Axie Infinity: the main risks of holding AXS

Axie Infinity is a game where players collect, battle and breed creatures called Axies. Holding it means holding AXS, its governance token, or SLP, which players earn in battles and spend on breeding, and the main risks come from those two tokens, the game economy behind them and the Ronin network they run on.

What are the main risks of holding?

AXS and SLP take their value from how many people play the game and spend inside it, and each has its own supply and use. Staking AXS or buying game assets adds risk: funds stay locked or hard to sell, and a staking contract can fail or be attacked.

How can the game economy hurt holders?

Play-to-earn pays SLP for battles, and players spend SLP on breeding new Axies. Sky Mavis sets those rewards and can change them: it cut SLP payouts after the game's 2021 boom, so player earnings fell in 2022.

How did the Ronin hack affect holders?

The Ronin bridge moved crypto between the game's network and other chains. In March 2022, attackers got hold of validator private keys and drained the bridge. Sky Mavis rebuilt it and repaid users, but bridge keys stay a point of failure.

Is Axie Infinity regulated in the US?

No US law names AXS or SLP, so the SEC decides token by token, and in June 2023 it named AXS among the tokens it called securities in its case against Binance. A security label can bring delistings and registration duties. The IRS treats crypto as property, so buying AXS with dollars is not taxable, but swapping it for SLP or paying with either token is.

Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.