It’s like any other game: you put together a team of cute little monsters, compete with others, and if you win you get points to create new, stronger critters. Only you get in Axie Infinity no points, but crypto coins that are worth real money. And your investment for your first samples? That can easily be hundreds of euros.
Has been gold for years Axie Infinity as the major player in the crypto game world. Last year, the makers achieved a turnover of 1.2 billion euros. The promise: Every player can earn a salary by playing games on a daily basis.
So it seemed. After months of economic troubles, Axie Infinity hit by a huge hack at the end of March: the perpetrators made off with about 600 million dollars (552 million euros) in crypto coins. All neatly written off via a ‘blockchain’, the digitized ledger that forms the basis of crypto and NFT technology. Because income and expenditure via the blockchain can simply be followed by experts if they know where the money is, the perpetrators can’t do much with it now.
Also read: Gaming to earn cryptocurrency
It was a sledgehammer that the game just couldn’t use. Creator Sky Mavis therefore quickly recruited crypto investors such as Binance to cover the missing money as much as possible.
In order to grow quickly, “we made choices that made us vulnerable to attack,” sighed Vietnam’s Sky Mavis in a blog post† Hackers managed to get special rights to use a digital bridge that makes it possible to trade the Axie crypto coins for the widely used cryptocurrency Ethereum. For several days they managed to funnel money into their own wallet.
Shortly afterwards, a bridge of the much smaller game MiracleHero hacked† The perpetrators stole about 300,000 dollars (276,000 euros). The price of WonderHero’s currency collapsed.
Presumably in both cases, the hackers got access to critical infrastructure by fooling employees with a fake website or email, a so-called phishing attack.
Dream of decentralized internet
Humans thus appear to be the great weakness of ‘Web3’, the vaguely defined dream of a decentralized internet based on blockchain technology. Web3 captures the economic value of all kinds of goods in a complex web of different ‘tokens’. On the one hand you have regular tokens, a kind of payment currency, such as Bitcoin. On the other hand you have ‘non-fungible’ tokens (NFTs), which most resemble a kind of digital receipt, for example to prove that you have paid for an Axie monster. Everyone has their own piece of the internet and can act freely: together we become a large network of individuals online. Central powers such as banks, social media and even governments are left behind. That is the ideal of the decentralized internet.
For now, however, Web3 remains the Wild West. On forums and in YouTube videos, crypto experts are trying to warn each other about rogue projects designed to make quick money off the backs of unsuspecting investors. The hack on Axie underlines that customers of well-meaning NFT game companies are also at risk.
Even without the hack it’s crisis ahead Axie Infinity† In order to maintain the value of purchased monsters, there must be enough players who need new monsters. But since the beginning of this year, the game has stopped growing. The price of the cryptocurrencies linked to Axie plummeted: in July last year you received thirty dollar cents for one of Axie’s coins, now you are a single cent rich with one ‘SLP’.
A collapsing bubble, or is it part of it? On Youtube enthusiastic experts shrug their shoulders: crypto games are an investment market. If the deposit price drops enough, new players will come, they reason.
Also read this column: Struggling with Web3
For a while, the entanglement between games and NFTs also seemed to permeate the wider gaming industry. Major game companies hinted last year that they were interested in the blockchain. But an outspoken group of gamers sees no point in NFTs: another way in which gaming giants try to take money out of their pockets, and now also through risky speculation, it sounds. Angry reactions led to the early end from ‘Metaworms’, a series of NFTs based on the popular Worms games. An introductory video about NFTs in the game Ghost Recon Breakpoint was released after incensed reactions from fans made invisible† The thousand NFTs that maker Ubisoft eventually made available for free were only traded 96 times. Now Ubisoft is ceasing to support the underlying game. The NFTs of guns and helmets are so practically worthless.
Annoying for the owners? Oh, they should be proud, appeased the company on its website† “You have left your footprint on the history of this game.”