What Happened to Axie Infinity?

Axie Infinity, developed by Vietnamese studio Sky Mavis, emerged in 2018 as a pioneering blockchain game, allowing players to collect, breed, and battle NFT creatures called Axies. Inspired by games like Pokémon and CryptoKitties, it quickly gained traction, especially with its play-to-earn (P2E) model, which enabled players to earn cryptocurrency, primarily Smooth Love Potion (SLP) and Axie Infinity Shards (AXS), through gameplay. The game's popularity exploded in 2021, particularly in Southeast Asian countries like the Philippines, where it became a significant source of income for many, leading to a peak of over 2.7 million daily active users and AXS reaching an all-time high of $164.90 in November 2021.

However, this rapid growth proved unsustainable. The inflationary nature of the SLP token, continuously minted through gameplay, led to its value crashing by over 99% from its peak by February 2022. A more devastating blow came in March 2022, when the Ronin Network, an Ethereum-linked sidechain built by Sky Mavis to support Axie Infinity, suffered one of the largest cryptocurrency hacks in history. Attackers, later linked to North Korea's Lazarus Group, exploited vulnerabilities in the Ronin Bridge, stealing approximately 173,600 ETH and 25.5 million USDC, totaling over $600 million. The hack was facilitated by compromising five of the nine validator nodes required to approve transactions, a vulnerability stemming from a temporary arrangement in late 2021 where Sky Mavis was granted signature authority on behalf of Axie DAO that was not revoked. Sky Mavis responded by raising $150 million to reimburse affected users and rebuilt the Ronin Bridge with enhanced security, reactivating it in June 2022.

The period from 2022 to 2024 saw a sustained bear market for Axie Infinity, with declining adoption metrics and a significant drop in token prices. The game's earning potential diminished, and the initial investment required for competitive play remained a barrier. In response, Sky Mavis began a strategic pivot towards long-term sustainability and deeper gameplay. Key turning points in 2025 included an AXS staking emission halving in July and a revamp of AXS staking rewards in November.

As of early 2026, Axie Infinity is undergoing its most aggressive economic model reforms since its peak. In January 2026, Sky Mavis completely halted SLP emissions in the 'Origins' game mode to combat bot farming and reduce inflationary pressure, a move that significantly reduced the daily new supply of SLP by over 30%. Concurrently, they introduced bAXS (bonded AXS), a non-transferable token designed to lock supply, align incentives with active players, and reduce speculative sell pressure. These changes led to a notable surge in AXS and SLP token prices in January 2026. Furthermore, Sky Mavis announced the shutdown of Axie Infinity Classic on June 24, 2026, to focus resources on Axie Infinity: Origins and the ambitious new Massively Multiplayer Online (MMO) experience, 'Atia's Legacy,' which is targeting an open beta in Q2 2026. In a significant development, co-founder Aleksander Larsen announced his departure from Sky Mavis in February 2026 to focus on the defense industry. The current strategy emphasizes 'riskier ventures' and a shift towards skill-based, competitive gameplay and a more robust, player-driven economy, moving beyond the initial simple play-to-earn model.