The Philippine National Police Against Cybercrime has released a document titled “Understanding the Risk of Cryptocurrency Gaming Scheme” in which it warns its citizens about the risks of losing money and NFTs in the popular game Axie Infinity.

In order to participate in the “play-to-earn” game, which gives the opportunity to earn cryptocurrencies, there is indeed a non-negligible initial investment to be undertaken, and during one’s journey there are many chances of losing one’s virtual money.

Axie Infinity had become very famous in the Philippines in late 2021, a time when NFT sales volumes had exploded, while now they seem to be going through a rough patch.

Let’s look at all the details together.

According to Philippine authorities, users have a high risk of losing their money and NFTs on Axie Infinity

Philippine law enforcement agencies in charge of overseeing cybercrimes in the country (PNP ACG) examined some of the patterns by which play-to-earn games could harm the finances of its citizens within a document titled “Understanding the Risk of Cryptocurrency Gaming Scheme.”

Amidst all of them, the eyes of the National Police were drawn to the famous metaverse game Axie Infinity and its various NFTs connected to it.

The latter, which relies on Ronin‘s (Ethereum’s sidechain) blockchain, is a “play-to-earn” in which participants can earn AXS tokens simply by fighting against other players in the Arena, winning trophies, and interacting with the marketplace and their own virtual lands in the form of NFTs.

In the Philippines, where the average salary is about $270, Axie Infinity became very popular from 2021 onward since with the earnings projections it offered, it was perceived as a real job by the population.

Law enforcement agencies in the country have warned citizens of the devious psychology associated with this game, where in order to start being competitive and actually earn money, it is necessary to make an initial investment of about $300 by buying various NFTs and game accessories.

This is definitely a high average, especially in the Philippines, considering that the average cost on traditional games that do not rely on the Web3 is $100 per user.

In addition, as if that were not enough, the PNP ACG highlighted in its statement a whole series of risks related to Axie Infinity and more generally to the crypto world, where losing money and one’s NFTs is indeed very easy.

In fact, there are a variety of dangers that lurk around the corner when approaching decentralized worlds.

First of all, the volatility of the market means that one’s initial investment can go way down if made with the wrong timing.

If you are not careful and meticulous in managing your wallet, you might lose all your funds by sending assets to the wrong smart contract address or to the wrong address.

Additionally, there are hacking threats and online scams that add another adversarial factor in this context.

In references to all these dangers, the Philippine Police Department commented as follows:

“Just because a game’s underlying blockchain is secure does not mean its engine or marketplace is secure.”

The PNP ACG advises its citizens to be careful with investments related to crypto assets and to always do proper research before investing money in NFTs and play-to-earn schemes such as Axie Infinity, as well as to be very cautious in online environments in general.

NFTs: sales volume analysis of the Play-to-Earn game

The Play-to-Earn game Axie Infinity has become extremely popular in the Philippines since May 2021, the month in which its NFT trading volumes began to take off reaching the $30.9 million mark in sales (CryptoSlam data).

This is a monstrous increase in volumes when we consider that in January 2021 alone, Axie’s NFT collection registered $930,000 in trades.

The game’s success has continued to rocket throughout 2021, touching the insane $869 million in sales as of August 2021.

The FOMO of players in the metaverse, 95% of whom are located in the Philippines and Venezuela, began to fall dramatically during 2022 in parallel with the bearish market for Bitcoin and the entire crypto sector.

In February 2022, NFT trading volumes fell below $100 million while in December 2022 we came to total only $1.86 million.

Compared to the last month of the previous year, the downsizing was about 172 times.

In January 2023 we saw a brief resumption of the trend, with volumes doubling from the previous month, continuing around $2-3 million in sales per month through May 2023.

On the other hand, June and July saw low trading activity, driven mainly by the decline in general interest in the crypto world during this summer.

