The effects of the bear market continue to be felt in Axie Infinity as Smooth Love Potion (SLP) continues to drop, hitting a new low earlier today. As of 3:19 PM GMT+8 (PHT) today, SLP has dropped to USD 0.0040 in value, and is threading closer to its previous all time low of USD 0.0031 USD back in June 2020. The token fell into a steady decline after hitting its all time high of USD 0.399 back in July of 2021, and has yet to recover despite various measures and supposed attempts to urge breeders to utilize SLP by breeding more Axies. But how did it come to this?
Midway last year, Axie Infinity quickly became one of the most played blockchain games globally hitting a record high estimate of 2.3 million average daily players back in January of 2022. As the playerbase grew, the balance between minting and burning of the game’s utility token, SLP, saw a reverse effect as more SLP is being minted than spent or burned resulting in the gradual decline in value.
According to Sky Mavis co-founder Jihoz, only about 40% of the total SLP minted are being burned by players which resulted in the economic imbalance. Sky Mavis did make efforts to help counter this effect first with the removal of the SLP earned through the Axie Infinity’s adventure mode, and as well as the Lunar New Year event which entices users to release their Axies in exchange for land-based rewards.
Aside from these changes and activities, the dawn of the new Axie Infinity competitive season also meant that players would need to switch up their team lineups, with breeders using SLP to breed new Axies that fit the meta because of the expected demand. However, as the mid-tier metagame remained largely unchanged, a lot of players, especially the scholars, still ended up using the same tried and tested lineups with only those who were really gunning for the top leaderboard spots creating only a small demand for new Axies.
The Road to Origin
Early last month, Sky Mavis release Axie Infinity Origin, the next evolution to Axie Infinity bringing new gameplay mechanics, new elements like Runes and Charms and a new burning mechanism that will finally utilize SLP. Origin has been heavily promoted and teased as a beacon of hope for the floundering ecosystem until it finally launched. However, the expected positive response turned to skepticism as the journey to Origin was mired by the largest breach in defi history, when Ronin was exploited several days before Origin’s release. With over USD 625 Million worth of assets compromised, the community’s reception, which already soured over the dropping value of SLP continued to go south and the FUD intensified. The lack of any major update or metagame changes for Axie Infinity battles v2’s final season also didn’t help as it didn’t create any demand for refreshing Axie lineups.
Crypto on the down low
But it’s not just SLP that’s experiencing a dip in value as the rest of the cryptocurrency market is also on a very sharp decline following global factors. Big names such as Bitcoin (BTC) and Ethereum (ETH) have dropped to more than 25% in value for the last 7 days. Many factors have been attributed to this continuing decline such as the ongoing Russia-Ukraine crisis, and the adjustments to interest rates by the US Federal Reserve. As it is being treated as an investment asset, Cryptocurrency seems to follow traditional trends and factors that affect that global stock market all while still being very volatile when it comes to value.
Where do we go from here?
So what happens to SLP now? At this point, exiting while your losses are still manageable is always a good option. Sky Mavis must be on point or perhaps even earlier in hitting their production and development timelines should Axie Infinity hope to recover its SLP value soon. While Origin is shaping up to be fun to play, the still lack of burning mechanisms mean that SLP will remain stagnant or might even continue to plummet due to oversupply.
Still, there is hope that SLP would reach a stable value soon, although the question now is, what value will we consider stable?