Rapture #167: Axie Infinity Update

Rapture #167: Axie Infinity Update

The last time I covered an update on Axie Infinity, SLP was on a quick 300% increase because of economic changes imposed by Sky Mavis. Despite the quick rise, I warned that the increases in SLP did not look sustainable and consequently I was waiting to see if the fundamental shifts in the game's dynamics yielded user growth.

Now that it is approximately 1 month later, let's examine if the economic changes led to an improvement in the Axie Infinity ecosystem.

SLP back down

Unfortunately for Axie Infinity, their SLP reduction changes did not lead to a sustained rise in SLP. While SLP did increase in the following few days after I last covered Axie Infinity February 7th from $.013 to a high of nearly $.040 on February 10th, SLP prices have decreased since the high and now currently sit at $.016.

SLP is back on its slow downward grind, which is not a positive sign for the Axie Infinity ecosystem.

Userbase deteriorates

SLP not sustainably increasing is not the only problem the leading crypto game faces. Axie Infinity has now been losing users each week effectively from mid November, and the user loss shows no signs of slowing down.

DAUs decreased from 2,176,182 on January 31st to 1,708,413 on February 28th, a loss of 21% DAUs in 1 month. This user loss is a huge problem, as the main narrative that propelled Axie Infinity to the approximately $150 per coin highs was user growth. Axie Infinity's DAUs are now 40% down from their all time highs.

Monthly volumes on their marketplace tells a similar story. Monthly volumes are down from $104,630,672 at the end of January to $73,700,002 on March 7th, a decrease of 30%.

Daily revenue has cratered

As you might expect to see with a decreasing user base and marketplace volume, revenue for Axie Infinity has plummeted. Daily revenue for March 13th stood at a measly $75,000, which is down 99.6% from Axie Infinity's daily revenue all time high and down 77% from just a month ago.

Daily revenue is now lower than when AXS was trading at sub $5.

Furthermore, Axie Infinity's P/S ratio is now 198.98x, while at its peak it was 5x.

Talk about a boom bust business!

Takeaway

Despite my deep affinity for Axie Infinity, I am not looking to touch AXS with a 10 foot pole even if the macro crypto environment. The deteriorating fundamentals and the fact that gaming in crypto is an oversaturated narrative concerns me.

Looking back on my trading with AXS, I should have sold my last 50% of my original position when I verifiably knew the fundamentals of the project had deteriorated and we were in a macro bearish environment in late December. Slow reaction time, and being beguiled by the sweet yield I was earning from AXS staking, are the culprits of not optimally selling the the last portion of my AXS position until mid-late January.

Now I have to pay taxes on the income I earned from AXS via staking when it was at its highs, which is a painful lesson to go through.

Onwards and upwards.

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