Yesterday, daily trading volumes stood at $93.51 thousand: a dismal number considering that in the height of the Axie Infinity fad its NFTs totaled several tens of millions of dollars every day.

NFTs are not the only cryptocurrencies in the Axie Infinity ecosystem to have marked a sharp decline since 2021: the AXS governance and utility token, used as a game reward token, has also had a forgettable two years.

Starting from its all-time high, touched in the first week of November 2021 at $160 (weekly candlestick closing price), the crypto has lost nearly 97% of its value to reach $5.36 nowadays.

When the Philippine Cybercrime Police talked about volatility risks regarding the crypto market, they were referring to just such scenarios.

Those who invested in the AXS token in November two years ago or got into the Axie Infinity game and its NFTs, have surely lost money as well as valuable time.

Axie Infinity seriously believed it after its crypto game Origins got approval from Apple to be launched on the App Store, but it still does not see any to-the-moon move. 

As a matter of fact, AXS is up +24% in price from a month ago, but down -55% from last year. 

Axie Infinity and Apple’s approval of the crypto game Origins

It was May, when Axie Infinity (AXS) got the famous approval to launch its crypto game Origins on Apple’s App Store. 

Obviously, this collaboration saw the video game company with NFTs and crypto, adapt its game with a different version, so as to be in line with the standards required by the tech giant. 

Origins’ Play-to-Earn card game initially gave players free “starter characters,” instead of offering them the classic NFTs that users had to buy or rent in the original game. 

Apart from this, Axie Infinity had managed to get into Apple’s heart, believing strongly that this would finally lift the price of the AXS crypto as well. 

And indeed, on that very day AXS had registered a 13% price pump, rising from $6.90 to nearly $8. To date, however, the enthusiasm seems to have died down a bit, as AXS is not flying. 

Axie Infinity: collaboration with Apple does not make the AXS crypto fly

As previously anticipated, the collaboration with Apple brought the price of the Axie Infinity (AXS) crypto close to $8. 

Too bad that at the time of writing, AXS is worth $5.95, and as of May to date, it has also touched a low of $4.7. 

Not only that, when looking at the annual price chart of AXS, it is clear that the blockchain-based gaming crypto is in total bear market, with a price dump of -55%. Yet, last year, it was in the middle of the “crypto winter.” 

In contrast, major crypto assets such as Bitcoin (BTC) and Ethereum (ETH), are seeing bullish price action compared to last year, +53% and +72%, respectively, at the time of writing. 

The crypto game appears to be losing popularity

Besides the price of AXS, there are also other indicators that confirm that the Axie Infinity crypto game launched on Apple, is losing popularity. 

And in fact, since May, Axie Infinity has also seen a decline in terms of the number of digital wallets engaged in the game (UAW), down 19% in the past 30 days, according to data from DappRadar. 

Not only that, the gaming data site Activeplayer, also pointed out that Axie Infinity would see a drop of more than 6,600 users in the last 30 days. 

Speaking of Non-Fungible Tokens, according to CryptoSlam, Axie Infinity’s NFT trading volume dropped to $1.4 million in June, down from $2.1 million in May. When considering that during the 2020 pandemic, Axie Infinity’s monthly trades exceeded $700 million in a single month, this is therefore another decrease.

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Axie Infinity (AXS) recorded a +15% price spike just after the announcement that the new crypto game Origins was launched on Apple’s App Store. 

Axie Infinity: AXS’s price increase thanks to collaboration with Apple

Just yesterday, Axie Infinity announced its new collaboration with Apple to launch the crypto game Origins on the App Store. 

1/ Origins has passed review with Apple and is now available on the App store!

We believe this is the first time that Apple has agreed to make an externally-purchased NFT usable on the App Store.

Let’s dive in pic.twitter.com/LYPLnHEVF6

— Axie Infinity | #AxieOrigins, #AxieHomeland (@AxieInfinity) May 17, 2023

For the occasion, the NFT and crypto video game company had to prepare its game in a different version in order to secure access to Apple’s App Store. 

