Breeding Fee Adjustment & Axie Economics
In 24 hours, we will update the Axie breeding fee!
The AXS cost per breed has been reduced from 2 AXS to 1 AXS.
The SLP costs per breed have been increased to the following:
The growth of the Axie Infinity community has been incredible, thanks to each and every one of your contributions. We value your commitment to our community, and we want you to feel a sense of ownership of what we’ve all built together. Some of you have voiced confusion, worry, and even frustration with the current volatility of the economy. We recognize that this volatility makes it hard for our community members to value their efforts consistently. Hopefully by the end of this update, you’ll better understand that our occasional economic adjustments are our attempt to consistently reward skill and effort while balancing community/player growth.
Let’s start with a couple of core Axie economic concepts:
The only way SLP can be created is through gameplay. Each SLP is the result of effort and skill.
The only way Axie can be created is by burning SLP. Each Axie is proof that a human played Axie Infinity for a certain amount of time.
When there are new players to Axie, the only way they can play is if there are more Axies available than there are players. This means that we need to think about the future demand shocks to the Axie market and SLP when balancing the economy.
Ensuring long-term sustainability for the economy will rely on a combination of player growth, new sources of demand for Axies, and external organizations subsidizing play-to-earn by sponsoring leaderboard seasons/tournaments & more.
If you’re interested in diving deeper into our economic model, take a look at these two articles for further context:
Axie Population & Long-term Sustainability
The Axie economy needs to be balanced by rewarding everyone’s immediate efforts while supporting a long-term plan for community growth. There are some considerations that can be hard for some of our community members to grasp, especially if they’ve only recently started their Axie journey. Many players that are new to Axie have expectations of the in-game economy that are unrealistic and would not be conducive to long-term growth. Thanks in advance for your understanding as we learn together how to balance the economy in both the short and long-term.
Axie’s growth is cyclical which means we need to take into account both current and future demand for Axies when we make economic adjustments. While our veterans have seen these cycles many times before (such as when Axie prices dropped from .1 ETH to .002 ETH in 2019), it can be a bit unnerving for our new players.
Our growth projections for 2022 suggest that we will require tens of millions of Axies for the future on-boarding rush that we expect with the launch of our Ronin Dex and Battles V2. Historically, whenever we’ve launched features that have reduced friction and increased utility for Axies, we’ve seen a surge of breeding to account for the increased demand from Axies, from both new players and veterans alike.
If we don’t have enough SLP to meet this upcoming surge in demand, we will have a situation where the price of SLP surges very high initially to meet demand but then crashes back down as growth normalizes and more SLP is created by players. One could even argue that SLP issuance was too low in the pre-Ronin era, this created a massive surge in SLP price that was short lived and ultimately caused unrealistic expectations around the Axie economy.
All of that said, we don’t want this growth planning to disrupt your current efforts. We’ve been looking at data around the Axie breeding economy for weeks now, and this is what we’ve observed:
Growth, while still strong, has been slowing down due to concerns over an imbalance in the amount of SLP minted versus burned per day.
Volatility in AXS and SLP price has caused large fluctuations in the breeding fee.
AXS as a portion of the breeding fee has inflated which has taken away from SLP’s utility within our economy. AXS is now over 80% of the breeding fee.
Today’s breeding fee changes come as a result of these observations. We know many of you are excited about this change. We are still early in our journey, but we’re learning every day.
While we are currently making these changes manually, long-term we’d like to outsource management of the economy either to intelligent machines or informed members of the Axie community. We hope to ultimately implement an auto-balancing system that will adjust the AXS and SLP portions of the breeding fee to be both stable in dollar/fiat terms and in relation to each other. This is a bit harder technically, but something that we hope to roll out in the future. At least for now, as we experiment with creating a new digital economy, more active management from Sky Mavis may be required.
* We’d like to give a shout-out to our friends at Delphi Digital for their assistance in thinking through these adjustments.