Archived: The Metaverse Has Bosses, Too. Meet the 'Managers' of Axie Infinity

Getting started in Axie isn't like other games, however. To play Axie at the highest level of the game—to be, effectively, a boss—you need start-up capital. 

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To start playing Axie Infinity, you need to buy three Axie NFTs—an investment that, when crypto markets were stronger, cost well over a thousand U.S. dollars. Today, the cost hovers around $300. Axies can also be bred―for a fee that grows each time―using a basic tripartite genetics system allows for selection for different traits as well as random permutations. These newer and potentially stronger Axies NFTs can be minted for use in teams, or sold on marketplaces. 

Not everyone has enough money IRL to be their own boss in the metaverse, however. That's why you can also loan your Axies to players unable to afford their own in exchange for a cut of any profits they generate, which can run from 20 to 50 percent. Manager cuts can go even higher, with “ranges from 30% - 75% cut per scholar based on their monthly rewards”  according to Axie Infinity’s co-founder and chief operating officer Aleksander Larsen (also known as "Psycheout" online). These players are known as "scholars," and their benefactors—who may employ a few scholars or run massive operations with dozens or hundreds of scholars toiling away—widely refer to themselves as "managers."

"I can't specifically call it a boss/employee. It's more of a partnership, or lets call it a joint venture. One party puts up the capital and the other puts up the time,” Conor Kenny, an Axie Infinity manager and a Youtuber who documents crypto trades, told Motherboard. “The scholar grinds daily, you split the profits. Everybody wins!"

In his Youtube videos however, Kenny strikes a different tune. “I employ them,” he enthusiastically says of his scholars in a September video agonizing over whether Axie Infinity was still a worthwhile investment for managers. “As we stand right now, Axie Infinity is a Ponzi scheme. It’s built on new players coming into the world,” Kenny added in the video. 

This attitude was echoed by other managers Motherboard spoke to, who see their profits in Axie as depending on a constant influx of new players, many of whom will be scholars. 

Several sources in this piece agreed to speak only with their usernames or pseudonyms; Motherboard verified that they are indeed Axie managers.

The cottage industry of becoming a boss in the metaverse is turning into big business. But every business has its ups and downs, and Axie is in a downswing.

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Among managers, it's an open secret that Axie Infinity’s in-game economy is in free-fall but opinions are divided on whether a rebound is in the cards. The numbers don’t paint an encouraging picture. 

In the Feb. 3 Substack post announcing a host of coming reforms, Sky Mavis stated that,  starting Feb. 9, SLP rewards would be removed from some game modes entirely and significantly reduced in others. The goal was to slow down the daily production of SLP, cap it, then eventually deflate it and rescue the token’s price from its death spiral.

"We know that this is painful medicine,” the blog post said. “The Axie economy requires drastic and decisive action now or we risk total and permanent economic collapse. That would be far more painful."

Sky Mavis’s Substack post pointed out that four times as much SLP is being minted than burned; the only way to remove SLP in circulation and counter the massive pressures to constantly expand the supply (at great cost to the token’s value) is to “burn” it, usually by spending it on another feature of the game’s ecosystem―here, that means on breeding new Axies and making that breeding cost increasingly more SLP. New burn mechanisms will be added in due time, with the developers mentioning cosmetics, upgrades to Axie body parts, in-game emojis, special breeding events, and more. For now, however, these moves will have to suffice.

Over email, Larsen was optimistic about the future of his game and its token economy. “Sustainability of the Axie economy is critical and requires us to find an equilibrium, which is why we introduced economic adjustments in February,” Larsen told Motherboard. “Being at the bleeding edge of gaming and blockchain technology makes Axie Infinity particularly susceptible to volatility, from internal and external factors.”

Still, with the token at historic lows, earnings have never been lower. Now, there are schemes to run more than one account in a bid to bypass the SLP cap. Some managers take painfully high cuts—more than 50 percent—and pair them with strict quotas to generate above-market returns. 

When Motherboard asked Larsen whether he was concerned about the effects of this hack on Axie Infinity’s tokens and what steps were being taken to make Axie players and investors whole again, he said they were “committed to ensuring that all of the drained funds are recovered or reimbursed, and we are continuing conversations with our stakeholders to determine the best course of action."

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Given the ongoing crash of SLP prices, many scholars simply sit on their earnings instead of, say, burning it through breeding. Managers are well-aware that their workers are holding on to tokens that are quickly becoming worthless.

"One problem is most of them hold on to SLP waiting for [an all-time high] and don't believe in bear markets, but you can't force or tell someone how they should manage finances," Rafar told Motherboard. "I don't really understand why some people hold, I've asked them and they tell me they are 'saving for something big'―essentially a big purchase."

Before the reforms announced in February, the most SLP an incredibly skilled player could expect daily was somewhere north of 324 tokens per day in Season 19 if they had 20 or more Axies, played at the highest levels of Adventure Mode, and got a 60 percent win rate while battling in higher ranks of PvP battling. At the current SLP price of $0.02 that’s a daily wage of $6.48, excluding the manager's cut, which could be half of those earnings. In the Philippines, where nearly half of all players reside, the average minimum wage is about 366 pesos or $7.13. 

A research report from gaming research and consulting firm Naavik affirms as much: for low-level players or those just starting out, playing Axie Infinity each day earned less than a minimum wage job in the Philippines, the research concludes. That was in November, when the price oscillated between $0.06 and $0.08.

The firm's exhaustive research report dives into SLP’s inflationary nature, but also paints the picture of a business model that is inherently unstable and leverages perpetual growth to outpace sputtering tokenomics.

“That said, Axie Infinity’s business model, for the moment, depends on continued growth in its user base and continued fresh money entering the system to prop up the value of Axies, $AXS, and $SLP,” Naavik writes. “The pace of that new user growth is also critical, because any slowdown in the breeding and selling of Axies to new players will lead to a decline in revenue. We think this outcome is likely over the coming months barring any unforeseen spike in new users. In Sky Mavis’ words, 'this is unsustainable.'"

All of the bluster about Axie Infinity's future ecosystem, metaverse functionality, and more, ultimately don’t matter here―we’ve seen it all before, in one form or another.

"Crypto may be new, but games involving money are not. Years ago, my friends and I made a lot of money selling skins on the Steam market and the Diablo 3 item shop. For me, this is no different. I know there's a lot of technology behind blockchain and everything, but we are here for the games,” Esteban, a Brazilian manager who plays every day, told Motherboard. “I wish that one day, something like what I read in Ready Player One could be real. Time will tell if the metaverse is a new way of making a living, or a big bubble that will pop."

With reporting by Ekin Genç.