Axie Infinity

Axie Infinity creator works with studios to push Web3 adoption through new games

Sky Mavis’s head of business development, Kathleen Osgood, told Cointelegraph that its goal is to onboard as many people into the ecosystem as possible.

Sky Mavis, the company behind the popular blockchain game Axie Infinity, revealed that four gaming studios would be building and launching games on top of the Ronin Network, sparking the creation of its own native gaming ecosystem. 

In an announcement sent to Cointelegraph, Sky Mavis highlighted that they have partnered with four gaming studios: Directive Games, Tribes, Bali Games and Bowled.io. In addition, the team also announced the Ronin blockchain’s shift into a delegated proof-of-stake (DPoS) consensus mechanism. Trung Nguyen, the co-founder and CEO of Sky Mavis, explained:

“With the upgrade to DPoS, we are ready to open up our infrastructure and technology to the wider Web3 world. We believe that this is the path toward creating gaming that’s community-centric, more rewarding, and above all, more fun.”

Kathleen Osgood, the head of business development at Sky Mavis, told Cointelegraph that its team reviewed 250 game studios before deciding on the ones that were announced. According to Osgood, it picked studios from various niches in the gaming space to achieve its goal of onboarding “as many people into the ecosystem as possible.“

“New user and wallet generation is a massive part of our game studio strategy. Our goal is to work with teams to build great games that not only attract Web3 users but also attract millions of Web2 users,” Osgood added. 

By working with other teams with a history of Web2 user acquisition, the Axie Infinity creator will be able to get blockchain games exposed to the masses and be a catalyst for more Web3 adoption.

Related: Former Age of Empires producer talks blockchain game adoption and GameFi

Despite the crypto winter, many still believe more traditional gaming firms will jump into the nonfungible token (NFT) and blockchain gaming space. On Jan. 12, Web3 executives discussed the potential for mainstream gaming companies to jump in, sharing their thoughts on NFT gaming models like play-to-earn and move-to-earn.

Magazine: Web3 Gamer: Shrapnel wows at GDC, Undead Blocks hot take, Second Trip

Norwegian police recover $5.9M stolen from Axie Infinity Ronin hack

The seized funds will be used to reimburse affected users and help prevent North Korea from funding its nuclear weapons program.

According to a press release published on Feb. 16 by Norway’s National Authority for Investigation and Prosecution of Economic and Environmental Crime (Okokrim), authorities have seized 60 million Norwegian kroner ($5.85 million) in stolen cryptocurrencies linked to the Axie Infinity Ronin Bridge hack in March 2022. According to Senior Public Prosecutor Marianne Bender: 

“Okokrim is good at following the trail of money. This case shows that we also have a great capacity to follow the money on the blockchain, even if the criminals use advanced methods.”

According to Bender, Okokrim worked with Federal Bureau of Investigation agents and the U.S. Department of Justice to track the trail of stolen digital assets. “We as a society stand stronger in the fight against digital, profit-motivated crime,” she said, “This is money that can support North Korea and their nuclear weapons program. It has therefore been important to track the cryptocurrency and try to stop the money when they try to withdraw it in physical value.” In April 2022, The U.S. Department of Justice identified North-Korea backed Lazarus Group as the mastermind of the attack. 

Authorities say that Sky Mavis, creator of the Axie Infinity game and the Ronin Bridge, will be notified of the seizure so that affected users “get the money back to the greatest extent possible.” The hack was valued at over $600 million at the time of the incident. Axie Infinity reopened its Ronin bridge in June 2022 after its founders, along with external investment from Binance, reimbursed users a total of 117,600 Ether (ETH) and 25.5 million USD Coin (USDC). The remaining 56,000 stolen ETH belonged to the Axie DAO Treasury and remains undercollateralized as Sky Mavis “works with law enforcement to recover the funds.”

3 signs Axie Infinity price risks giving up its 135% gains in January

AXS price has formed a “gravestone” doji on its daily chart that coupled with its recent token unlock event hint at a potential bearish reversal ahead.

Axie Infinity (AXS) has rallied 135% month-to-date to reach approximately $14 on Jan. 23, its highest level in two months. Nonetheless, the AXS/USD pair could suffer major losses in the coming weeks owing to a flurry of negative technical and fundamental indicators.

Axie Infinity price prints “gravestone” doji

The AXS price formed a “gravestone doji” candlestick on Jan. 23, which technical analysts view as a bearish reversal pattern.

A gravestone doji appears when an asset’s opening, closing, and the lowest price comes to be nearly identical except for the highest price, as shown in the chart below. The long upper wick shows that the bears pared all of the gains printed by the candle during the given session.

AXS/USD daily price chart featuring gravestone doji. Source: TradingView

AXS seems to have been forming a similar candlestick pattern as of Jan. 23, with bears rejecting its advance above the $14 price level, triggering a 10%-plus intraday price drop.

In addition, the rejection came as the AXS/USD pair’s relative strength index (RSI) crossed into overbought territory, coinciding with its price testi the 200-day exponential moving average (200-day EMA; the blue wave in the chart above), which has served as resistance in January 2022 and April 2022.

These three factors have raised AXS’s possibility of undergoing a price correction in the coming weeks. The nearest downside target for AXS comes to be near its 50-day EMA (the red wave) at around $8, or a 40% drop by March.

Axie Infinity total supply expands 1.8%

From a fundamental perspective, the Axie Infinity price could fall in the coming weeks due to its latest supply unlock.

