Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
UK Housing Market Analysis, Trend Forecast 2022 to 2025 - Part 2 - 30th June 22
Stock Market Turning the Screws - 30th June 22
How to Ignore Stocks (and why you should) - 30th June 22
Top Tips For Getting The Correct Insurance Option For Your Needs - 30th June 22
Central Banks Plan To Buy More Gold In 2022 - 30th June 22
AI Tech Stock PORTFOLIO NAME OF THE GAME - 29th June 22
Rebounding Crude Oil Gets Far Away from the Bearish Side - 29th June 22
UK House Prices - Lets Get Jiggy With UK INTEREST RATES - 28th June 22
GOLD STOCKS ARE WORSE THAN GOLD - 28th June 22
This “Bizarre” Chart is Wrecking the Stock Market - 28th June 22
Recession Question Answered - 28th June 22
Technical Analysis: Why You Should Expect a Popularity Surge - 28th June 22
Have US Bonds Bottomed? - 27th June 22
Gold Junior Miners: A Bearish Push Is Coming to Move Them Lower - 27th June 22
Stock Market Watching Out - 27th June 22
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Axie Infinity (AXS)Mmade a lot of People Rich… Temporarily, What We Learned

Companies / cryptocurrency Jun 11, 2022 - 04:55 PM GMT

By: Stephen_McBride

Companies

Axie Infinity (AXS) made a lot of people rich… temporarily.

In 2020–2021, the crypto token shot from about 14 cents to above $150… handing out a mind-boggling 107,000%+ return... in just one year.

And it didn’t just make investors rich. The Axie token is associated with a video game that pays you to play it. Players—many of them in poorer countries like the Philippines—were making up to $3,500/month.



That’s 300% more than the average Filipino makes. It’s equivalent to an American making $160,000 a year playing video games.

Keep in mind, these players weren’t professional gamers. They weren’t part of an esports team. And they didn’t receive money from sponsors.

They simply got paid for playing a video game.

Amazing, right?

Unfortunately, like many unsustainable crypto projects, this story didn’t end well. Axie crashed back down under $20. Its user base has plunged by 60%... and players now earn a few dollars a day, max.

What went wrong?
  • Axie screwed up the one thing you can’t afford to screw up in building a successful crypto project…

Tokenomics.

In crypto, tokenomics are everything.

Tokenomics set the rules for how a crypto token operates. They determine:

  • How many tokens are in circulation
  • How new tokens are created
  • How old tokens are destroyed
  • How the token is used
  • And how the token accrues value from the underlying crypto business (if there is one).

For example, bitcoin’s tokenomics ensure there will only ever be 21 million bitcoins created.

Notice there’s a key difference between crypto and the stock market here…

In the stock market, strict rules dictate what a company can do with its own stock.

Take Netflix (NFLX). There are about 444 million shares of Netflix stock on the market. Each represents a sliver of ownership of the company’s equity.

Imagine if Netflix management could simply create 500 million more shares out of thin air whenever it felt like it? Clearly, that would dilute ownership and inflict losses on investors. That’s why issuing new shares of stock is only allowed under certain circumstances.

In crypto, no such rulebook exists yet. It’s up to the developers who write the blockchain code to set the rules for their project.

Some set rules are great for investors—like bitcoin’s.

And other set rules are terrible for investors—like Axie’s.

  • Axie essentially experienced hyperinflation…

I won’t bore you with all the details. In short, Axie players made money by earning in-game currency called “Smooth Love Potion” (SLP). At one point last summer, SLP’s token reached $0.42.

Players earned this “magic internet money” in the game that they could then convert into real US dollars.

But SLP collapsed 98%... falling to $0.005 because of its overwhelming supply.

In other words, SLP’s tokenomics were bad. Every player was able to create a lot of daily SLP, but there were few ways to actually use the currency. That doomed it to crash sooner or later.

SLP was worthless. And no one wanted to play Axie anymore.

  • Do you see how important tokenomics are?

Without good tokenomics, nothing else about a crypto project matters.

Keep in mind, crypto projects have wildly different tokenomics. There isn’t a one-size-fits-all approach. But as I’ve shown you, token design can make or break a crypto… which is why I study the nitty gritty of every token before putting money to work.

In my premium crypto advisory, we favor cryptos that accrue value from the underlying business.

3 Breakthrough Stocks Set to Double Your Money in 2022

Get my latest report where I reveal my three favorite stocks that will hand you 100% gains as they disrupt whole industries. Get your free copy here.

By Stephen McBride

http://www.riskhedge.com

© 2022 Copyright Stephen McBride - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in