In fact, Origins is a card game that will initially give players free non-NFT “starter characters.” This is a change from the original Axie Infinity game, for which users had to buy or rent NFTs.

Thanks to this launch, AXS experienced a 13% price pump on the same day yesterday, rising from $6.90 to nearly $8. 

Axie Infinity (AXS) expands on Apple and attracts new users with its Play-to-Earn game

The launch of Origins on Apple will initially allow only users of devices in Latin America and Asia to download Axie Infinity’s game, which will thus increase its user base.

Specifically, these are users in countries such as Argentina, Colombia, Peru, Mexico, Venezuela, Indonesia, Malaysia and Vietnam.

And indeed, according to reports, the Axie Infinity ecosystem has already seen a 300% surge in new players joining the network, compared to just a week ago. 

To give you an idea, on 12 May, there were only 35 new users who joined the AXS network. In contrast, on 17 May, just 12 hours after Apple’s news, the new wallet addresses created had already reached 137. 

After all, with more than 1.8 billion active Apple devices worldwide, it is not surprising that Axie Infinity has seen an increase in new users.

AXS price performance

The increase in adoption and demand for AXS in order to play Origins led to the increase in its price within hours. At the time of writing, however, AXS has settled at $7.30. 

This is a green position compared to a week ago, but still not too favorable when looking at the price of AXS a month ago. 

And indeed, AXS was worth $6.85 a week ago and $9.43 a month ago. Still far from its all-time high or ATH – All Time High recorded in early November 2021 at a price of $160. 

In any case, AXS remains in 56th position in the crypto ranking by market capitalization, while in the “gaming crypto” category, AXS is in fourth position, after ApeCoin (APE), The Sandbox (SAND), and Decentraland (MANA).

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Axie Infinity is one of the first blockchain-based games using NFTs and the Play-to-Earn concept, set in the metaverse. But how is the AXS token responding to the general crypto bearish trend?

Axie Infinity: what it is and how the blockchain game works

Created in 2017 by Vietnamese studio Sky Mavis, Axie Infinity is one of the first games based on the Ethereum Blockchain. 

Basically, the game involves users collecting Axies as virtual pets, with aspirations to fight, breed, collect, grow and build kingdoms for their Axies. 

In addition, the Axie Infinity universe uses a design that allows players to own their virtual assets in the Non-Fungible Token (NFT) format and achieve an advanced level of skill. 

To start playing, users need to set up their crypto wallet and interact with the digital marketplace to purchase their first 3 Axies, which are essential to be able to download the app and start playing. 

Axies are NFTs with different factors such as rarity, experience, attributes, and type, with prices ranging from $30 to $1,000 each. 

Axie Infinity: NFTs and the Play-to-Earn model

The blockchain game has quickly become the leader as a game with NFTs, recording the highest ceiling with its sales last November 2021, at $40 million in one day. 

According to the data at the time of writing, however, precisely during this year of general bear market, sales of Axie NFTs have also suffered, dropping yesterday to $10,000. 

At the same time, Axie Infinity was also one of the first games on blockchain to introduce the Play-to-Earn (P2E) model, which rewards participants by adding value in different ways to the game’s world or ecosystem. 

Play-to-Earn was introduced through two simultaneous changes: the introduction of Love Position as a requirement to breed Axies (thus increasing the difficulty of breeding – the version of “mining difficulty”), and the ability to earn Love Potions simply by playing the game.

This past March, Axie Infinity increased transaction fees in honor of the creator reward program. Specifically, the fees increased from 4.25% to 5.25%. Thus, Axie Infinity players can enter a code from a certain content creator so that the extra 1% will be paid to that creator. 

The AXS metaverse token and price fluctuations

Despite its leadership and distinctiveness, the Axie Infinity (AXS) governance token has not always been supported by users. 