Related: Axie Infinity is toxic for crypto gaming

On Jan. 23, AXS’s circulating supply grew by 4.8 million, about 1.8% of its total supply of 270 million, after a scheduled vested token unlock. Theoretically, more supply could push prices lower if demand does not increase.

AXS price bullish hopes remain

On larger-timeframe charts, however, AXS appears to have formed a falling wedge, which analysts treat as a bullish reversal pattern.

AXS/USD three-day price chart featuring falling wedge pattern. Source: TradingView

AXS’s ongoing recovery run has resulted in its price breaking out of the wedge that’s been in place since May 2022.

In theory, such a move could mean that the price could rise by as much as the the wedge’s maximum height. In other words, the bullish target for AXS price is now around $22.50, up nearly 70% from current prices. 

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

CME Group to launch 3 metaverse reference rates

Axie Infinity, Chiliz and Decentraland will be represented in CME’s new reference rates and real-time indexes.

Derivatives marketplace CME Group is planning to launch reference rates and real-time indexes for three metaverse crypto assets, allowing investors to track pricing data more reliably using a methodology commonly used in traditional finance. 

Beginning Jan. 30, CME Group and CF Benchmarks will launch reference rates for Axie Infinity Shards (AXS), Chiliz (CHZ) and Decentraland’s MANA (MANA), the company announced on Jan. 5. The reference rates and indexes are not tradeable products but instead can be used by investors to “price sector-specific portfolios, develop structured products […] and manage price risk around various Metaverse-based projects,” said Giovanni Vicioso, CME Group’s head of cryptocurrency products.

The reference rates and real-time indexes for AXS, CHZ and MANA will be calculated using pricing data from at least two crypto exchanges, including Bitstamp, Coinbase, Kraken, itBit and LMAX Digital. The assets’ reference rates will be priced in U.S. dollars and published daily at 4:00 pm GMT. Each real-time index will be published every second of every day.

Chiliz, the largest of the aforementioned metaverse plays, currently has a market capitalization of $742.1 million, according to CoinMarketCap. AXS has a market cap of $686.5 million, and MANA is worth roughly $597.2 million.

CME Group has been active on the crypto scene, launching micro-sized Bitcoin (BTC) and Ether (ETH) options last year. The derivatives marketplace also launched euro-denominated BTC and ETH options for institutional investors outside the United States.

Related: An overview of the metaverse in 2022

Metaverse tokens exploded in popularity during the previous crypto bull market as dozens of projects promised to create virtual versions of the real world. Recognizing this potential opportunity, Mark Zuckerberg’s Facebook rebranded to Meta in October 2021. Meta’s metaverse division has been hemorrhaging money since its inception, underscoring the difficulties of creating commercially viable products in the new virtual world.

7 biggest crypto collapses of 2022 the industry would like to forget

A look at some of the biggest disappointments in the crypto space from this year as the industry readies itself for better things to come.

2022 has been a bumpy year for the cryptocurrency market, with one of the worst bear markets on record and the downfall of some major platforms within the space. The global economy is beginning to feel the consequences of the pandemic, and clearly, this has had an influence on the crypto industry.

Below is a breakdown of some of the biggest disappointments in the crypto space this year.

Axie Infinity’s Ronin Bridge hacked

In March of this year, Ronin, the blockchain network that runs the popular nonfungible token (NFT) crypto game Axie Infinity, was hacked for $625 million. The hacker took 173,600 Ether (ETH) and 25.5 million USD Coin (USDC) from the Ronin bridge in two transactions.

When the Lazarus Group started its attack, five of the nine private keys for the Ronin Network’s cross-chain bridge were hacked. With this vote, they authorized two withdrawals totaling $25.5 million in USDC and 173,600 ETH.

According to the Ronin group, Axie Infinity’s issues began in November 2021, when its user base had expanded to an untenable size. Consequently, the corporation’s safety rules had to be relaxed to fulfill client demand. After the initial phase of fast development was completed, the firm reduced its safety procedures.

The main difficulty was a lack of a suitably decentralized network created by game developer Sky Mavis. The hacker acquired access to the private keys of five of Sky Mavis’ Ronin Chain’s nine validator nodes, enabling them to compromise the network. When the hackers gained control of five nodes, they essentially controlled over half of the network and were free to accept or deny whatever transactions they wanted. They obtained ETH and USDC via falsifying withdrawals.

The crime occurred on March 23, but it was only noticed on March 29, when a user reported being unable to withdraw 5,000 ETH from the Ronin bridge ATM. In the aftermath of the attack, Axie Infinity developers raised $150 million to reimburse the affected users.

TerraUSD/LUNA collapse

On May 7, when over $2 billion in TerraUSD (UST) was unstaked (removed from the Anchor Protocol), hundreds of millions of United States dollars were quickly liquidated. It’s unclear if this was a deliberate attack on the Terra blockchain or a response to rising interest rates. Because of the enormous outflow of cash, the price of UST fell from $1 to $0.91. As a result, market players started trading $0.90 in UST for $1 in LUNA.

When a considerable amount of UST was moved out, the stablecoin depegged. The availability of LUNA increased as more people sold their UST during the panic.

Following this fall, cryptocurrency marketplaces started to suspend trading pairs such as LUNA and UST. Following the initial accident in May, Do Kwon disclosed a rehabilitation plan for LUNA, and things seemed to improve. However, the currency’s value eventually fell. It was abandoned almost as soon as it began. Finally, Terra launched a whole new currency known as LUNA 2.0.

