During the height of the COVID-19 pandemic, Gian Carlo McGlay, a migrant worker from the Philippines, believed he had discovered a viable solution to the economic challenges posed by lockdowns. His strategy? Leading a team of “play-to-earn” cryptocurrency gamers who engaged with the popular game, Axie Infinity. Initially, the venture seemed promising, as players earned tokens called Smooth Love Potion (SLP), which could be converted into real money, thus providing a stable income during tumultuous times. However, as often occurs in the unpredictable world of cryptocurrency, the dream rapidly devolved into a nightmare.
Axie Infinity, a blockchain-based game developed by Vietnamese company Sky Mavis, enabled players to earn SLP by engaging in battles with Pokémon-like characters. At its zenith, the game attracted 2.7 million active daily users, with half of them hailing from the Philippines. Players, or “scholars” as they were known, who could not afford to purchase the game’s characters, rented them from “managers” like McGlay, in exchange for a portion of their earnings. For a time, this arrangement was highly profitable, with McGlay’s scholars earning between 5,000 to 10,000 pesos per week—a considerable sum in a country with a much lower minimum wage. Unlike other managers, McGlay, who had worked as a fisher in Alaska before the pandemic, did not profit from the venture, allowing his scholars to retain all their earnings.
However, the prosperity was short-lived. The value of SLP tokens plummeted by 99% from its peak, mirroring a broader collapse in cryptocurrency prices. McGlay, who had made significant investments in Axie Infinity, faced losses amounting to 1 million pesos (approximately US$18,031). “Nothing was left. My Axie Infinity assets became worthless, so I just gave them away,” he lamented. The situation was further compounded by a massive hack in March 2022, where hackers absconded with approximately US$615 million in cryptocurrency from a blockchain network that facilitated crypto transactions in and out of the game. This incident severely damaged the game’s credibility, causing its user base to dwindle to about 250,000 active daily users.
The collapse of Axie Infinity had a profound impact on the lives of many Filipinos who had come to rely on the game for their livelihood. Christopher Cruz, a Filipino businessman and cryptocurrency trader, managed 200 Axie scholars at the height of the game’s popularity. He earned as much as 600,000 pesos a day by taking a 60% cut of his players’ income. “I felt like a drug lord,” Cruz admitted. “I could buy everything I wanted — every item inside the mall was never too expensive.” However, as the value of SLP tokens plummeted, so did the earnings of Cruz’s scholars, most of whom were high-school students and gig workers from impoverished provinces. Many of them abandoned the game, turning to gig work as delivery riders, online clothes sellers, or pursuing full-time education.
The rise and fall of Axie Infinity serve as a cautionary tale for those considering investments in the volatile world of cryptocurrency. Elaine Tinio, a marketing professional in Manila, once played the game for up to four hours a day to supplement her income. Encouraged by her initial profits, she invested increasingly in Axie characters. However, when the value of SLP tokens declined sharply, she faced a loss of 200,000 pesos, equivalent to about five months of her salary. “Greed got the best of us,” she confessed. Luis Buenaventura, manager of Yield Guild Games (YGG) Philippines, a group that invests in non-fungible token (NFT) games, observed that players motivated solely by financial rewards have moved on to other pursuits. YGG continues to rent out Axie’s NFT characters, but the demand is not as high as it once was.
Despite the setbacks, there remains a glimmer of optimism in the crypto gaming community. The Bangko Sentral ng Pilipinas (BSP) has announced plans to launch a Central Bank Digital Currency (CBDC) by 2024. This digital peso aims to offer a more stable and regulated alternative to existing cryptocurrencies, potentially providing a safer investment for those seeking to earn a living through crypto gaming.
The experience of Axie Infinity underscores the inherent risks of the cryptocurrency market. While the game offered a temporary escape from poverty for many Filipinos, the volatile nature of digital assets means fortunes can change overnight. The story serves as a poignant reminder of the importance of cautious investment. As the industry evolves, both players and regulators must heed these lessons to navigate the complex landscape of crypto gaming with prudence.
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