‘Axie Infinity’ Caps SLP Token Supply—Can It Revitalize the Play-to-Earn Game?

A supply cap has been established for SLP, limiting the total number of tokens to 44 billion, the Axie Infinity team shared Wednesday. It’s not a technical cap enforced by a new smart contract that governs the token functionality. Instead, Sky Mavis wrote, it’s a “social contract” that will be enforced in part through metering in-game rewards to remain within the cap. Currently, there are about 41.4 billion SLP in circulation.

SLP is Axie’s main in-game currency and can be earned through gameplay, while AXS is its governance token and RON is the gas (transaction fee) token of Axie’s Ronin blockchain, a gaming-centric Ethereum sidechain.

The Axie Infinity team hopes to bring SLP to a deflation rate of 2%, and has established a “stability fund.” The team promises to add 2 SLP to the fund for every 10 SLP burned, according to the update, and has already added 60,000 USDC to the fund to get it started. The stability fund “programmatically buys SLP when inflation is higher than target and sells SLP when inflation is lower than targeted,” according to a blog post.

“The goal of this program is to create a steady and consistent source of demand for SLP and balance supply with demand,” the team said in the post.

SLP’s price has risen roughly 8% over the past day in the wake of this news, but remains down almost 2% over the past week, per CoinGecko data. The token is still down more than 99% from its 2021 peak, back when Axie Infinity caught fire and had millions of active players.

SLP can be earned by winning games in Axie Infinity. But the team has also introduced a new game mode, Premium Cursed Coliseum, where players must pay a one-time fee of 150 SLP to enter, but can earn 50 SLP for three wins, 150 SLP for six wins, 300 SLP for nine wins, and 750 SLP for 12 wins. Players who win 12 games without losing a single match will receive 3,000 SLP, according to a post.

Ultimately, 20% of those entry fees will be burned, while the remainder will go to a growth fund—but that percentage could fluctuate on a monthly basis going forward, the team said. It’s also worth noting that SLP earned from the new Coliseum mode can’t currently be withdrawn or cashed out, but the team has stated that this key feature will become available “within the next month or two.”

First launched back in 2018, Axie Infinity saw substantial growth in 2021 and early 2022, driving the initial boom in play-to-earn crypto games and racking up billions of dollars’ worth of NFT trades. But after SLP hit all-time highs in the spring and summer of 2021, its value crashed and has not returned to a price even remotely close to its prior highs since.

As the game’s assets shed value in early 2022, Sky Mavis blamed SLP inflation as one of the key issues with its play-to-earn economy at the time, as more than four times the SLP was being handed out daily than was being burned (or destroyed) through the Axie monster breeding process.

Edited by Andrew Hayward