The Philippine National Police Against Cybercrime has released a document titled “Understanding the Risk of Cryptocurrency Gaming Scheme” in which it warns its citizens about the risks of losing money and NFTs in the popular game Axie Infinity.
In order to participate in the “play-to-earn” game, which gives the opportunity to earn cryptocurrencies, there is indeed a non-negligible initial investment to be undertaken, and during one’s journey there are many chances of losing one’s virtual money.
Axie Infinity had become very famous in the Philippines in late 2021, a time when NFT sales volumes had exploded, while now they seem to be going through a rough patch.
Let’s look at all the details together.
Summary
According to Philippine authorities, users have a high risk of losing their money and NFTs on Axie Infinity
Philippine law enforcement agencies in charge of overseeing cybercrimes in the country (PNP ACG) examined some of the patterns by which play-to-earn games could harm the finances of its citizens within a document titled “Understanding the Risk of Cryptocurrency Gaming Scheme.”
Amidst all of them, the eyes of the National Police were drawn to the famous metaverse game Axie Infinity and its various NFTs connected to it.
The latter, which relies on Ronin‘s (Ethereum’s sidechain) blockchain, is a “play-to-earn” in which participants can earn AXS tokens simply by fighting against other players in the Arena, winning trophies, and interacting with the marketplace and their own virtual lands in the form of NFTs.
In the Philippines, where the average salary is about $270, Axie Infinity became very popular from 2021 onward since with the earnings projections it offered, it was perceived as a real job by the population.
Law enforcement agencies in the country have warned citizens of the devious psychology associated with this game, where in order to start being competitive and actually earn money, it is necessary to make an initial investment of about $300 by buying various NFTs and game accessories.
This is definitely a high average, especially in the Philippines, considering that the average cost on traditional games that do not rely on the Web3 is $100 per user.
In addition, as if that were not enough, the PNP ACG highlighted in its statement a whole series of risks related to Axie Infinity and more generally to the crypto world, where losing money and one’s NFTs is indeed very easy.
In fact, there are a variety of dangers that lurk around the corner when approaching decentralized worlds.
First of all, the volatility of the market means that one’s initial investment can go way down if made with the wrong timing.
If you are not careful and meticulous in managing your wallet, you might lose all your funds by sending assets to the wrong smart contract address or to the wrong address.
Additionally, there are hacking threats and online scams that add another adversarial factor in this context.
In references to all these dangers, the Philippine Police Department commented as follows:
“Just because a game’s underlying blockchain is secure does not mean its engine or marketplace is secure.”
The PNP ACG advises its citizens to be careful with investments related to crypto assets and to always do proper research before investing money in NFTs and play-to-earn schemes such as Axie Infinity, as well as to be very cautious in online environments in general.
NFTs: sales volume analysis of the Play-to-Earn game
The Play-to-Earn game Axie Infinity has become extremely popular in the Philippines since May 2021, the month in which its NFT trading volumes began to take off reaching the $30.9 million mark in sales (CryptoSlam data).
This is a monstrous increase in volumes when we consider that in January 2021 alone, Axie’s NFT collection registered $930,000 in trades.
The game’s success has continued to rocket throughout 2021, touching the insane $869 million in sales as of August 2021.
The FOMO of players in the metaverse, 95% of whom are located in the Philippines and Venezuela, began to fall dramatically during 2022 in parallel with the bearish market for Bitcoin and the entire crypto sector.
In February 2022, NFT trading volumes fell below $100 million while in December 2022 we came to total only $1.86 million.
Compared to the last month of the previous year, the downsizing was about 172 times.
In January 2023 we saw a brief resumption of the trend, with volumes doubling from the previous month, continuing around $2-3 million in sales per month through May 2023.
On the other hand, June and July saw low trading activity, driven mainly by the decline in general interest in the crypto world during this summer.
Yesterday, daily trading volumes stood at $93.51 thousand: a dismal number considering that in the height of the Axie Infinity fad its NFTs totaled several tens of millions of dollars every day.
NFTs are not the only cryptocurrencies in the Axie Infinity ecosystem to have marked a sharp decline since 2021: the AXS governance and utility token, used as a game reward token, has also had a forgettable two years.
Starting from its all-time high, touched in the first week of November 2021 at $160 (weekly candlestick closing price), the crypto has lost nearly 97% of its value to reach $5.36 nowadays.
When the Philippine Cybercrime Police talked about volatility risks regarding the crypto market, they were referring to just such scenarios.
Those who invested in the AXS token in November two years ago or got into the Axie Infinity game and its NFTs, have surely lost money as well as valuable time.
