How Axie Infinity Is Advancing Play-to-Earn Gaming With Chainlink

For over a decade, the promise of “play-to-earn” has tantalized gamers and developers alike. At the core of the play-to-earn model is the premise that, with nothing more than their time and effort, a player can unlock real-world economic value via in-game items and currencies—a seemingly alchemical transformation akin to turning iron into gold.

However, despite its promise, play-to-earn has failed to break into the mainstream, and the dream of being able to earn a living simply by playing games remains out of reach to many. The challenges have been largely technical: a lack of robust marketplaces for in-game items, the difficulty of provable ownership, and unsustainable economic models.

But there is hope for those who wish to play their way to income. Axie Infinity, a leading blockchain-based game, is spearheading the play-to-earn revolution for thousands of active users. From first blush, Axie Infinity’s digital pet universe might seem like just a fun, fantasy adventure, but the economics of the Axie world signal a new chapter for gaming. In the midst of the pandemic, Axie Infinity has unlocked economic opportunities for gamers worldwide and given players in rural communities in the Philippines a way to earn upwards of $400 a month.

In this post, we’ll explore how Axie is using blockchain technology and Chainlink’s decentralized oracle network to help bring play-to-earn to the forefront of the gaming world.

The Problem With Play-to-Earn Today

The current play-to-earn landscape is rife with pitfalls, scams, ambiguities, and obstacles. Take, for instance, the trade of rare “skins” in Counter-Strike: Global Offensive. CS:GO is credited for creating the skin economy, a system where players earn “loot boxes” that contain randomized cosmetic upgrades to their avatar and equipment. The rarest skins can earn upwards of tens of thousands of dollars when sold, but the exchanges often take place on opaque third-party marketplaces rife with chargeback fraud, credential-stealing scams, and fake skins. Players have few details about the “drop rates” of items, which can be altered by game developers at any time. These are shaky foundations on which to build a virtual gaming economy.

NFTs and Provably Rare Digital Assets

To bring cryptographic guarantees to the gaming world, Axie Infinity is built using Non-Fungible Tokens (NFTs) to back tradable Axie critters. NFTs, akin to a cryptocurrency like Ether, are blockchain-native data. But unlike ETH, which is fungible (meaning any one ETH is identical to another), NFTs are unique. Each Axie is programmatically tied to an NFT, which contains the metadata that determines each Axie’s in-game appearance and rarity—everything from a common Axie, making up 70% of the population, to a Quad Mystic, of which there are only three in existence.

Axie Infinity’s marketplace allows players to buy and trade provably rare digital items.
Axie Infinity’s marketplace allows players to buy and trade provably rare digital items.

NFTs are an ideal solution to many of the current challenges with play-to-earn. Through Axie’s Ethereum-based marketplace, players can verify the supply and provenance of their NFTS and sell them to anyone, anywhere in the world. Because the Ethereum blockchain supports a growing ecosystem of composable DeFi protocols, players can seamlessly interact with decentralized exchanges (DEXs) like Uniswap directly through the Axie marketplace to sell the fungible tokens that they earn in-game. Axie also recently integrated Chainlink’s ETH/USD Price Feed into their marketplace to ensure users have access to high-quality, reliable price data, secured by a decentralized network of oracle nodes.

Additionally, Axie announced that they will be using Chainlink VRF (Verifiable Randomness Function) for the generation of Origin Axies from Axie Origin Coins. Chainlink VRF allows players to audit on-chain that the outcome of an in-game action relying on randomness, such as breeding a new and potentially valuable Axie, was conducted in a provably random fashion.

Chainlink VRF enables smart contracts to generate verifiable randomness around in-game dynamics and assets.
Chainlink VRF enables smart contracts to generate verifiable randomness around in-game dynamics and assets.

Axie will be using Chainlink VRF to determine whether or not Origin Axies will be minted with Mystic traits, which make them even rarer. Origin Axies are capped at 4,088 total, and new ones can be created by burning Axie Origin Coins. This creates a pricing dynamic similar to first edition trading card packs.

In aggregate, these technologies allow the play-to-earn economic model to flourish because it’s based on concrete and provable distribution rates. This certainty and transparency make it easier for a market to determine the value of in-game items, which can be quite high: a “Triple Mystic” Axie, the second-highest rarity tier, recently sold for 300 Ether, or over $130,000 at today’s prices.

By using provably unique NFTs, secure price feeds, and verifiable randomness powered by Chainlink VRF, players have assurances that the digital goods they create with their gameplay are based on fair systems, that they can exchange those goods on transparent, tamper-proof markets, and that the economic models that govern those goods are unchanging.

Decentralizing Governance of Game Development

There is a final necessary step in creating a fully sustainable virtual economy: aligning incentives between game developers, players, and community content creators. Players of MMOs know the pain of seeing hundreds of hours of their work gathering in-game items disappear when a game ceases to exist due to bankruptcy or lack of development from a parent company. In a play-to-earn model, this scenario could mean a significant loss of real economic value.

For this reason, Axie has designed Axie Infinity Shards (AXS), ERC-20 governance tokens for the Axie universe. AXS will allow stakeholders in the Axie ecosystem to vote on key decisions related to the Axie universe, as well as earn game revenues from the Community Treasury. Revenues from Axie Infinity will no longer go solely to core developers but will be deposited in the Community Treasury. AXS will create a virtuous cycle in which players can participate in the decentralized governance of their game, increasing both their decision-making power and their earning potential, while strengthening the long-term vitality of the Axie Infinity project as a whole.

The decentralized governance model of Axie Infinity aligns the incentives between game developers, players, and contributors from the community.
The decentralized governance model of Axie Infinity aligns the incentives between game developers, players, and contributors from the community.

This is a natural conclusion to the evolution of the play-to-earn model—a model where players are not unrewarded workers in a kind of game factory, but instead active participants with skin in the game who can dictate the growth and success of their virtual ecosystems, economies, and worlds.

If you are a smart contract developer and want to quickly connect your dApp to Chainlink Price Feeds or take advantage of the Chainlink VRF feature, visit the Chainlink developer documentation and join the technical discussion on Discord. If you want to schedule a call to discuss an integration more in-depth, reach out here.

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