned about Axie Infinity from his customers. Miranda owns Minerodotcom, a shop that sells mining rigs, computers and computer parts.

“I checked it myself to see if it was legitimate because in reality, when it comes to crypto, there are several frauds, which is why you should not go full blast when you test them,” Miranda told OneNews.PH in a separate interview. He has been mining cryptocurrencies since mid-2016.

“Should you try it, you must consider that there is a chance you will lose and you must accept it from the get-go,” he advised. Miranda purchased his first Axie Infinity team from a middleman for P59,000.

Convinced with its legitimacy, he immediately purchased more Axies from the Axie Infinity marketplace for breeding the next day, spending about P400,000 to 500,000. He also had teams for scholarships. Within two weeks, Miranda had about 15 scholars.

At the time of the interview, which was held also on July 17, the cryptocurrency miner already had 32 scholars. According to Miranda, the return-of-investment in breeding Axies takes a shorter time compared to having scholars play the game.

Vince Edralin, a 21-year-old business management student and stock market trader from La Union, also dabbled in the popular game. With interests both on gaming and cryptocurrencies, Axie Infinity offered a perfect opportunity for him to enjoy and earn money at the same time.

Edralin became aware of Axie Infinity through an online article about a community in Cabanatuan, Nueva Ecija that switched to playing the video game to make up for their insufficient income amid the pandemic.

Around the second week of May, he bought his first team for P22,500, but revealed this amount is not good enough to invest on a team. Edralin went on to purchase another for P50,000.

“When I found out about Axie Infinity, I thought it was cool. I play and earn money at the same time. I mean, if I’m playing a game, I might as well earn from it… I just knew I had to try it out because they have a good [business] model,” Edralin told OneNews.PH on July 19.

Edralin also helped his friends get into the game by making them his scholars. He had around 10 scholars at the time and he planned on recruiting more. He required them to farm at least 4,500 SLPs per month or 150 per day.

Miranda pointed out that investing on quality Axies would be beneficial for both the managers and scholars. “When you give Axies of lower quality to your scholars, they would spend longer hours to reach their minimum [SLP target],” he said.

“In my case, I have scholars who can get it done within 45 minutes. Then, for the rest of the day, their only goal is to go beyond the minimum. That’s when I realized that it is a win-win situation when you give them powerful and quality Axies,” Miranda noted.

Miranda admits that the goal of every manager is to generate profit when they recruit scholars, so it is important to also help them achieve the desired results. “It’s like a business or a company wherein you have to provide the best for your employees,” he said.

He also required a daily quota of 150 SLPs, but his scholars were able to farm 260 SLPs on average, sometimes even reaching 300. Miranda implements a 60-40 partition with him taking a larger share of the total earnings. He said his scholars earn around P40,000 per month.

A daily quota of 150 SLPs used to be easy to achieve because one can earn 100 SLPs in adventure mode and 50 bonus SLPs by completing the daily quest. However, the cap earnings were halved to only 50 and 25, respectively, when the game was updated last August.

The Axie Infinity Season 18 upgrade prompted some managers to also lower their SLP targets. According to Sky Mavis, these adjustments were supposed to benefit the Axie Infinity ecosystem in the long run as it attempted to balance the minted and burned SLPs.

Meanwhile, SLP rewards in the arena were increased, favoring those with better quality Axies and higher skill level.

A risky investment

Miranda expressed belief that investing on play-to-earn games such as Axie Infinity is better than merely spending money on in-game purchases in other online video games that would yield no returns.

“Even if what you earn from Axie is just a small amount, as long as it gives you something back, it’s already better than nothing at all. We invest on things that don’t give us anything in return just because they make us happy, but with Axie, there are returns and it’s fun,” he said.

Edralin, who is the associate vice president for investment instruction of the Junior Fellowship for Financial Literacy – an organization formed by Ateneo de Manila University students – stressed a list of things must be considered and evaluated before investing into Axie Infinity.

“Generally, I ask them first (about) their objective and risk tolerance. For me, the first thing you must consider before you enter any investment is the risk. How much are you willing to lose and how comfortable are you to lose?” he said.

Edralin also warned against making decisions based only on the hype toward a product. “It is not wise to jump on the hype. You can earn through hype because you go along with the trend, you earn with people, but without a proper exit plan, you may be constrained,” he advised.

Price volatility of the cryptocurrencies must also be taken into account as they are harder to predict in contrast to stocks. Early in the second quarter of the year, the SLP soared to a rate of P20. As of Sept. 14, 3:00 p.m., the SLP was valued at P4.40.

“It is volatile and that’s the scary part. It can be unpredictable sometimes, so you cannot make a long-term plan for it, if that’s the case. Unlike with stocks, it is easier to create long-term plans…because you have the fundamentals,” Edralin noted.

Overall, Edralin believes Axie Infinity is a “risky investment,” considering it was just created in 2018 and has only recently gotten so much hype in the market. “Although you could earn a good passive income from it, the problem is it’s not always about the returns,” he said.

Chavez echoed the thoughts of Edralin, saying people should not rely on Axie Infinity alone. He has followed the news on cryptocurrency since 2014 and is very much aware of how its value fluctuates in the market.

He advised potential managers and scholars to always treat whatever money they are making from Axie Infinity only as “blessing,” or a backup source of income, even if their earnings from it tremendously exceeds their main source of income.

“The players themselves make the Axie economy work. They create their own supply and demand through the Axie marketplace and breeding… There's still a possibility that when the game has overcome the hype, the prices will [fall] and so will the income,” Chavez said.

Miranda, however, gave a more positive outlook saying Axie Infinity’s two-year history is enough for it to gain credibility. “Because I’m already in the cryptocurrency world, I am used to assessing the risks of whatever I venture into,” he said.

