Crypto Gaming and Play-to-Earn: What Happened to the Industry That Was Going to Change Gaming Forever

In May 2021, a token called SLP traded at $0.40. People in the Philippines were quitting jobs to play a video game. Some were earning more from battling cartoon creatures on their phones than they’d made at their previous full-time work. By mid-2022, that same token was worth less than a cent.

This is the story of what happened in between — and what’s left of it now.

The Setup: A Pandemic, a Country, and a Game About Cute Monsters

Axie Infinity launched quietly in 2018, built by a small Vietnamese studio called Sky Mavis. The concept was simple enough to explain to anyone who’d ever played Pokémon: collect creatures called Axies, breed them, battle them. The twist was that every Axie was an NFT — genuinely owned by the player, tradeable on an open marketplace, with genetics that actually mattered for value. The game runs on Ethereum but settles most activity through Ronin, a purpose-built sidechain — the same kind of Layer 2 scaling trade-off that other blockchains wrestle with when raw Ethereum gas fees would make frequent, small transactions like daily battle rewards impractical.

For two years, almost nobody outside crypto circles noticed. Then came 2020, and with it, a global lockdown that left millions of people stuck at home with time on their hands and, in many countries, suddenly unstable income.

The Philippines became the epicenter. Players discovered that grinding battles earned a token called SLP (Smooth Love Potion), which could be sold for real money. Word spread the way it always does when money is genuinely changing hands — not through marketing, but through someone’s cousin’s neighbor showing them how to set up a wallet. By 2021, Axie Infinity had over 2 million players and had generated more transaction revenue, in some weeks, than the entire Ethereum network it was originally built on.

How the Money Actually Worked

Understanding why this collapsed requires understanding the mechanism, because it’s not complicated — it’s almost embarrassingly simple, which is exactly the problem.

Axie ran on two tokens. AXS was the governance token — holders could vote on the game’s direction, and it carried the kind of speculative value any project token does. SLP was the one that mattered for daily income: players earned it through battles and quests, and it functioned as the in-game currency for breeding new Axies.

Breeding was supposed to be the token sink — the mechanism that removed SLP from circulation to balance out what gameplay was generating. Players spent SLP and AXS to breed, theoretically burning enough tokens to keep supply in check, a dynamic that echoes how token sinks function in DeFi yield mechanisms more broadly: a system promising ongoing rewards needs an equally robust mechanism removing tokens from circulation, or the rewards eventually become worthless. For a while, it worked, because the player base was growing so fast that demand for new Axies (and the SLP needed to breed them) kept pace with the SLP being earned.

Then growth slowed. At the peak, the game was minting roughly 300 million SLP daily through gameplay rewards, while breeding only consumed about half that. A two-to-one ratio of tokens created to tokens destroyed doesn’t survive contact with a shrinking player base. When new player growth slows in a system like this, the math doesn’t bend — it breaks. Fewer new players buying Axies means less breeding, which means less SLP burned, which means more SLP flooding into a market with fewer new buyers. SLP cratered from $0.40 in May 2021 to under a cent within about a year.

This is, in miniature, the same lesson that shows up in crypto risk management more broadly: a system that depends on continuous new capital inflow to sustain payouts to existing participants is structurally fragile, regardless of how fun the underlying game is.

The Scholarship Economy: Genuinely Clever, Genuinely Exploitable

One of Axie’s real innovations — and it was a genuine innovation, not just hype — was the scholarship model. Because starting the game required buying at least three Axies, which wasn’t cheap for many players in the regions where adoption was strongest, asset owners began lending their Axies to “scholars” who played for a cut of the earnings, typically somewhere between 30% and 70% going back to the manager.

This let people with zero capital but plenty of time participate in an economy that would otherwise have excluded them. Some managers scaled this into operations running dozens or hundreds of scholars across multiple countries — a genuinely new labor structure that didn’t exist before crypto gaming, somewhere between gig work and sharecropping, depending on who you asked and how generous the manager’s cut was.

It also meant that when SLP’s value collapsed, the people most exposed weren’t speculators who’d bought tokens hoping for appreciation — they were scholars who’d been depending on daily earnings as actual income, sometimes their primary income, during a global pandemic. The human cost of the crash landed hardest on exactly the population the scholarship model had been celebrated for including.

What Sky Mavis Did Next (And Why It Mattered)

Most crypto projects facing this kind of collapse simply fade out. Sky Mavis didn’t, and what they did instead is arguably more interesting than the original boom.

The team rebuilt meaningful parts of the game’s economy rather than abandoning it. Axie Infinity: Origins relaunched as a revised, free-to-play card-battle format — explicitly lowering the barrier to entry that had priced out new players during the original NFT-purchase model. They redesigned the scholarship system and worked to reduce the inflationary pressure that had killed SLP the first time, introducing new token sinks and adjusting reward rates with the explicit goal of not repeating the same two-to-one minting disaster.

By 2025, a phrase started circulating that’s become something close to an industry mantra: the shift from “play-to-earn” to “play-and-earn.” The distinction sounds like marketing spin, but it reflects something real — a recognition that games designed primarily around extracting financial reward, with entertainment as an afterthought, don’t survive their first market downturn. Games that survive need to be worth playing even when the token price is flat or falling.

Where Things Actually Stand in 2026

The numbers tell a genuinely mixed story, which is more honest than either the original hype or the obituaries that followed the crash.

AXS, which peaked near $165 in November 2021, has spent most of 2026 trading in a $1-3 range — a decline exceeding 99% from its all-time high. That’s the headline number, and it’s not wrong. But underneath it, the Axie ecosystem still shows real activity: over 100,000 daily unique active wallets interacting with the game’s smart contracts, more than a million on-chain transactions per day, and upward of $100 million in contract balances still secured on the Ronin network the game runs on.

