Axie Infinity price struggles as $189M worth of tokens are set to be unlocked
The price of the native token of blockchain-based game Axie Infinity has come under significant pressure over the past week. According to CryptoSlate data, Axie Infinity’s (AXS) price has fallen 12.04% over the past 24 hours, marking his second highest loss in a single day.
The token has experienced extremely bearish sentiment over the past 7 days, falling 22.08%. At the time of writing, the token was trading at $8.79.
Further selling pressure ahead
The token price will come under more selling pressure as $189.79 million worth of AXS is scheduled to unlock on October 25th. unlock tokenA total of 21,543,000 tokens, representing almost 8% of AXS’ total supply, will be unlocked after the end of the vesting period.
During the vesting period, early investors must hold on to their investments so that new investors do not exit at the same time. Therefore, after the expiration of the vesting period, these early investors may sell the tokens to cash in their profits, putting significant selling pressure on the tokens.
Of the tokens unlocked, 5.73 million AXS will be sent to the developer team and 4.89 million tokens will be used for future staking rewards. Private sale advisors and early investors will receive 2.5 million and 1.99 million tokens respectively.
However, it is important to note that although tokens are unlocked, they will not be put into circulation. Aleksander Larsen, co-founder and COO of Axie Infinity, explained in a Twitter thread that the unlocked tokens “will follow a different issuance schedule.”
The same applies to the upcoming 22M unlocks.
Even unlocked, it follows a different publishing schedule that is more flexible and can scale with the number of users.
Axie World Championship rewards come from P2E allocations.The same goes for seasonal rewards.
— Alexander / Psycheout – Axie Infinity (@Psycheout86) October 20, 2022
However, early investors bought AXS for around 8 cents in a private sale in 2020. white paperEven if the price falls, these investors could still make a profit of 10,000% or more on their investment if they decide to sell at the current price. Therefore, some of these investors are likely to try to realize profits after the token is unlocked, increasing selling pressure.
I’ve been having trouble brewing for a while
Axie Infinity exploded in popularity last year as one of the first blockchain-based Play-to-Earn games, allowing some players to earn bread and butter through the game. The Axie Infinity player starts with his 3 pets or his Axie in the form of non-fungible tokens (NFTs). Players then battle his Axies to level up and earn his SLP, the in-game cryptocurrency.
The game was hugely popular in the Philippines last year, accounting for 40% of the game’s user base. However, as more players entered the game, the value of SLP declined, leaving some users unsatisfied. SLP caused inflation and many questioned the sustainability of the game’s economic model. Axie Infinity also continued to tweak how much SLP players could earn, limiting their earning potential.
By November 2021, “scholars” — players who borrowed Axies from “managers” who cut their earnings — Income below the daily minimum wage in the Philippines. So over time, the platform’s user base declined — Over 74% reduction in daily active players From a peak of 2.27 million in February 2022, it will increase to 584,539 in October 2022.
The biggest hit was when the platform lost more than half of its average monthly users in 30 days after Terra-Luna’s collapse in June 2022. data from active players. Axie Infinity is currently trying to shift away from the “play to earn” model, launching “Axie Infinity: Origin” without cryptocurrencies.
In the Ronin bridge hack in March, attackers stole $600 million worth of tokens and played a role in demoralizing players. However, Sky Mavis, the company behind Axie Infinity, later refunded all users.
