NFT games, like Axie Infinity, move economy during the pandemic

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Thousands of players are earning money by taking care of virtual little monsters.

This is thanks to games like Axie Infinity, which have technology based on non-fungible tokens (NFTs), a type of collectible and unique cryptoactive.

Axie Infinity was developed by Vietnamese company Sky Mavis in 2018, but it only gained notoriety in the Philippines last year and, more recently, in other developing countries such as Venezuela and Brazil.

Inspired by the Pokémon game series, the title allows players to buy, train, battle and sell their “Axies”, which look like little monsters and are linked to the cryptocurrencies Axie Infinity Shards (AXS) and Smooth Love Potions (SLP).

As the player progresses through stages, trading items, and battling with other players, he is able to “mine” more coins that can ultimately be exchanged for real money.

The game is still in beta version and has no date to release the final. According to data from ActivePlayer.io, about 40% of players are in the Philippines, followed by Venezuela, the United States, Indonesia, Thailand and Malaysia — all of those mentioned, with the exception of the US, are developing countries.

In October, the game hit the peak of players, with more than 2.2 million users distributed around the world.

In Brazil, the game’s Facebook group has more than 28,000 members — they also meet on Discord and Instagram.

How to enter Axie Infinity?

Players mainly have two options to enter the game: buying little monsters or renting them in schemes called “scholarship”.

To purchase, a player must purchase at least three Axies — and their value typically starts at $200 at the time of this article’s publication. Therefore, whoever wants to start the game needs to spend at least R$3.3 thousand. But the values ​​can be much higher depending on which Axies the player buys.

In scholarships, veterans rent their little monsters so that novices with no start-up capital can train them. In this case there is a division of profits: normally 60% stays with the owners, while 40% remains with the players, who come in with the work and development of the little monsters on a daily basis.

In the Facebook group, many players post posts looking for scholarships.

Free time to play the game (usually varies between 2 am and 10 am daily), internet speed and experience in other NFT games are also taken into account.

In addition to players, interest from speculators has also been growing in the game.

That’s because it’s possible to buy AXS at cryptoactive brokers to bet on its valuation — which also helped in the increase in demand for assets and, consequently, in prices within the game.

Each Axie, or little monster, is an NFT based on Ethereum, a blockchain network launched in 2015. This platform is decentralized, not controlled by any entity and runs on computers around the world.

Journalist and PhD in political science from the Federal University of Santa Catarina (UFSC), João Kamradt considers himself an enthusiast of cryptocurrencies and blockchain technologies.

In addition to working with games play to earn (P2E, orplay to profit”, in Portuguese) at Projog, an investment manager focused on blockchain games, he is also studying the adherence of young people to the NFT. In addition, he arranges for friends and family in the scholarship scheme for Axie.

Interest in the game came from a purely financial issue. In addition to scholarships, he advises on NFT games for a startup.

“I always liked playing video games. In March of this year, I started playing Axie Infinity for real. When I joined, the SLP was worth about $0.03 and then it went down to $0.40. During this period, I saw people earn R$5,000 in 15 days. In Brazil today, that means you’re swimming in money”, he says.

According to information from the website Blockchaingamer.biz, investments in games based on NFTs grew about 6 times this year, to US$ 452 million from US$ 71 million last year.

The founding document Axie Infinity shows the desire of the company that created the video game to attract more and more players. “We believe in a future where work and leisure become one. We believe in empowering our players by giving them economic opportunities. Above all, we have the dream that fighting and collecting cute creatures can change the world”, says the text of document released by Sky Mavis.

Heloísa Passos, 28, founder of one of the largest Axie Infinity communities in Brazil, worked as a creative director until she came across NFT games. “When I walked in, everything looked like bush. Last year, around 7,000 people played [Axie Infinity] In all world”. Today, she is one of the partners at Sp4ce Games, a startup focused on attracting professional players to maximize earnings from coins earned in the game.

extra income in tough times

Many of the players adopted the game in order to secure a monthly income amid the social and economic crisis accentuated by the Covid-19 pandemic.

Hamilton Dangel, 31, started playing Axie Infinity after becoming unemployed in the midst of the pandemic.

Because of the game, created a canal no YouTube in which it shares tips for new users. “Axie Infinity has been my job and my primary source of income. I got to know the game because of a friend, who invested around R$ 10 thousand. With the income I got, I also started investing in other NFT games”, he says.

Like Dangel, Diogo Ferreira, 39, a game designer and partner at SLP Hunters, started playing Axie because of the quick payback potential the game presented. “It’s the most expensive game I know and that’s why I consider it not just fun, but a business and an investment,” he said. After four months at Axie Infinity, Ferreira says he reinvested all the profit he raised.

And the regulation, how is it?

