In the NFT game “Axie Infinity,” there is a strange system: wealthy players from the West employ players from the Philippines, Venezuela, or Thailand as “Scholars.” A German YouTuber explains how much money he made from it in August 2021: 15 % return is a great passive income. But now the market is collapsing.
What kind of game is this?
- Axie Infinity is a “Pokémon”-like game where everything revolves around “SLP,” the “Smooth Love Potion”: a currency that can be exchanged for money.
- In the game, there are Pokémon-like creatures called “Axie,” which players can battle and breed.
- In 2021, there was a hype around Axie Infinity. The game appeared to be the flagship game for “Play2Earn” games, games through which one can earn money. But now a harsh awakening threatens.
Investors lend Axies, want 30 – 70 % of the profits from their “Scholars”
How do wealthy Westerners make money from it? To play Axie Infinity, one needs to buy 3 Axies initially. These 3 Axies cost about $1,000 at the peak of the game, and now prices have fallen. But for many players, it’s still too expensive. This is because Axie Infinity is currently popular in regions where people don’t earn much (via playercounter):
- 40 % of Axie Infinity players come from the Philippines
- 6.3 % from Venezuela
- 5.7 % from the USA
- 4.7 % from Thailand
Investors with a lot of money in real life buy Axies and lend their Axies to players from “poor regions” to let them earn “Smooth Love Potions.” They then collect their share of the earnings from their farmers monthly.
According to a co-founder of Axie, the typical share lies between 30 and 70 % (via vice).
The investors call themselves “managers” – their people call them “Scholars.”
The German YouTuber Sw1pe Axie showed in a video from August 2021 (via youtube) that he had 16 “Scholars” playing for him. The best earned 5,886 SLP (about 586 euros), while the worst made 739 SLP (about 74 €). Sw1pe explained that he lets his Scholars keep 50 % of their profits.
Investor dreams of “passive income” – €3,000 profit a month with a €20,000 investment
Why is he doing this? According to the YouTuber, this way he achieves a great return of 15 % per month:
“€3,000 is quite a lot of money. However, considering that I spent only about €20,000 for all the teams combined – I believe it was even less, just about €18,000. That means I made approximately 15 % return or profit per month.”
How did it go on for him? Sw1pe released 2 more videos showing his earnings. They showed that he had expanded his program and doubled the number of “Scholars,” while his earnings remained relatively constant because, during the same time, the price of “Smooth Love Potion” halved in relation to the euro.
- In September 2021, 23 Scholars worked for him – he earned €2,895, at which point the price of 1 SLP had already fallen from 10 cents to 6 cents
- In October 2021, 31 Scholars worked for him – he made €3,463
- However, starting in November, Sw1pe did not publish any more videos about his earnings from the “Scholarship” – during November and December 2021, the value of 1 SLP fell from 6 cents to 2 cents
“Scholars” instead of China farmers
What is the difference to “China farmers”?“China farmer” is a term from MMORPGs like World of Warcraft. It implies that Chinese people are forced to farm an MMORPG in sweatshops for a pittance to sell the content to wealthy players in the West.
The difference with Axie is that there is no “company” behind it, but private individuals from the West who want to generate “passive income” as crypto investors. Additionally, their Scholars apparently are not from China, but from Thailand, Venezuela, and the Philippines.
This is what it looks like when you really play Axie Infinity:
“Digital colonialism” or “relationship that benefits all”?
Isn’t it all a bit strange? Yes, of course. This is about wealthy people letting others from poorer areas play a video game for very little money a month.
A journalist observing this strange relationship talks about “digital colonialism.”
However, the investors see themselves as benefactors. The site Vice quotes a manager employing up to 200 Scholars. He says the arrangement is mutually beneficial:
“I make money from them using my NFTs, and they make money by playing with them. Charity is something I’ve never experienced myself. However, the messages I receive from my Scholars are about how they use their profit to pay their bills, buy a washing machine, or get new teeth for their grandma.”
Market collapses and the “Scholars” resign
What is the problem? The video with the bill from Sw1pe Axie is from August 2021 – at that time, a “Smooth Love Potion” was still worth 10 cents. But since then, the value of a Smooth Love Potion has fallen sharply:
- At the peak on July 24, 2021, one SLP was still worth 29 cents
- On August 8, there were at least still 15 cents for it – so almost half
- On September 21, the price had fallen to 5 cents – about one-sixth
- Today, on April 22, 2022, one SLP is worth only 1.4 cents – just one-twentieth of the peak price
This leads to investors like Axie Swipe LP losing their cheap laborers in droves because no one wants to farm for the money anymore.
On Twitter, some investors complain that their “Scholars” are resigning and they are stuck with their Axies. One says it is now too time-consuming to find new Scholars because they quit faster than he can find new ones.
The managers are now discussing whether to sell all Axies and live with the loss or hope that the price will rise again. However, the prices seem to be so low that “giving up” is simply not an option for many.
The German “Sw1pe Axie” also seems to be fully committed to the game. Just last month, 7 new videos on the topic were released. But with the price drop, the dreams of a YouTube career also seem to be fading:
- While the video about his earnings with the “Scholar program” in August 2021 still has 3,300 views
- The latest videos only received between 70 and 430 views
We have reported about Axie before when the game was hacked for a lot of money:
Hackers steal €550 million from NFT game – Pokémon-like game was unfortunately too successful