And indeed, the price of AXS also fell to $100 in early January 2022, while today AXS is worth $6.31 and ranks 60th in market capitalization. This is a net price drop that follows the long crypto winter.

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According to My Digital Money exchange president Guy Gotslak, the recent $625 million hack attack suffered by Axie Infinity was due to Ronin’s failure to create a secure code. 

Guy Gotslak is president and co-founder of My Digital Money (MDM), a cryptocurrency trading platform based in Los Angeles. One of the things MDM is known for is CryptoIRA (IRA stands for Individual Retirement Account). 

Axie Infinity the $625 million hacker attack

The $625 million hack was carried out on Ronin Network, an Ethereum sidechain used for the Axie Infinity blockchain game. 

According to Gotslak, the hack demonstrates how Ronin has failed to create secure code. Axie Infinity is one of the largest, if not the largest, blockchain-based play-to-earn game in the world, which should lead the company to consider player protection a top priority. 

But their platform is in fact based on an Ethereum sidechain, and not on the Ethereum blockchain. What gave way was the sidechain, which is clearly not as secure as the underlying blockchain. 

Gotslak said: 

“This hack proves just how important sidechains are. As bad as it is for those who got hacked, it also demonstrates how sidechains protect the parent blockchain, and individuals using it get alienated from how others are using it. There is no need to completely open the whole blockchain for a specific purpose“.

So in a way, the sidechains can protect the blockchain by attracting the attentions of hackers, or malicious users, with new experimentation or functionality, while the underlying blockchains can continue undaunted to do their basic work in full security. 

This makes it unnecessary to experiment with changes or variants on layer 1 blockchains, particularly those that are now secure and established, so as not to put them at risk. Experiments and new features can be added with higher layers that cannot endanger the base blockchain, even if they are hacked. 

Next steps of one of the most famous gamefi 

Gotslak also wonders now what both Axie Infinity and Ronin Network intend to do next. 

He says: 

“Will a fork happen? Will they reverse time and return all the hacked tokens? The majority of Axie Infinity, as far as I know, is in Asia. This was, in fact, the main source of income of many unemployed people during the pandemic. I personally think they were the reason Axie grew to its size. Personally, I believe they deserve to get their coins back and fast”.

$625 million is not a small amount, but the company has already made it known that it intends to reimburse users out of pocket if the stolen funds cannot be recovered. 

This is not the first time that a sidechain has been hacked, and even the previous times the underlying blockchain was not breached. However, the loss of tokens is real, i.e. these tokens once stolen, while continuing to exist, are no longer owned by their rightful owners, but by the hackers who stole them. 

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The sensational cryptographic hack targeted a blockchain network that supports popular GameFi Axie Infinity. The hackers escaped with around $625 million worth of Ethereum and USDC.

Multi-million dollar hack involving the Axie Infinity game 

The recent hack of the popular DeFi game Axie Infinity may be considered one of the largest cryptocurrency thefts in the history of cryptocurrencies, and certainly the largest against decentralized finance.

According to initial findings from the ongoing investigation, the hacker used hacked private keys to forge withdrawals from the Ronin Bridge, stealing 173,600 ETH and $25.5 million in USDC. 

The hackers breached the cybersecurity of the Ronin Network, the independent Ethereum blockchain developed in-house by the publishers of the hugely successful and popular video game Axie Infinity.

According to a post on Ronin Network’s official blog, the attack specifically targeted the network validation nodes for Sky Mavis, the publishers of Axie Infinity and Axie DAO.

Reassurances from Axie Infinity

The lengthy statement on the company blog reads:

“The Ronin bridge has been exploited for 173,600 Ethereum and 25.5M USDC. The Ronin bridge and Katana Dex have been halted. We are working with law enforcement officials, forensic cryptographers, and our investors to make sure all funds are recovered or reimbursed. All of the AXS, RON, and SLP on Ronin are safe right now”.

