Tokenomics / Ponzinomics case study: Axie Infinity

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This week we come to the final ‘ponzinomic’ case study of this series…
And of course, it’s AXIE INFINITY!!!

This case study offers different lessons to Olympus DAO and Safemoon since this time, the project actually appeared to offer utility that wasn’t centred on financial speculation – gaming.

Unfortunately what we learn is that the gaming element was too narrowly specified, and the hype around the game attracted financially motivated players who acted to minimise gameplay engagement in order to maximise value extraction.

And underneath all this were monetary regulation and incentive mechanics that simply could not sustain themselves, because the only way that the game had to take reward tokens out of the economy… was to promise more of them in the future.

The demand composition and incentive mechanics created amplifying feedbacks that serve to drive valuations all the way up and plummet back down again, outpacing the efforts of the development team to build out the gaming universe in time to arrest the decline.