Investors lost a combined $60 billion due to the panic selling that accompanied the decline of TerraUSD Classic (USTC) and Luna Classic (LUNC), a related token.

On Sept. 14, a South Korean court issued an arrest warrant for Do Kwon. This happened four months after Terraform Labs’ LUNA and UST tokens collapsed. Do Kwon and five others were detained for allegedly violating regional market restrictions.

Three Arrows Capital collapse

When Terra collapsed, the crypto hedge fund Three Arrows Capital (3AC), which had a peak market valuation of more than $560 million, suffered significantly. 3AC had invested heavily in several troubled cryptocurrency projects, including the play-to-earn game Axie Infinity, which lost $625 million to a North Korean hack this year, and the centralized cryptocurrency exchange BlockFi, which laid off hundreds of employees in mid-June.

The UST collapse shattered investor confidence and expedited the slide of cryptocurrencies, which was already underway as part of a bigger flight from risk. A flood of margin calls from 3AC’s lenders sought repayment, but the firm lacked the funds to meet the requests. In addition, many of the company’s counterparties could not meet their investors’ expectations, many of whom were retail investors promised 20% annual returns.

Related: Santas and Grinches: The heroes and villains of 2022

The crypto hedge fund eventually collapsed after taking on major directional trades and borrowing from over 20 institutions, and the founders defaulted on its payments.

Because the founders would not appear in court, the lawsuit proceeded without them. In a leaked court document filed with the Singapore High Court, the Singapore government was asked to accept liquidation proceedings and work with liquidators. As liquidators try to wind down the failed crypto business of Three Arrows Capital, U.S. Bankruptcy Judge Martin Glenn has issued subpoenas to the company’s founders.

Voyager Digital’s fall

On July 6, prominent cryptocurrency investment firm Voyager Digital filed for bankruptcy after crypto hedge fund 3AC defaulted on a $650 million loan. 3AC received a significant loan from Voyager with no security. When 3AC defaulted on all of its obligations and its owners left, Voyager lost a significant sum of customer money.

Trading, withdrawals, and deposits were all suspended when Voyager reported that 3AC would not repay its loan. In June, Sam Bankman-Fried, billionaire CEO of trading firms FTX and Alameda Research, presented Voyager with a $500 million line of credit to help them weather the market collapse.

On July 5, 2022, Voyager Digital Holdings filed for bankruptcy in the Southern District of New York. According to Voyager Digital, the corporation owes between $1 billion and $10 billion to its more than 100,000 debtors. Despite its debts, however, the company believes it has assets worth between $1 and $10 billion. They also guarantee that adequate money is available to pay off the company’s unsecured creditors.

In a September court filing, insolvent cryptocurrency broker Voyager Digital revealed that it would auction off its remaining assets.

Click “Collect” below the illustration at the top of the page or follow this link.

Celsius crash and liquidity crisis

Celsius’s value plummeted on July 13, 2022, when one of the main crypto businesses, Celsius Network, declared bankruptcy. As the price of cryptocurrencies fell, investors on the Celsius network started withdrawing their Bitcoin (BTC) holdings in search of safer alternatives.

Consequently, panicked investors left Celsius in volume. Despite stating they were forced to do so due to “extreme market conditions,” Celsius Network halted BTC withdrawals, swaps and transfers on June 12. Users of the site understandably thought that Celsius had declared bankruptcy and would be unable to refund their money. The value of the Celsius cryptocurrency plummeted by 70% in only a few hours and fell further in the days that followed.

The crypto market has seen a significant sell-off due to the insecurity and falling prices of many major cryptocurrencies, which corresponded with the drop in the price of Celsius. In addition, due to escalating cash flow issues, Celsius announced 23% layoffs on July 3, 2022. When the time came, the company filed for bankruptcy on July 13, 2022.

Celsius had total liabilities of $6.6 billion and assets of $3.8 billion, resulting in a $1.2 billion hole in the company’s balance sheet due to the court ruling.

FTX collapse

FTX and its U.S. equivalent, FTX.US, filed for Chapter 11 bankruptcy on Nov. 11. The exchanges collapsed due to a lack of liquidity and money mismanagement, resulting in a large number of withdrawals from fearful investors.

Following the announcement of bankruptcy, FTX.US briefly restricted withdrawals on Nov. 11, despite earlier promises that FTX.US would be unaffected by FTX’s liquidity concerns. On the evening of Nov. 11, an alleged hack took more than $600 million from FTX wallets. The assault was revealed by FTX in its assistance channel on the instant-messaging network Telegram.

According to some Twitter users, hackers were also attempting to get access to FTX-linked bank accounts. Plaid, a company that connects consumer bank accounts with financial applications, responded to “concerning public reports” by denying FTX access to their products, claiming that they had no proof that their tools had been used unlawfully.

Bankman-Fried was arrested in the Bahamas on Dec. 12 at the request of the U.S. government, which wanted him extradited for eight criminal offenses, including wire fraud and conspiracy to defraud investors. Bankman-Fried was eventually deported to the United States and is awaiting trial after posting a $250 million bail.

BlockFi bankruptcy

The collapse of FTX earlier in the month generated fear and uncertainty across the market. BlockFi, another cryptocurrency exchange, filed for Chapter 11 bankruptcy on Nov. 28. With assets and liabilities ranging from $1 billion to $10 billion, the firm had over 100,000 creditors. In addition, they had a $275,000,000 debt to Sam Bankman-Fried’s American subsidiary, FTX US. The application shows that the largest client has a balance of $28 million.