Axie Infinity co-founder Jeff Zirlin was at an NFT conference in Los Angeles. While on stage, Zirlin said:

“We realized that the Ronin network has been exploited for 173,000 Ethereum and about $25 million in USDC”.

With the hope of someone who really believes this, he then added:

“This is one of the biggest hacks in history. We believe in a future of an Internet that is open and owned by users”.

Past hacker attacks

Last year, an anonymous group of hackers managed to steal around $600 million in cryptocurrency from Poly Network, in what was dubbed as the biggest theft in cryptocurrency history. After a short time, more than half of the loot was returned.

In the whole of 2021, according to analyst firm Chainalyisis, crypto scams would have yielded something like $14 billion. This exponential growth, according to the analyst firm’s experts, is largely due to the growth of decentralized finance platforms, whose volumes grew by 912% year-on-year.

Chainalysis in its annual Crypto Crime report wrote:

“DeFi is one of the most exciting areas of the wider cryptocurrency ecosystem, offering huge opportunities for both entrepreneurs and cryptocurrency users”.

In detail, cryptocurrency theft increased by 516% over what was recorded in 2020, equating to approximately $3.2 billion in cryptocurrency. Of this total, 72% of the stolen funds were taken from DeFi protocols.

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Today’s NFT News involves country music star Dolly Parton and her ‘Dollyverse’ metaverse and Pplpleasr’s Shibuya video platform that uses Ethereum NFTs to fund and decide on movies. Not only that, Axie Infinity’s popular blockchain game has also received criticism from its gamers over the news that it will increase the transaction fee from 4.25% to 5.25%.

Dolly Parton creates ‘Dollyverse’ with music and artwork

Country music star, Dolly Parton is diving into the metaverse by creating ‘Dollyverse‘, in collaboration with bestselling author James Patterson, to bring NFT music and artwork during SXSW 2022.

I am pleased to announce I will be performing at @sxsw for the first time! @JP_Books and I will also be talking about our new novel #RunRoseRun and its companion album. Join us on the “blockchain” on March 18th where you can watch it all live! https://t.co/nirF0hcjen pic.twitter.com/QYQHY4VDOI

— Dolly Parton (@DollyParton) March 1, 2022

“I am pleased to announce I will be performing at @sxsw for the first time! @JP_Books and I will also be talking about our new novel #RunRoseRun and its companion album. Join us on the “blockchain” on March 18th where you can watch it all live! https://welcometodollyverse.com/dolly“.

Parton and Patterson co-wrote the novel titled “Run, Rose, Run”, while only the country star would write and produce the accompanying music album. SXSW or South by Southwest is a music and film festival that takes place every spring in Austin, the capital of Texas. 

Behind the Dollyverse is FOX Entertainment’s Blockchain Creative Labs and blockchain company Eluvio. In fact, all NFTs in the Dollyverse will be minted on Eluvio’s blockchain, a proof-of-authority Content Fabric, compatible with Ethereum. 

NFT News: Pplpleasr’s Shibuya wants to fund projects and films with Non-Fungible Tokens

From music and artwork to films. Pplpleasr’s Web3 video platform Shibuya is using Ethereum’s NFTs to help fund films, through voting and decisions by users. 

Launched yesterday, Shibuya is an Ethereum-powered “direct-to-community” video platform that allows creators to fund their films and webseries and, more importantly, have their backers decide the creative direction of each project.

The first webseries launched with Shibuya is “White Rabbit”, inspired by the anime of co-founder Maciej Kuciara, a concept artist who has worked on numerous Marvel Studios films (including “Spider-Man: No Way Home”) along with other Hollywood blockbusters.

Each chapter of the webseries will have its own NFT Pass, allowing owners to decide the course of the narrative as the full film gradually takes shape. For the first chapter of “White Rabbit”, Shibuya is selling 5,000 total NFT Passes at 0.08 ETH (about $235) each with a maximum of five per wallet.

