Axie Infinity and Yield Guild Games took the Philippines by storm but users are starting to question long-term viability

March 14, 2022 Philippines Blockchain

For as long as he can remember, August Calderon has been an avid gamer. “At the age of two or three, I started playing console games, which later sparked my interest in other video games. I don’t think I ever had a year in my life where I did not play,” the 27-year-old Manila native told KrASIA.

As with many who have spent uncountable hours engaged in video games, Calderon pondered the possibility of becoming a professional gamer. He started participating in local e-sports tournaments in 2010, and even earned several medals and trophies, but the financial rewards were meager. “The prize pools for local tournaments were only worth the cost of around one meal at the time,” he said.

Frustrated by those past experiences, Calderon was excited when he first encountered Axie Infinity, a play-to-earn (P2E) game that became popular in the Philippines in early 2020. For the first time, players could earn an income just by playing a video game.

To get started, a player has to purchase at least three Axies, the in-game pets. The prices of Axies fluctuate wildly—in August 2020, the cheapest Axie cost USD 307, but the floor price has since dropped to around USD 20 as of early March. When Axie prices were high, many people in the Philippines were unable to join the game because the national minimum wage stands at PHP 537, or roughly USD 10, per day.

This led to a business opportunity: gaming guilds were formed to rent out the relevant in-game assets to players. They also provide training and support networks to their players. In particular, this appealed to users in rural areas of the Philippines, where the average income is lower than in major cities like Manila. Eventually, Yield Guild Games (YGG) became the largest guild of this type. Its market cap was USD 276 million as of March 11, according to data from CoinMarketCap.

Now, guilds like YGG act as entry points for gamers who cannot afford the prerequisite assets to start gaming. As projects in GameFi—“game” plus “finance”—developed their own corner in the crypto sector, individuals with low to zero starting capital began to utilize Web3 tools to generate earnings.

But the speed of GameFi’s development has also prompted questions about the long-term viability of this business model, since gaming guilds generate revenue based on the yield generated by players. This means if a P2E game fails or players lose interest in a game, the value of game assets will depreciate, in turn disrupting the earnings of guilds.