Axie Infinity Ecosystem Takes a Big Hit, $AXS Price Tanks
Crypto traders predicted the decline in $AXS post the token 'unlock'
The value of Axie Infinity Shards ($AXS) has been steadily declining from its all-time high of $164.90 USD to $8.21 USD (as of October 2022). As of 25th October, tokens worth $200 Million USD were given to private investors and crypto traders predicted that unlocking such a large amount of tokens would reduce the value of $AXS even further as early investors would dump the tokens for higher profits. The decline in the value of $AXS coupled with a decline in the active users of Axie Infinity has raised a lot of eyebrows.
The decline in the value of $AXS
As of 24th October, AXS has lost 22% of its value and has been incurring the most losses in comparison to some of the other leading cryptocurrencies.
The market capitalization has gone down to $890 Million USD from $1.13 Billion USD. As per the whitepaper given by the company, 2.16 Million AXS tokens out of 21.543 million AXS tokens will be given to Axie’s private investors. COO of Axie Infinity and Sky Mavis, Aleksander Leonard Larsen reportedly said, "[Sky Mavis] will not be selling a single token” of the the unlock.
Some of the locked AXS Tokens (worth $200 Million USD) were released to the early investors. The scheduled unlock was subject to scrutiny by crypto traders who predicted that the unlock would lead to the reduction of the token valuation as early holders of the tokens were most likely to dump the tokens.
The current valuation of Axie Infinity (as of 31st October) is $9.21 USD which is 90% lower than the previous all-time high of $164.90 USD.
Downward surge of active players - Reason for decline in $AXS value?
Axie Infinity has incentivized players to spend more time playing. It even catered to the livelihood of several people who were taken out of their jobs during the pandemic. However, the drop in the value from its all-time high of $164.90 USD per token to the low $9 per USD token has brought in a lot of skepticism about its viability in the long run.
The dip in the player count coupled with a surge in the bear market may have been some of the major reasons for the reduction in the valuation of the tokens.
The developers and the team in Sky Mavis have been facing several challenges in 2022. In February 2022, the Economic Balancing Update lowered the daily earnings of players by removing SLP rewards after clearing adventure mode and daily quests. In March, $600 Million USD were stolen from the Ronin Network after it got hacked.The Ronin Network is the blockchain network that supported Axie Infinity. The active player count declined from an all-time high of 2.7 Million to less than a million as of May 2022.