Before talking about the regulation of NFT games, it is necessary to first reflect on the regulation of cryptocurrencies as a whole, explains Raphael Souza, a lawyer specializing in cryptocurrencies.

For him, in addition to the difficulty in taxing this technology, there is also a need to deal with an eventual labor relationship proposed by the scholarships. “Depending on the requirements and contracts, it can be classified as a close working relationship”, he points out.

On the tax side, the Federal Revenue Service requires that the possession of cryptocurrencies above R$ 5 thousand be reported in the Income Tax.

In addition, since August 2019 the operations involving cryptocurrencies in Brazil must be reported to the federal agency.

O report it is done directly by exchange agencies. For operations outside the Brazilian exchanges, the investor himself must report for transactions above R$30,000 per month and pay taxes if the amounts traded exceed R$35 thousand reais per month.

Also according to the Federal Revenue, Brazilians moved R$ 127 billion in cryptocurrencies in 2020. During the period, 445,000 individuals and about 6,000 companies reported transactions with virtual currencies.

For Souza, it is important that investors and players follow two simple guidelines when starting to invest in crypto and NFT games: “Don’t invest in what you don’t know, study. And it’s important to research the brokers that have the lowest rate of complaints. You can check this in Reclame Aqui, for example”, he says.

In other countries, regulation is also starting to be ruled. In September of this year, China decided to prohibition cryptocurrency mining across the country. After the announcement, bitcoin, the world’s largest cryptocurrency, dropped 5%.

In a decision similar to China’s, Nigeria decided to ban financial institutions from processing bitcoin transactions.

Recently, the country’s government launched the eNaira digital currency, which is issued by the country’s central bank and is subject to the exchange rate.

In the Philippines, one of the countries where Axie Infinity is most popular, profits from the game will be taxed;

Across the counter: investors

While quite eye-catching on paper, Axie Infinity also features its hotspots.

The game requires prior knowledge about the universe and trends in the cryptocurrency market. Also, the investment in a single account is high.

Now, for risky profile investors, NFT games can be attractive. That’s what 33-year-old lawyer and investor Luiz Felippe Quites explains. In June of this year, while still working at a law firm, he read a news story about the massive adoption of the game in the Philippines. Disbelieving in the period, he invested around R$ 6 thousand in an initial Axie Infinity account. Shortly thereafter, it allocated R$70,000 in new agency accounts for friends and family. More recently, he founded Khal Special Forces, an organization focused on eSports and NFT games.

At Khal Special Forces, around 700 people are hired to work with the Axie universe — and there is a waiting list for 2,000 people, says Quites.

All users are over 18 years old and have a signed agreement where 45% of the profit generated by the game is for the players, while the rest is split between the company and investors, but this is not a rule in all scholarships.

José Arthur, CEO of Coinext, a brokerage specializing in cryptocurrencies, says NFT games have led many unbanked adults in developing countries like Bangladesh and the Philippines to gain access to the world of cryptocurrencies. “There is an interesting social aspect in these countries. Including people who managed to exchange game currency for a fiat currency”, he says.

In Venezuela and the Philippines, there are stories that Axie Infinity’s SLP began to be accepted as a current means of payment.

But after all, is it a pyramid?

This is a question that surrounds the universe of NFT games and there are players who accuse the pyramid game among the hundreds of posts in the community on Facebook. That’s because, especially in scholarship schemes, there is usually someone at the “top” getting paid on top of other players.

For the accounting and finance professor at USP, Marcelo Botelho, there aren’t many similarities between the pyramid scheme and the Axie Infinity game.

For him, the main point that usually generates this type of reaction is the lack of understanding in relation to the dynamics of supply and demand presented. “The game’s valuation trend is due to the inflationary increase of more people entering. Every coin only has value when it is scarce”, he reflects.

In Brazil, Law 1521/51 defines that the pyramid scheme is usually sold as advantageous, promising surreal returns while attracting new investors. However, as soon as new applicators stop coming in, the system can start to collapse. Payouts stop and those at the top win based on the money invested from those who lost at the bottom—practices that seem far removed from that definition.

For journalist João Kamradt, the blockchain technology, which is used in the game, is safe because it contains all the information on negotiations. “For me, what scares people is that the money is not centered in a bank. Now, how can I control João’s money if part of my income comes from a token called gentle love potion [SLP, sigla para Smooth Love Potions]?” questions.

For experts, Axie Infinity has become a phenomenon for being the first game of its kind to “bomb” among young people around the world, but it won’t be the last. There are other NFT games that are already on the players’ horizon.

In addition, Andrew Wilson, head of Electronic Arts (EA), argued this week that NFTs and games that pay users to play are “an important part of the industry’s future.”

Reference: CNN Brasil

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