October 22, 2022

Last year, Axie Infinity was touted as one of the best candidates for a mainstream blockchain app. The game, launched in 2018 by Vietnamese developer Sky Mavis, was a massive hit in the cryptocurrency world. It offered full-time job prospects to some players and commanded an entry price of over $1,000 at its peak, while Sky Mavis itself was valued at $3 billion after a $152 million funding round led by Andreessen Horowitz. Even more impressively, Axie Infinity was supposed to herald a new era of “play-to-earn” gaming built around crypto tech.

A year later, Axie’s future looks rockier.

Sky Mavis’ Ronin blockchain suffered a catastrophic hack last week, losing over $600 million to unidentified hackers and putting players’ funds in limbo as Sky Mavis froze Ronin transactions. But even before that, Sky Mavis was facing bigger questions about its long-term sustainability. Combining the freewheeling hype market of crypto with the complicated economic workings of a massively multiplayer game, Axie Infinity’s in-game world has spent months trying to avert a financial crisis. And, as it attempts to reinvent itself with a new free-to-play game, the situation offers a glimpse at what can happen when the hype hits its limits.

Axie Infinity — whose creators refer to it as both a “nation” and “a bleeding-edge game that’s incorporating unfinished, risky, and highly experimental…

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