Deutscher employs 16 “China farmers” to edit an NFT game – but the market collapses

On April 24, 2022By Garmin Philip

In the NFT game “Axie Infinity” there is a strange system: rich players from the west employ players from the Philippines, Venezuela or Thailand as “scholars”. A German YouTuber explains how much money he made with it in August 2021: 15% return is a great passive income. But now the market is collapsing.

What kind of game is this?

Axie Infinity is a “Pokémon”-like game all about “SLP”, the “Smooth Love Potion”: a currency that can be exchanged for money
In the game there are Pokémon-like creatures called “Axie” that players can fight with and breed
In 2021 there was a hype about Axie Infinity. The game looked like it would become the flagship game for “Play2Earn” games, i.e. games with which you can earn money. But now a rough awakening is imminent.

Investors borrow Axie, want 30-70% of profits from their scholars

How do rich westerners make money with it? To play Axie Infinity you need to buy 3 Axies at the beginning. These 3 Axies cost around $1,000 at the peak of the game, but prices have since fallen. But it’s still too expensive for many games. Because Axie Infinity is particularly popular in regions where people don’t earn much (via playercounter):

40% of Axie Infinity players are from the Philippines
6.3% from Venezuela
5.7% from the US
4.7% from Thailand

Real-life investors with big money buy Axies and lend their Axies to players from “poor regions” to let them earn the “Smooth Love Potions”. They then collect their share of the income from their farmers on a monthly basis.

According to an Axie co-founder, the usual percentage is between 30% and 70% (via vice).

The investors then call themselves “managers” – their people called them “scholars”.

The German YouTuber Sw1pe Axie showed in a video from August 2021 (via youtube) that 16 “scholars” played for him. The best earned 5,886 SLP (about 586 euros), the worst made 739 SLP (about 74 €). Sw1pe explained that he leaves his scholars 50% of their profits.

Investor dreams of “passive income” – €3,000 profit per month with an investment of €20,000

Why does he do this? According to the YouTuber, he gets a great 15% return per month this way:

“First of all, 3,000 euros is a lot of money. But if you see that I only spent about 20,000 euros for all teams together – I think it was even less, I only spent 18,000 euros, then that’s about a 15% return or profit that I made on it per month .”

How did that go for him? Sw1pe released 2 more videos with his earnings. They showed that he continued to expand his program and doubled the number of scholars, while his income remained relatively constant because the price of the Smooth Love Potion halved in relation to the euro at the same time.

in September 2021, 23 scholars worked for him – he earned €2895, by then the price of an SLP had already fallen from 10 cents to 6 cents
in October 2021 31 scholars worked for him – he made €3463
However, as of November, Sw1pe stopped posting videos about its earnings from the “Scholarship” – during November and December 2021 the value of an SLP dropped from 6 cents to 2 cents

Man in Venezuela supports his family by playing a very old MMORPG

“Scholars” instead of China farmers

What is the difference to “China farmers”?”China farmer” is a term from MMORPGs like World of Warcraft. It suggests that Chinese sweatshops are forced to farm an MMORPG for a pittance to sell the content to wealthy players in the west.

The difference with Axie is that there is no “company” behind it, but private individuals from the West who want to generate “passive income” as crypto investors. In addition, their scholars are apparently not from China, but from Thailand, Venezuela and the Philippines.

This is what it looks like when you actually play Axie Infinity:

“Digital colonialism” or “relationship that benefits everyone”?

Isn’t it all a bit weird? Yes of course. This is about rich people who let people from poor areas play a video game for very little money a month.

A journalist looking at the strange relationship from the outside speaks of “digital colonialism.”

But investors see themselves as benefactors. The Vice site quotes a manager who employs up to 200 scholars. He says the agreement is mutually beneficial after all:

“I make money from them using my NFTs and they make money playing them. Charity is something I’ve never experienced myself. But the news I get from my scholars is how they use their profits to pay their bills, buy a washing machine, or buy grandma new teeth.”

Market collapses and the “scholars” quit

What is the problem? The video with Sw1pe Axie’s bill is from August 2021 – back then, a “Smooth Love Potion” was still worth 10 cents. But since then, the value of a Smooth Love Potion has fallen sharply:

At its peak on July 24, 2021, an SLP was still worth 29 cents
On August 8th there was at least 15 cents for it – almost half
On September 21, the price had fallen to 5 cents – about a sixth
Today, April 22, 2022, there is still 1.4 cents for an SLP – only one twentieth of the maximum price

As a result, “investors” like Axie Swipe LP are losing their cheap workers in droves because no one wants to farm for the money anymore.