An NFT acts as a deed to a unique digital object, and can be used for things like images, video files, interactive video game items and more. 

Axie Infinity: gamers oppose the increase in transaction fees

The popular Blockchain game Axie Infinity, one of the first to introduce play-to-earn, has received criticism from its gamers for increasing transaction fees in honour of a reward program for creators. 

According to its developer Sky Mavis, Axie Infinity will increase the transaction fee from 4.25% to 5.25% from 7 March. 

On March 7, the Axie Marketplace fee will update to 5.25%. This will provide a sustainable source of funding for marketing & growth initiatives going forward: Axie creator codes!

Full details https://t.co/7y1MMb9afx

— Axie Infinity (@AxieInfinity) February 28, 2022

“On March 7, the Axie Marketplace fee will update to 5.25%. This will provide a sustainable source of funding for marketing & growth initiatives going forward: Axie creator codes!”

The reason is the new creator rewards program, whereby the developer will set up a system that allows Axie players to enter a code from a certain content creator – such as a streamer or influencer – and that extra 1% will be paid to that creator.

The increase will be applied to all transactions on Axie Marketplace, which runs on Ronin, a custom sidechain scaling solution built on Ethereum. The new reward model for creators is already being used by other online games such as Fortnite and Roblox. 

Of course, if players don’t enter the creator code when they buy on Axie’s Marketplace, the entire 5.25% goes into the community treasury which will then be invested in marketing activities to promote the blockchain-based game. 

This news has obviously been quite criticized by gamers, partly because of the general situation of the crypto market in full bear market and secondly because this decision was not submitted to the vote of the Axie Infinity DAO, through AXS, the governance token of the project. 

 

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According to data from the company Namsen, the Ronin sidechain, developed by the creators of GameFi’s most successful game, Axie Infinity, recorded 560% more transactions than Ethereum itself last November.

Axie Infinity and the Ronin Chain

Researcher Martin Lee from Namsen explains:

“A lot of blockchains, whether they like it or not, will specialize. Even though creators might not plan for it, developers will force them to go a separate way, purely because of the trade-offs different chains have – developers will be attractive to developers for specific reasons”.

Axie Infinity, the game that is all about “play to earn”, has around 2.8 million daily active users and Ronin is also processing 40% more transactions than Avalanche, one of the most popular Level 1s by transaction volume, again according to the Namsen report.

Martin Lee added: 

“What stood out to me was the sheer number of transactions on the chain relative to other layer 1 solutions like Avalanche or Fantom,” Lee said. “That alone is a signal for other, similar layer 2s to be created. If one single game demands so much out of the underlying blockchain, what happens when a chain is home to multiple games?”$

The limits of Ethereum

Lee’s report then also discusses the issue of cost, the real Achilles heel of the Ethereum blockchain network, which developers hope to resolve with the new Arrow Glacier update coming in June.

The report reads:

“Gas fees on Ethereum hovers between 50-100 gwei making micro transactions uneconomical. Ronin, on the other hand, offers 100 free transactions per wallet per day. In the future, there will be a small fee once the $RON token is released, but it will likely cost less than $1”.

The company expects other developers to take advantage of Ronin soon, considering we’re just in the early stages of launching this blockchain.

“It’s still early days for Ronin and it will be interesting to see how the blockchain develops and grows over time. Will Ronin become the go-to blockchain for gaming? Only time will tell”.

This is the conclusion of Lee’s study.

Record-breaking Axie Infinity

Axie infinity has posted record NFT sales related to its game worth about $3.85 billion. It represents perhaps the most resounding case of the incredible success of GameFi, the game linked to NFTs and decentralized finance.

According to a recent survey of the world’s top 197 gaming companies, 58% are now considering incorporating blockchain into new games, and 44% are considering incorporating the NFT reward system into new games.

The world’s largest video game shop chain, Gamestop, recently announced that it will create a team of cryptocurrency and blockchain experts, including an NFT engineer. 

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