Overall, the cumulative value of the cryptocurrency industry is estimated to be $2 trillion. There are so many categories within the industry but some of the most well-known ones are NFTs, smart contracts, and defi.
Another category that may be growing at the fastest rate are gaming coins also known as "play to earn". And among gaming coins, Axie Infinity is the largest. Its growth and size are quite impressive but before diving into the fundamentals, let's review some background with regards to gaming economies.
Gaming Economies
In many video games with multiple characters and role-playing, little economies emerge within the game. In many games, players have to do routine tasks to gather resources that they can use to buy weapons or other features for their character. Or, they can pay money. Things in the game may take time like traveling to attack another player or the characters in your game needing to recover after a battle. But, you can expedite this process by paying money.
This creates an economy in the game, where players can make money. It also leads to speculation within the game as players may accumulate resources with the intention to sell when prices are higher. Some games became large enough that people in other countries could earn substantial incomes by playing games.
Axie Infinity
So, Axie Infinity applies this to crypto. Currently, it has a $25 billion market cap which is a nearly 50% decline from its peak in November of this year. The coin is only a little more than a year old having made its debut for around $0.20 in November of last year.
Axie Infinity was developed by a Vietnamese studio Sky Mavis. It uses Ethereum-based cryptocurrencies, Axie Infinity Shards (AXS) and Smooth Love Potion (SLP). It has about 2.5 million users.
Axie is a battling game where players can collect, breed, raise, and trade creatures known as 'Axies' which are NFTs. Players purchase Axies to play the game and it's estimated that the average player has spent around $400.
Players earn tokens that can be traded for money or used in the game to acquire assets. So, there are overlaps between gambling and gaming. The company is remarkable for its fast growth and large userbase of players.
In the same way that bitcoin is the premier cryptocurrency, Axie is the premier gaming coin. Buying its coin is a bet on the game continuing to get more popular. Of course, just like any other coin, there is a risk that another gaming coin emerges that takes users away from Axie.