That’s not a dead project. It’s a much smaller, much more sustainable one than 2021’s gold rush — which is precisely the outcome Sky Mavis seems to have been steering toward once they accepted the original model couldn’t last. Realistic earnings for a new player in 2026 sit somewhere between $20 and $200 a month depending on time investment and market conditions — a far cry from the thousands some early players reported in 2021, but also a far more honest number that isn’t propped up by an unsustainable minting ratio.

The Three Risks Nobody Mentioned During the Boom

If you’re looking at play-to-earn gaming now, with three years of hindsight the 2021 cohort didn’t have, a few risks are worth naming plainly rather than discovering the hard way:

Token price risk isn’t separate from game risk — it’s the same risk. Your in-game earnings are denominated in an asset that moves with broader crypto market sentiment, completely independent of how well you’re actually playing. A great week of battles can still net you less than a mediocre week did six months earlier, purely because the token dropped.

Scholarship scams piggyback on legitimate models. Because the scholarship structure is real and was genuinely life-changing for some early participants, it’s also become a template fraudsters copy — posing as guild managers, requesting “registration fees” or wallet access upfront. Legitimate scholarship arrangements never require the scholar to pay anything before earning starts.

The developer holds more power than it first appears. Sky Mavis controls reward emission rates, breeding costs, and the broader token economy. That’s exactly what let them save the game after 2022 — but it also means a single set of decisions, made by people you’ve never met, can materially change your earning potential between one season and the next. This isn’t unique to Axie; it’s structurally true of tokens governed by a project team rather than fully decentralized rules, and it’s worth understanding before treating in-game earnings as a stable income source.

Beyond Axie: The Wider Play-to-Earn Landscape

Axie dominates this story because it’s the clearest, best-documented case — but it wasn’t alone, and the same boom-correction-rebuild pattern has played out, with variations, across the broader sector. The 2021 cycle produced dozens of competing titles chasing the same model, most of which launched to underwhelming results and quietly disappeared once the speculative capital dried up. Players who’d been burned once became understandably skeptical of any new project promising token-based rewards as the primary draw.

The titles that have stuck around past 2023 share a pattern: they’ve de-emphasized the “earn” half of the equation relative to actual gameplay quality, treating token rewards as a bonus layer on top of a game people would plausibly play even if the token were worthless. That’s a meaningfully different design philosophy than 2021’s gold rush, and it’s the philosophy the surviving projects — Axie included — have converged on, whether by choice or by the market forcing their hand.

What This Means If You’re Considering Playing

The honest framing, three full years past the peak: play-to-earn gaming in 2026 is not the path to life-changing income that 2021’s headlines suggested, and treating it as one is the surest way to be disappointed or exploited. It can be a legitimate way to earn modest supplemental income — often somewhere in the tens to low hundreds of dollars monthly — for people who’d be playing a game like this anyway and don’t mind that some of their time converts to crypto rather than nothing.

The risk-reward calculation that matters here isn’t fundamentally different from evaluating risk in any other corner of crypto: understand that token values fluctuate independent of your effort, never invest upfront capital you’d be devastated to lose, verify that any scholarship or guild arrangement is legitimate before sharing wallet access, and treat any income projection based on 2021 numbers as a historical artifact rather than a realistic current expectation. AXS itself runs as an ERC-20 token on Ethereum, which is worth understanding before assuming the rules governing it are unique to gaming rather than shared with thousands of other tokens. The game has to be worth playing on its own terms — because the token, almost certainly, will not stay where it is today.

FAQs

Is Axie Infinity still profitable to play in 2026?

Modestly, for most players — realistic earnings range from roughly $20 to $200 a month depending on time invested and current token prices, well below 2021’s peak figures. Players treating it purely as an income source generally find the return on time invested fairly low; players who enjoy the game itself tend to view any earnings as a bonus rather than the point.

What caused the SLP token to collapse so badly?

A fundamental imbalance between token creation and token destruction. At peak, the game was minting roughly twice as many SLP tokens daily through gameplay as breeding mechanics were burning, a ratio that only worked while rapid new-player growth kept demand high. When growth slowed, the oversupply had nowhere to go but down.

Are play-to-earn scholarships legitimate, or are they a scam?

The model itself is legitimate and has provided real income to many participants, particularly during 2021’s peak. However, the structure has also been copied by scammers posing as guild managers who request upfront payment or wallet access — something no legitimate scholarship arrangement requires before earnings begin.

How is play-to-earn different from a regular video game with microtransactions?

In a traditional game, money flows one direction: you pay the developer for items or advantages, and nothing you buy holds value outside that game. In play-to-earn, in-game assets are typically NFTs or tokens that can be traded for real currency on open markets, meaning value can flow back to the player — but this also means the player is exposed to that asset’s market volatility, something a traditional game’s loot box never exposed you to.

Will play-to-earn gaming recover to 2021 levels?

Unlikely in the same form. The 2021 boom was driven significantly by pandemic lockdowns creating both free time and income instability simultaneously — a specific circumstance unlikely to repeat at the same scale. The more probable trajectory, based on how surviving titles have evolved, is smaller but more sustainable “play-and-earn” models where entertainment value, not income potential, is the primary draw.

This article is for educational and informational purposes only and does not constitute financial or investment advice. Cryptocurrency and NFT gaming markets are highly volatile; token prices, player statistics, and game mechanics referenced reflect publicly available information as of June 2026 and are subject to change. Always research current conditions independently before investing time or capital in any play-to-earn game.