By Mariejo Ramos / Thomson Reuters Foundation, MANILA
At the height of the cryptocurrency COVID-19 pandemic boom, migrant worker Gian Carlo McGlay thought he had found a way to overcome lockdowns and provide income for dozens of unemployed workers in his hometown in the Philippines.
However, McGlay's dreams of leading a team of 'play to win' cryptocurrency gamers focused on the Axie Infinity game quickly crumbled as crypto prices plummeted, leaving the 32-year-old with fears. losses of 1 million Philippine pesos (US$18,031).
“There was nothing left. My Axie Infinity assets became worthless so I just gave them away,” McGlay said.
Part of a new generation of blockchain-based online games that combine entertainment and financial speculation, Axie Infinity also attracted investors who saw it as a way to introduce more people to cryptocurrency.
Axie players can earn cryptocurrency by cashing in the tokens they earn in-game – called Smooth Love Potion (SLP). For a time, it was a lucrative business.
McGlay's "scholars" - a term used for gamers who cannot afford to buy the game's characters themselves, so rent them out to so-called managers in exchange for a cut in their income - initially earned 5,000 to 10,000 pesos per week.
Unlike other Axie managers, McGlay – who worked as a fisherman in Alaska before the pandemic – said he made no profit from the business, leaving his fellows to keep all of their earnings.
At its peak, Axie Infinity attracted 2.7 million daily active users, but those numbers have dropped to around 250,000, according to Cryptogambling.tv, a website focused on cryptocurrency gaming.
Half of the game's players were from the Philippines – and many more from developing countries like Brazil, Indonesia, Peru and Venezuela.
Yield Guild Games (YGG), a group that invests in non-fungible token (NFT) gaming, said it "prioritizes providing scholarships in emerging economies where job opportunities are lacking and where government assistance has been limited" during the pandemic.
Many managers like McGlay faced big losses as the value of the game's SLP tokens fell 99% from its peak in February last year, reflecting a crash in cryptocurrency prices.
Axie Infinity received another blow the following month, when hackers stole an estimated US$615 million in cryptocurrency from a blockchain network that allows users to transfer crypto in and out of the game.
While some Axie managers say their motives were philanthropic, other smaller investors were driven by potential earnings.
Christopher Cruz, 36, a Filipino businessman and cryptocurrency trader who managed 200 Axie fellows, said he made up to 600,000 pesos a day from gambling by taking a 60% cut in earnings of its players.
"I felt like a drug lord," Cruz said. "I could buy anything I wanted - every item inside the mall was never too expensive - during this time."
Its scholarship recipients, who were mostly high school students and construction workers from impoverished provinces, earned a daily income of 450 pesos, just below the minimum wage of 470 pesos in areas outside the capital, Manila.
A Filipino doctor, who asked not to be named, said it was "extremely easy" to sign players during the pandemic and his earnings as a manager were similar to his regular job.
SLP tokens were worth 3 pesos each when McGlay, Cruz and the doctor joined the game. The value of the token peaked at 20 pesos, before steadily dipping in late 2021. It now sits at around 0.16 pesos.
"It's not worth it anymore. Gameplay also got harder,” Cruz said, adding that it was now difficult to earn 50 SLPs per day, down from 150 at his peak.
Losing their new source of income, legions of scholars gave up gambling, turning to gig work as delivery men or selling clothes online or taking up full-time studies.
"Players who were only motivated by the financial rewards of the game have moved on now," said YGG Philippines manager Luis Buenaventura.
YGG continues to rent Axie NFT characters to interested players, "but it's not as necessary as it used to be since these NFTs are all really affordable now," he said.
Axie's dizzying ups and downs should serve as a warning signal to potential investors in the volatile world of crypto, said Elaine Tinio, a marketing professional in Manila who played the game for up to four hours a day for increase its income.
Delighted by her initial profits, she spent more and more money on Axie characters before a sharp drop in the value of the game's SLP token left her facing a loss of 200,000 pesos, or about five months of his salary.
"Greed got the better of us," she said.
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