Following the demise of Three Arrows Capital, multiple firms, including the crypto company that operates a trading exchange and an interest-bearing custodial service for cryptocurrencies, had serious liquidity issues.

Related: Women who made a contribution to the crypto industry in 2022

BlockFi agreed earlier this year to accept a credit package from FTX worth up to $400 million to help it weather a liquidity restriction caused by the exchange’s exposure to the TerraUSD stablecoin’s collapse. As a result of these concerns, BlockFi was reliant on the performance of the cryptocurrency exchange FTX, which may now jeopardize its financial stability.

While 2022 may have been a tough year for the crypto market, there may be a silver lining. Investor sentiment seems to be improving, and the crypto market has always recovered from previous bear markets and platform collapses. The events of 2022 could pave the way for new platforms to learn from the mistakes of their predecessors.

Bitcoin’s boring price action allows XMR, TON, TWT and AXS to gather strength

BTC’s price range is tightening in preparation for a potential range expansion. Meanwhile, XMR, TON, TWT and AXS are maintaining their bullish momentum.

The relief rally in the United States equities markets took a breather this week as all major averages closed in the red. Traders seem to have booked profits before the busy economic calendar next week.

The S&P 500 index dropped 3.37%, but a minor positive for the cryptocurrency markets is that Bitcoin (BTC) has not followed the equities markets lower. This suggests that crypto traders are not panicking and dumping their positions with every downtick in equities.

Crypto market data daily view. Source: Coin360

The range-bound action in Bitcoin suggests that traders are avoiding large bets before the Federal Reserve’s rate hike decision on Dec. 14. However, that has not stopped the action in select altcoins, which are showing promise in the near term.

Let’s look at the charts of Bitcoin and select altcoins and spot the critical levels to watch out for in the short term.

BTC/USDT

Bitcoin has been hovering around its 20-day exponential moving average (EMA) of $17,031 for the past few days. The flat 20-day EMA and the relative strength index (RSI) near 50 do not give a clear advantage either to the bulls or the bears.

BTC/USDT daily chart. Source: TradingView

The critical level to watch on the upside is $17,622. If buyers kick the price above this level, the BTC/USDT pair could start a stronger recovery that could carry it to the downtrend line. The bears are expected to defend this level aggressively.

If the price reverses direction from the downtrend line but does not fall below $17,622, it will suggest that the bulls are attempting to flip the level into support. That could enhance the prospects of a break above the downtrend line. The pair could then rally to $21,500.

On the downside, the bears may gain strength if the price breaks below $16,678. The pair could then drop to $15,995.

BTC/USDT four-hour chart. Source: TradingView

The pair has been trading inside an ascending channel on the four-hour chart. The bears have kept the price in the lower half of the channel, indicating selling on rallies. A break below the moving averages could pull the price to the support line of the channel. If this level fails to hold, the pair could start a down move to $16,678 in the near term.

If the price turns up from the current level or the support line of the channel, it will indicate that bulls continue to buy on dips. The pair could then attempt a rally to the overhead resistance at $17,622. If this level gets taken out, the pair could climb to the resistance line of the channel.

XMR/USDT

Monero (XMR) has been trading inside a falling wedge pattern for the past several days. The upsloping 20-day EMA ($143) and the RSI in the positive zone indicate that bulls have an edge.

XMR/USDT daily chart. Source: TradingView

The XMR/USDT pair could rise to the resistance line of the wedge, where the bulls are likely to encounter strong selling by the bears. If the price turns down from the resistance line and breaks below the moving averages, it will suggest that the pair may extend its stay inside the wedge.

Instead, if bulls drive the price above the resistance line, it will suggest a change in the short-term trend. The pair could then attempt a rally to $174 which could act as a roadblock. A break above this level could signal that the downtrend could be over.

XMR/USDT four-hour chart. Source: TradingView

The pair has been rising inside an ascending channel pattern on the four-hour chart. This shows that the short-term sentiment remains positive and traders are buying the dips. The pair could continue its up-move and reach the resistance line near $156. If this level is scaled, the rally may touch $162.

The first sign of weakness will be a break and close below the moving averages. The pair could then decline to the support line of the channel. A break below the channel could start a downward move to $133.

TON/USDT

The bulls pushed Toncoin (TON) above the resistance of the symmetrical triangle on Dec. 11, indicating that the uncertainty has resolved in favor of the buyers. The symmetrical triangle usually acts as a continuation pattern, which increases the likelihood of the resumption of the uptrend.

TON/USDT daily chart. Source: TradingView

If buyers sustain the price above the triangle, the TON/USDT pair could attempt a break above the overhead resistance zone between $2 and $2.15. If they manage to do that, the pair could pick up momentum and soar to the pattern target of $2.87.

Contrarily, if the price fails to sustain above the triangle, it will suggest that bears continue to sell on rallies. A break below the 50-day simple moving average (SMA) of $1.70 could trap the aggressive bulls, pulling the pair to the support line of the triangle.

TON/USDT four-hour chart. Source: TradingView

The moving averages on the four-hour chart are sloping up and the RSI is in the overbought zone, indicating that bulls are in command. The up-move may face hindrance near $2 but if bulls sustain the price above this level, the rally could pick up speed.

