Axie Infinity is the market leader in blockchain gaming, having just surpassed $4 billion in total NFT trading volume. But it’s also battling a dwindling play-to-earn economy, which creator Sky Mavis is working to fix, and many players aren’t happy with this week’s announcement of a transaction fee hike.

Sky Mavis said yesterday that the transaction charge on Axie Infinity’s marketplace would increase from 4.25 percent to 5.25 percent starting March 7. This will apply to all transactions on the Axie marketplace, which is powered by Ronin, an Ethereum-based proprietary sidechain scaling solution.

Why is it necessary to increase the fee? It’s mostly to reward community members that bring in new players, according to Sky Mavis. The developer will implement a system that will allow Axie gamers to enter a code from a specific content producer—such as a streamer or influencer—and that content creator will receive an extra 1% of their earnings.

Fans of other popular online games, such as Fortnite and Roblox, will be familiar with the system, compensating content creators with a percentage of digital currency purchases when their unique code is utilized. In addition, Axie Infinity will introduce a model variation to the Web3 game space, with millions of players and an active online community.

When players shop on the Axie marketplace without using a creator code, the entire 5.25 percent goes to the community treasury, which is used to fund various marketing and growth initiatives for Axie Infinity.

Axie’s struggles

The rate hike comes amid a financial crisis for Axie Infinity’s unusual play-to-earn model, which pays players with crypto tokens for playing the game but needs an initial investment in potentially expensive NFT assets.

Last summer, Axie Infinity exploded in popularity, generating billions of dollars in NFT sales and boosting the value of the game’s AXS governance token and SLP reward token. However, trade volume has plummeted in the previous three months, with both tokens—particularly SLP—falling precipitously from their respective price maxima.

Sky Mavis announced a series of adjustments to the token rewards program earlier this month, with more to coming, to reduce the quantity of SLP given daily.

Following the announcement, Axie Infinity’s critical KPIs enjoyed a brief spike, but SLP is still down 95% from its peak. According to CryptoSlam data, February was Axie’s worst NFT volume since May 2021, with $82.5 million. Axie’s most significant month of trading volume last August was $848 million, a drop of more than 90%.

Raising Axie’s marketplace transaction fee amid a recession has enraged many users, who have expressed their displeasure on social media. In addition, some players were irritated by the prospect of paying extra to trade NFT products, especially given their recent depreciation.

Others believed that such a significant issue should have been a community vote through the Axie Infinity DAO (decentralized autonomous organization). But unfortunately, the game has yet to integrate a voting system, even though the AXS coin was built for governance.

“Sentiment around Axie is shallow, and this is what they do,” a Twitter user as Axie Coach wrote. “By not repairing it sooner, Axie damaged their economy.” Axie is gradually removing free transactions to get you to acquire a new coin that they already possess a large amount of. Axie has now raised the tax. “Your governance token is powerless.”

However, not everyone is depressed by the news. “This is the start of something new, and creators receiving 1% of marketplace transactions is a great gain,” Brycent, a leading Axie, and play-to-earn gaming streamer and Twitter Spaces presenter, tweeted. However, he did warn that the concept could have negative consequences, such as a rise in shilling.

View from the top

Jeff Zirlin, the co-founder of Axie Infinity and Sky Mavis Growth Lead, defended the fee hike on Twitter. He believes it was the most sustainable solution for supporting creators who add value to the ecosystem. Furthermore, when all costs and royalties were considered, he claimed that Axie’s marketplace fee was still lower than many NFT collections traded on the significant Ethereum marketplace OpenSea.

In the midst of it all, Zirlin also stated that the marketplace charge should be chosen by the community when the capability allows.

“As the last point, I believe the marketplace charge should be established by governance once that capability is enabled,” he added. “The marketplace fee can be altered again in the future, and as usual, we can adjust if we find a better solution and source of cash.”

In response to criticism, Sky Mavis said late yesterday afternoon that it “would be pushing out the formal launch” of the creator code program to get feedback from the community. According to Quinn Campbell, the studio’s marketing lead, Sky Mavis will begin sharing more details about its proposed approach and will gather comments from players via Twitter Spaces.

While the creator code program’s structure may alter, Campbell said the fee increase on March 7 “will be part of all creative and community discussions over the following few weeks.”

Axie Infinity is undergoing structural and gameplay adjustments and dealing with current economic issues. The Ethereum-based game will soon introduce free “starting Axies” that will allow new players to try the game without having to initially purchase NFTs, as well as a revamped battle mode before eventually adding other land-based gameplay.

Despite the opposition, Axie’s AXS token has risen 13 percent in the previous 24 hours to a current price of over $57, outperforming the approximately 6% increase in the whole cryptocurrency market, according to CoinGecko data. In the same timeframe, the SLP token has gained over 3%.