“Axie Infinity has been operating since 2018. That’s already two years…come to think of it, there must have been players since then. They have not shut down either. The developers are still there,” Miranda reasoned.

Brandon shared the same optimism that Axie Infinity would be sustained, at least according to a 10-year plan. “The [developers] have a 10-year roadmap and Axie is [only at its alpha stage]. There's a lot more in store for us provided that the market does not crash,” he said.

The video game player also said he would stick with Axie Infinity and engage in it for the long-term as long as it pays the bills. If the game goes downhill, then he will work “like a normal person,” Brandon said.

Miranda believes the game would be more stable if threats on the system would be handled well. He is referring to cyberattacks such as DDoS (distributed denial of service), which is intended to halt a site’s operation by flooding it with several malicious traffic. 

 “That’s how it is with crypto. It is a normal occurrence that it gets attacked because such is the nature of technology. We don’t know if they have enemies that want them [to stop]. It is up to the developers to take care of it. It is already beyond our control,” Miranda said.

 Similarly, the penetration of the so-called “whales” poses a risk, according to Miranda. The whales are individuals who hold large amounts of cryptocurrencies enough to manipulate its valuation.

“They will buy it at lower prices, then the (prices) will be pumped up. Hypothetically, it will get the whole world hyped, then suddenly, the whales will dump it. That is perhaps another risk but it is  also beyond our control once they venture into it,” Miranda said.

Meanwhile, other controllable risk factors also threaten Axie Infinity players, such as getting banned from the game. For Edralin, this is his top-most concern. An individual playing on multiple accounts is among the grounds for getting banned.

“With scholarship, the main risk is having your account banned. When your scholar’s account gets banned, even the account of the manager would be banned as well, which is why I am still hesitant on taking in scholars from people I haven’t met yet,” Edralin said.

Miranda shared that he once caught one of his scholars applying and getting accepted by another manager. “Fortunately, it was posted by that scholar that he got accepted. It is considered a mortal sin for us, so I expelled him,” he disclosed.

Aside from getting banned, Edralin also feared having his wallets hacked through phishing. It is a type of social engineering attack often used to steal user data, including login credentials and credit card numbers.

“Phishing scams are prevalent when it comes to cryptocurrencies that is why I am being careful of the links that I click, as well as when [visiting] cryptocurrency sites, especially the ones that are tricky and crafty,” he said.

Edralin also warned about a copycat Ronin Wallet that is in an advertisement form shown as the top search on Google Chrome. It looks similar to the legitimate Ronin interface and anyone who signs up through it could be hacked.

Ronin Wallet is a Google Chrome extension that “allows users to play Axie Infinity and other decentralized applications running on Ronin, an Ethereum sidechain built specifically for blockchain games.”

Ronin Wallet and Metamask are two crypto wallet accounts needed to cash in and convert Ethereum to Axies. Edralin opted to create multiple wallets so all his assets would not be taken away in case he gets hacked.

In several Facebook groups, many users reported that their SLPs disappeared from their accounts and their Axies got hacked and were suddenly “gifted” to other users. Clicking on phishing sites results in these cases.

Victims can only do as much as request for the suspicious Axie Infinity accounts to be banned, so they would not be used by the culprit to further attack other individuals, but the stolen Axies could no longer be returned to the original owner.

Regulations

In the Philippines, where the minimum wage ranges between P316 and P537 per day, Axie Infinity has definitely presented itself as an appealing option to expand families’ declining economic capabilities amid the pandemic fallout.

The primary reason behind it, according to some players, was how taxes were not deducted from their generated income. However, recent reports said the Department of Finance (DOF) recognizes transactions made from Axie Infinity as taxable.

Based on reports, Finance Undersecretary Antonette Tionko said the cryptocurrency earned from the game is taxable, although the government is yet to establish the mechanism to collect taxes from digital assets.

However, she disclosed that both the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC) have yet to decide if an “Axie” would be characterized either as a security or a currency. She said its characterization will determine how it should be taxed.

Sky Mavis has not yet registeredin the Philippines. Both the SEC and BSP earlier said they are still studying the regulatory touchpoints regarding Axie and that they are not yet requiring the company to register.

Sky Mavis told players in a statement a month ago to comply with regulation and tax rules of their home country.

Under the law, a foreign entity is required to secure primary registration with the SEC if they want to do business in the country. By registering, their onshore operations will be subject to Philippine tax laws.

If individuals do decide to transact with unregistered entities, the SEC said the government can offer little to no protection against harm and any form of misconduct from these companies.

“Domestic participants would have to go to the country where these platforms are registered and where they operate to file the appropriate complaint in order to seek redress,” the SEC said.

Plans impose taxes on earnings from Axie Infinity have since triggered negative reactions from the Filipino Axie community. They also wondered how the government would track those earning from the game if the nature of cryptocurrency allows anonymity.

Meanwhile, despite the high level of interest people are having on cryptocurrencies, Miranda asserted that skepticism toward them will always be present. “You cannot diminish and take it out of people. I myself did not even believe it at first four years ago,” he said.

Miranda likewise encouraged people to understand cryptocurrencies and how they work before assuming that investing on Axie Infinity is a scam, considering its prerequisite of buying at least three Axies before getting started.

“If you do not understand it fully, you would assume it’s a scam. Why would a game generate income? A computer? But if you really exert an effort in understanding it from the very beginning, you would understand why,” he said.

“You would realize that it’s just like the stock market. Why do stocks go high in value? Because there are people investing in it. The same goes with cryptocurrency. Why does Bitcoin or Ethereum increase in value? Because there are people investing in them,” Miranda noted.

Edralin said before investing in anything, all risks must be evaluated. In terms of Axie Infinity, risks will never be eliminated because of the volatile nature of cryptocurrencies.