If the price turns down from the current level and breaks below the 50-SMA, the selling could accelerate and the pair may slump to $1.70. This is an important level to keep an eye on because a break below it could signal that bears are back in charge.

Related: SBF ‘didn’t like’ decentralized Bitcoin — ARK Invest CEO Cathie Wood

TWT/USDT

Trust Wallet Token (TWT) has continued its northward march, suggesting that traders are buying at higher levels and not booking profits in a hurry. That increases the possibility of the extension of the uptrend.

TWT/USDT daily chart. Source: TradingView

The bulls will attempt to drive the price above the overhead resistance at $2.73. If they succeed, the TWT/USDT pair could rally to the psychological level of $3 where the bears may try to stall the up-move.

If buyers bulldoze their way through this obstacle, the uptrend could reach the pattern target of $3.51.

The bears are likely to have other plans as they will try to defend overhead resistance at $2.73. They will have to pull the price below the 20-day EMA ($2.30) to gain the upper hand.

TWT/USDT 4-hour chart. Source: TradingView

The four-hour chart shows that bulls have been buying the dips to the moving averages. Although the moving averages are sloping up, the RSI is showing a negative divergence, indicating that the bullish momentum may be weakening. This may change if bulls thrust the price above $2.73 as that could attract further buying.

The moving averages are the critical support to watch on the downside. If the 50-SMA support collapses, several short-term traders may book profits and that could pull the pair down to $2.25 and thereafter to $2.

AXS/USDT

Axie Infinity (AXS) has been in a strong downtrend but it is showing the first signs of a potential trend change. Buyers pushed the price above the downtrend line on Dec. 5 but could not sustain the higher levels, as seen from the long wick on the day’s candlestick.

AXS/USDT daily chart. Source: TradingView

A minor positive is that the bulls have not allowed the price to break below the moving averages. This shows that buyers are trying to flip the moving averages into support.

The moving averages are on the verge of a bullish crossover and the RSI is in the positive territory, indicating that the momentum may be shifting in favor of the bulls. If the price breaks and sustains above the downtrend line, a rally to $11.85 is likely. This level is expected to act as a major hurdle on the upside.

The bullish view could invalidate in the near term if the price turns down and breaks below the moving averages. The AXS/USDT pair could then slide to $6.57.

AXS/USDT four-hour chart. Source: TradingView

The four-hour chart shows that bears are vigorously defending the downtrend line and the bulls are buying the dips to the 50-SMA. The 20-EMA has flattened out and the RSI is near 47, indicating a balance between supply and demand.

A break and close above $8.70 could shift the advantage in favor of the bulls. The pair could then rally to $9.28 and later to $10. Alternatively, a break below $7.86 could suggest that bears are back in the driver’s seat. The pair could then slide to $6.87.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Axie Infinity is toxic for crypto gaming

Axie Infinity, like most cryptocurrency games, has provided players with an awful experience.

Blockchain gaming is only four years old — a toddler compared to the rest of the industry. It has a lot of growing up to do, particularly when it comes to play-to-earn games.

I’m a 28-year game industry veteran. I’ve produced 32 titles in that period of time on everything from Sega Genesis to Oculus Rift. Some of them were great. Many were forgettable. I didn’t hear much chatter about blockchain gaming from traditional developers and players until Axie Infinity began to take off. Cut to the peak of 2021, and the game had nearly 2 million players logging on daily.

Most people outside the crypto community at the time were (and still are) extremely skeptical about blockchain’s ability to add anything meaningful to games. They see Axie as an example of the low production values and rampant speculation they want to avoid at all costs. Moreso, they see blockchain as a continuation of overreach by publishers. However, in 2021, many believed Axie would prove blockchain gaming skeptics wrong.

It didn’t. Axie and most other crypto “games” to date have been awful experiences. They aren’t even really games. They’re more like digital sharecropping, rich NFT owners exploiting low-wage earning players. It’s shallow gameplay layered on a tokenomics model. This was highlighted most recently in October, when Axie’s SLP token plummeted in value as a result of an impending token unlock.

Related: Crypto gaming needs to be fun to be successful — Money doesn’t matter

Most players sell their tokens on the crypto market rather than in the game, meaning token numbers increase and cause a sort of crypto inflation. The game model relies on a constant inflow of new players to sustain it — something this month has shown to be very much not guaranteed.

Axie’s value is primarily driven by this speculation rather than fun. The game, if it can even be called that, is literally a grind. Despite attempts to separate it from game economy reliance with iterations like Axie Origins, the toxic model of being hyper-dependent on tokenomics prevails. This continues to detract from projects that are trying to make fun games that utilize blockchain to enhance player experience.

At the peak of its popularity, the team behind Axie arrogantly claimed that they were “freeing” players and enabling a world in which work and play merge. But the game’s decline following the massive $620 million hack on customer funds in March showed how hollow this language was. Axie creator Sky Mavis flip-flopped from the play-to-earn narrative towards a play-and-earn ethos, clearly aware that the game wasn’t going to deliver on its mission.

For blockchain gaming to succeed, developers need to focus on awesome game design instead of trying to prop up their tokens. During an increasingly difficult global economic climate, even mainstream gaming is struggling. But those games that are doing well despite market sentiment are AAA titles like God of War Ragnarök and the latest Call of Duty, which have exciting lore and awesome gameplay.

