People are playing games in greater numbers than ever before, particularly in Southeast Asia. According to App Annie, the Philippines was the fastest-growing mobile game download market in 2020, accounting for nearly 16 percent of all game downloads in the region.
Filipinos, on the other hand, aren’t just using their phones to have fun and escape the hardships of everyday life. Play-to-earn is a relatively new trend that, as the name implies, allows individuals to earn money while playing games, mainly through cryptocurrencies or non-fungible tokens (NFTs).
Axie Infinity is one such game that has surged in popularity in the country. The game, created by SkyMavis, involves users breeding and battling digital pets known as Axies.
To play the game, you’ll need at least three Axies. You’ll go on daily missions, adventures, and arenas to win a Small Love Potion, or SLP. These SLPs are NFTs, which may be sold on exchanges like Binance or Uniswap.
I’ve noticed this propensity to value SLP in proportion to real-world objects when living in the Philippines. It appears that the player community is less concerned about the value of SLP in PHP or USD. On his first day of playing Axie, a friend of mine gleefully informed me that he had earned three Chicken Joys in just a few hours. If you already know that Chicken Joy is a popular menu item at Jollibee, a popular fast food chain in the Philippines, you’ll also know that it’s a highly relatable and culturally relevant unit of account that Filipinos all over the world understand.
The birds and the bees of NFTs
To explain the function of SLP in Axie Infinity, I’ll have to teach you about non-fungible tokens’ “birds and bees’ ‘ (NFTs). Because Axies are NFTs with the ability to reproduce, SLP works like Barry White and candlelight to get a pair of adult Axies in the mood to have a kid.
Axie owners compete for SLP by pitting their NFT dogs against one another, with the winner receiving small vials of the digital aphrodisiac as a prize. If you’re not interested in breeding Axies, you may sell your SLP on the open market for other cryptocurrencies.
The transaction volume for SLP is so significant in some places that innovative platforms are allowing users to convert the token for local money. An increasing number of local businesses in the Philippines are willing to accept micro-doses of the drug as payment for goods and services.
The Ronin wallet, which is essentially MetaMask for Axie’s sidechain and allows users to perform up to 100 free transactions each day, is used to carry out all of this. Merchants handle it on a case-by-case basis at the time of purchase, checking the price of SLP on Binance before offering their consumers an accurate conversion rate.
Other sellers, particularly those wanting to take a win-some, lose-some approach, will set a fixed selling price that falls halfway between SLP’s lowest and greatest monthly value.
“There are more Filipinos with Ronin wallets than there are Filipinos with credit cards.” Of course, he was being sarcastic. While Axie’s popularity in the Philippines has skyrocketed in recent months, Ronin adoption hasn’t followed suit, at least not yet.
However, it may not be too far away. A Ronin-to-Ronin wallet transfer is unquestionably a convenient way for the unbanked to make online payments. While this is likely not how the Philippines’ central bank had envisioned it, it is a significant step toward the bank’s aim of the Philippines being a “digital-heavy, cash-light society” by 2023, with 50% of all transactions being digital.
Critics will scoff at the thought of a mysterious and highly volatile in-game reward token being widely accepted and utilized for payments. We’ve heard a lot about it recently, with the International Monetary Fund railing against El Salvador’s move to make bitcoin an official tender. However, the “suitability” of any tender is very subjective, and volatility is a good problem to have in the developing world, where many nations are still reeling from the economic impact of COVID-19. Volatility is a difficulty that you can manage proactively within your company; a larger economic downturn is unlikely.
For retailers who choose to take SLP, it’s a smart answer to a newly wealthy customer demographic looking to spend. With the average player earning between 4,000 and 6,000 SLP ($520 to $780 at today’s prices) in mid-July, and more than half of Axie’s one million daily active users hailing from the Philippines, this represents a rapidly growing group of people who are doing financially better than most in the midst of a long and brutal economic downturn.
Allowing clients to pay for goods and services in the same currency that they earn their income may provide a competitive edge to the merchant wanting to serve them.
To say the least, the alternative is inconvenient. Players must first use a decentralized exchange, such as Uniswap, to convert their SLP into a more digestible currency, such as ether.
They can then send to a centralized and locally regulated exchange that can interface with fiat currency. While many early users were willing to jump through those hoops, they didn’t find it quick or convenient, and they weren’t thrilled with the fees that ate away at their salary at every stage.
BloomX and Binance P2P, which offer an SLP to Philippine peso (PHP) trading pairs, are two options that have emerged in the Philippines to help streamline the process. However, if merchants are willing to accept SLP at the point of sale, gamers will no longer need to convert SLP.
Since accepting SLP in July, Smile Craft Dental Centre in Mandaluyong, Metro Manila, has had five patients pay with it. “We’ve noticed in several Axie Infinity groups that some scholars have no prior trading or cryptocurrency knowledge and are having difficulty cashing out their SLP,”.
He’s talking to Axie players who leased rather than bought the NFTs they need to play, and as a result, haven’t yet learned the ins and outs of handling crypto for themselves, a procedure that for a novice with no idea what to do can feel like having their teeth extracted.
It’s worth noting that these merchants aren’t chosen at random. Almost every merchant I met with was an enthusiastic Axie breeder, committing a significant portion of their SLP revenue to the cost of breeding more NFT critters. They believe that even if SLP loses value against the Philippine peso, it can still be used as an Axie love drug.
That is, in fact, its major goal. Unlike a paper banknote or even a bitcoin, SLP has inherent utility because it can always be used to breed more Axies, making it similar to other goods-as-money payment mechanisms that have been used in the past, such as gold, rice, rum, and cigarettes.
Axie has products on the market. It’s a legitimate game. It’s a really competitive market. And, as far as I can tell, it’s meant to channel money into its particular economy to players who have dedicated a significant amount of effort to mastering it.
That isn’t to imply the Axie universe is impenetrable. Its creators must be as inventive as the players in order to keep the game’s worth, grow it, and prevent it from collapsing. It’s more of a proof-of-concept for decentralized blockchain-based games in the works.
To recap, blockchain games set themselves apart from regular ones thanks to its metaverse economy, which combines traditional cash economies with a digital in-game economy.