The ability for players to spend time creating things that people will love in terms of stickers, skins and weapons — while being able to monetize them — is key. People need an outlet where they can be creative and put together content that generates interest and emotion with a community that loves playing the game.

If we are to turn the tide on the perception of blockchain gaming, we need to show how it can benefit gamers. Moving beyond words and actually demonstrating that it enhances gameplay and utility. Blockchain can do incredible things as a backend infrastructure, such as enabling players to truly own in-game items, prove attribution and the history of their weapons and loot, and get rewarded for their in-game creations.

Related: The reason bots dominate crypto gaming? Cash-grubbing developers incentivize them

Part of Vitalik Buterin’s drive to innovate with blockchain was driven by his distress when he lost a spell’s abilities in World of Warcraft overnight as a result of centralized control of the game. Blockchain ultimately restores true ownership of in-game features to players, meaning that they own them, even if changes occur in a game or it goes under.

This asset ownership can extend into many areas. Right now, Microsoft and Sony let you capture video of your in-game activity and then post it to social media, but you don’t really own how it’s monetized. You’re locked into YouTube monetization. With blockchain, players could capture in-game moments, memorialize them as NFTs and then allow people to buy/sell them as they see fit. By updating gaming infrastructure and enabling new innovation, real-time integration of players into the creative process can also take place, which is rarely seen in the industry.

Players want involvement in the creation of the games. They don’t want to be manipulated into paying more. Studios need to prioritize gameplay, rich graphics, and compelling narratives to bring players on board. The blockchain games that become successful will be the ones where players don’t even know there’s a blockchain operating in the background.

Deception and speculative frenzies have been the central features of the wider crypto market this year. So bringing players on board is going to be that much harder. Studios will have to go the extra mile to demonstrate to players that blockchain gaming can achieve the security, fun, and adrenaline-pumping action that defines the games they love.

Mark Long is the CEO of Shrapnel, a blockchain-enabled moddable AAA first-person shooter game. He graduated from the University of Texas at Austin with a BS in computer science before attending an executive education program at the Wharton School. He previously served as a director with HBO’s digital products group; as a group program manager at Microsoft; and as the CEO of companies including Aristia, Meteor Entertainment, and Zombie Studios.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Axie Infinity player count falls back to Jan 2021 levels

The numbers represent a 74% decrease from peak levels witnessed just ten months ago.

According to the game statistics site Activeplayer, the average monthly number of users playing the monster-battle nonfungible tokens (NFT) game Axie Infinity has fallen to 701,447, representing levels not seen since January 2021. At its peak, monthly Axie Infinity players hit 2.78 million in January of this year before the advent of the crypto winter. The popular play-to-earn NFT game lost 1.2 million players alone in June.

Bear market aside, game mechanics also partly contributed to the decrease in player count. At around the same time last year, players in developing nations reported higher earnings from playing Axie Infinity than some countries’ minimum wages.

However, since that time, the price of Smooth Love Potion (SLP), Axie Infinity’s in-game rewards token, has fallen by more than 95%. Its circulating supply has also increased from about 2.4 billion to around 40 billion in the same period due to the high volume of new players rushing in and earning tokens in-game. 

November 2021 was also the month when the Axie Infinity NFT marketplace saw 2 million Axies bought and sold, amounting to 140,956.7 Ether (ETH), or $639.5 million at that time. But, the numbers have since fallen sharply, with about 311,300 Axies sold, valuing at 4,143.3 ETH, or $5.37 million at the time of writing, in the past 30 days.

The drop is largely consistent with an intense bear market in the NFTs realm, where trading volumes across digital collectibles have dropped 98% since January.

Other developments this year, such as Axie Infinity’s Ronin Bridge being exploited for $600 million, also appear to have dampened confidence in its GameFi ecosystem. Although developers have since worked diligently to try and recover users’ funds. 

The feds are coming for the metaverse — from Axie Infinity to Bored Apes

NFTs in the metaverse should generally be considered securities, but developers have been slow to recognize that fact. Expect a regulatory reckoning to come swiftly for Axie Infinity, Bored Apes, and other projects that have thrown caution to the wind.

The metaverse is a futuristic iteration of the internet, featuring a digital economy and an immersive virtual environment alongside other interactive features. This relatively nascent space has gained so much traction in recent years that conservative estimates suggest that by 2024, its total valuation could top $800 billion. Meta (the parent body behind Facebook and Instagram), Google, Microsoft, Nvidia, Nike and others have made Fortune-100-sized metaverse splashes.

But with great valuations comes great scrutiny from increasingly tech-savvy financial regulators. Unlike traditional tech products, which often spend years putting growth over revenue, some metaverse projects push questionable monetization schemes on their users prior to launching a live experience. Metaverse real estate is a prime example of this practice, with platforms like Big Time games selling land in their metaverse before opening up access to the game.

Typically, the United States Securities and Exchange Commission doesn’t step in unless retail investors face predatory courting of their dollars without full disclosure of what they are investing in. The line for what classifies as a security is often blurry — but in the case of the metaverse, the practice of land sales should generally be considered a security under U.S. law.

GameFi platforms like Axie Infinity demonstrate the speed at which metaverse projects can birth multi-billion-dollar economies. Their sheer scale necessitates internal controls and monetary policies similar to multinational banks or even small countries. They should be required to staff compliance officers who coordinate with government regulators and even conduct Know Your Customer for large transactions.

Number of active Axie Infinity users, Jan. 2021-Sept. 2022. Source: DappRadar

The metaverse is intrinsically linked with financialization. While no bodily harm can be inflicted in the metaverse (yet), a lot of financial harm has already been caused. The company behind the Bored Apes Yacht Club nonfungible tokens (NFTs) saw a hack this year after a community manager’s Discord was compromised. Hackers walked away with NFTs worth 200 Ether (ETH).

A swath of Wall Street banks was recently fined $1.8 billion for using “banned” messaging apps. Metaverse projects like Yuga Labs should face similar proactive fines for not implementing secure monetary and technical controls.

Related: Throw your Bored Apes in the trash

A key first step for any metaverse project will be to classify what type of asset(s) they are issuing. For example, is it a security? A utility token? Or something else? This might seem like a daunting task, but the groundwork has already been laid by the initial coin offering era in 2017, and further efforts should be undertaken by regulators and protocols to provide clarity and protect consumers.

After the classification process is complete, the next step will be to develop a regulatory framework that can be applied to the metaverse. This will likely include rules and regulations around things like securities offerings, Anti-Money Laundering and consumer protection.

It’s crucial to strike the right balance. Too much regulation could stifle innovation and adoption, but too little could lead to widespread abuse. It will be up to policymakers to work with founders to find that sweet spot.

Despite concerns, the metaverse brings together a suite of emerging technologies: virtual reality (VR), augmented reality (AR) and NFTs. They all come together to drive the space forward with increasing momentum in the near-to-mid term.

Risks associated with operating in the metaverse

Cybercriminals are continually discovering new tactics to exploit users of the metaverse — i.e., through hacking schemes or identity theft. Because AR and VR wearables associated with these ecosystems generate massive volumes of personal data — including biometric info from eye-tracking and body-tracking technology — the metaverse is a tantalizing playground for bad actors.

Outside of financial theft, privacy concerns abound as three-dimensional data sets will reveal increasingly sensitive personal information. The General Data Protection Regulation in Europe and the California Consumer Protection Act are comprehensive pieces of privacy legislation that have forced tech platforms to hire data protection officers and data privacy compliance officers. Metaverse platforms will need to fill similar roles and could face even greater regulatory scrutiny, given the sensitivity of the data they might collect.

Related: Biden’s anemic crypto framework offered nothing new

As the demand for the metaverse continues to spike, so will the need for better internet services since the former requires a lot of bandwidth (estimated to be several orders of magnitude from internet traffic levels today). As a result, it is quite possible that many telecom networks and their existing data dissemination infrastructures may become overloaded.

One way to solve this issue is by investing in 5G technology and building out a stronger infrastructure. But this takes time, money and resources. The other solution is to develop more efficient data compression algorithms that can help reduce the amount of bandwidth required to transmit data within the metaverse.

Lastly, aside from all the technical risks, an aspect of the metaverse to consider is the negative impact it can potentially have on one’s mental health. Since the ecosystem is unencumbered by criminal law, there can be no path of recourse when users are faced with online abuse (such as racism).

Challenges to regulation

Because any network operator, firm or business, on paper, can exist outside of a proposed regulatory framework if they chose to do so — any given country’s efforts at regulation will have limited impact.

This is perfectly illustrated by the fact that many of the social media platforms we use today, including Twitter and Facebook, are not based in the U.S., but instead, operate from countries like Ireland and Singapore, where data protection laws are much more relaxed.

Related: Crypto gaming sucks — But devs can fix it

The same logic applies to the metaverse. Even if a country were to pass a law attempting to regulate this space, it is doubtful that all businesses would agree to abide by it.

Therefore, unless every participant of the metaverse aligns and agrees with the vision of setting up a uniform code of governance, there is no way of stopping a third-party entity (such as an offshore investment firm) from creating its own unregulated pocket within the metaverse, which users of other digital ecosystems can then access without any apparent restrictions.

Looking ahead toward a decentralized future

The metaverse is all set to reshape our lives whether we like it or not. Ultimately, the “move fast and break things” ethos of technology development is alive and well, and history has shown that founders move much faster than regulators can keep up with. But it will be crucial for regulators to step up and take proactive steps to allow for innovation to flourish without causing catastrophic financial damage to retail investors. After all, the choices we make today will determine how this technology will shape our tomorrow.

Huy Nguyen is the co-founder of KardiaChain, Southeast Asia’s first interoperable blockchain infrastructure. Since May 2022, he has served as the vice president of the Vietnam Blockchain Association, the official government body to push for mass adoption in Vietnam. He previously served as a senior tech lead manager at Google and holds more than 10 years of experience building large-scale distributed infrastructures, including the Google Access Wireless Platform and Google Fiber Network Infrastructure.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

The feds are coming for the metaverse, from Axie Infinity to Bored Apes

Expect a regulatory reckoning to come swiftly for Axie Infinity, Bored Apes and other projects that have thrown caution to the wind.

The metaverse is a futuristic iteration of the internet, featuring a digital economy and an immersive virtual environment alongside other interactive features. This relatively nascent space has gained so much traction in recent years that conservative estimates suggest that by 2024, its total valuation could top $800 billion. Meta (the parent body behind Facebook and Instagram), Google, Microsoft, Nvidia, Nike and others have made Fortune-100-sized metaverse splashes.

But with great valuations comes great scrutiny from increasingly tech-savvy financial regulators. Unlike traditional tech products, which often spend years putting growth over revenue, some metaverse projects push questionable monetization schemes on their users prior to launching a live experience. Metaverse real estate is a prime example of this practice, with platforms like Big Time games selling land in their metaverse before opening up access to the game.

Typically, the United States Securities and Exchange Commission doesn’t step in unless retail investors face predatory courting of their dollars without full disclosure of what they are investing in. The line for what classifies as a security is often blurry — but in the case of the metaverse, the practice of land sales should generally be considered a security under U.S. law.

GameFi platforms like Axie Infinity demonstrate the speed at which metaverse projects can birth multi-billion-dollar economies. Their sheer scale necessitates internal controls and monetary policies similar to multinational banks or even small countries. They should be required to staff compliance officers who coordinate with government regulators and even conduct Know Your Customer for large transactions.

Number of active Axie Infinity users, Jan. 2021-Sept. 2022. Source: DappRadar

The metaverse is intrinsically linked with financialization. While no bodily harm can be inflicted in the metaverse (yet), a lot of financial harm has already been caused. The company behind the Bored Apes Yacht Club nonfungible tokens (NFTs) saw a hack this year after a community manager’s Discord was compromised. Hackers walked away with NFTs worth 200 Ether (ETH).

A swath of Wall Street banks was recently fined $1.8 billion for using “banned” messaging apps. Metaverse projects like Yuga Labs should face similar proactive fines for not implementing secure monetary and technical controls.

Related: Throw your Bored Apes in the trash

A key first step for any metaverse project will be to classify what type of asset(s) they are issuing. For example, is it a security? A utility token? Or something else? This might seem like a daunting task, but the groundwork has already been laid by the initial coin offering era in 2017, and further efforts should be undertaken by regulators and protocols to provide clarity and protect consumers.

After the classification process is complete, the next step will be to develop a regulatory framework that can be applied to the metaverse. This will likely include rules and regulations around things like securities offerings, Anti-Money Laundering and consumer protection.

It’s crucial to strike the right balance. Too much regulation could stifle innovation and adoption, but too little could lead to widespread abuse. It will be up to policymakers to work with founders to find that sweet spot.

Despite concerns, the metaverse brings together a suite of emerging technologies: virtual reality (VR), augmented reality (AR) and NFTs. They all come together to drive the space forward with increasing momentum in the near-to-mid term.

Risks associated with operating in the metaverse

Cybercriminals are continually discovering new tactics to exploit users of the metaverse — i.e., through hacking schemes or identity theft. Because AR and VR wearables associated with these ecosystems generate massive volumes of personal data — including biometric info from eye-tracking and body-tracking technology — the metaverse is a tantalizing playground for bad actors.

Outside of financial theft, privacy concerns abound as three-dimensional data sets will reveal increasingly sensitive personal information. The General Data Protection Regulation in Europe and the California Consumer Protection Act are comprehensive pieces of privacy legislation that have forced tech platforms to hire data protection officers and data privacy compliance officers. Metaverse platforms will need to fill similar roles and could face even greater regulatory scrutiny, given the sensitivity of the data they might collect.

Related: Biden’s anemic crypto framework offered nothing new

As the demand for the metaverse continues to spike, so will the need for better internet services since the former requires a lot of bandwidth (estimated to be several orders of magnitude from internet traffic levels today). As a result, it is quite possible that many telecom networks and their existing data dissemination infrastructures may become overloaded.

One way to solve this issue is by investing in 5G technology and building out a stronger infrastructure. But this takes time, money and resources. The other solution is to develop more efficient data compression algorithms that can help reduce the amount of bandwidth required to transmit data within the metaverse.

Lastly, aside from all the technical risks, an aspect of the metaverse to consider is the negative impact it can potentially have on one’s mental health. Since the ecosystem is unencumbered by criminal law, there can be no path of recourse when users are faced with online abuse (such as racism).

Challenges to regulation

Because any network operator, firm or business, on paper, can exist outside of a proposed regulatory framework if they choose to do so — any given country’s efforts at regulation will have limited impact.

This is perfectly illustrated by the fact that many of the social media platforms we use today, including Twitter and Facebook, are not based in the U.S., but instead, operate from countries like Ireland and Singapore, where data protection laws are much more relaxed.

Related: Crypto gaming sucks — But devs can fix it

The same logic applies to the metaverse. Even if a country were to pass a law attempting to regulate this space, it is doubtful that all businesses would agree to abide by it.

Therefore, unless every participant of the metaverse aligns and agrees with the vision of setting up a uniform code of governance, there is no way of stopping a third-party entity (such as an offshore investment firm) from creating its own unregulated pocket within the metaverse, which users of other digital ecosystems can then access without any apparent restrictions.

Looking ahead toward a decentralized future

The metaverse is all set to reshape our lives whether we like it or not. Ultimately, the “move fast and break things” ethos of technology development is alive and well, and history has shown that founders move much faster than regulators can keep up with. But it will be crucial for regulators to step up and take proactive steps to allow for innovation to flourish without causing catastrophic financial damage to retail investors. After all, the choices we make today will determine how this technology will shape our tomorrow.

Huy Nguyen is the co-founder of KardiaChain, Southeast Asia’s first interoperable blockchain infrastructure. Since May 2022, he has served as the vice president of the Vietnam Blockchain Association, the official government body to push for mass adoption in Vietnam. He previously served as a senior tech lead manager at Google and holds more than 10 years of experience building large-scale distributed infrastructures, including the Google Access Wireless Platform and Google Fiber Network Infrastructure.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.