Unconfirmed Ep 188 - Featuring Leah Callon- Butler

Axie Infinity’s July Revenue Tops $200 Million. Here’s How Filipinos Drove It

Primer: Laura Shin interviews Leah Callon-Butler, director of Emfarsis, about the documentary that she made on the Play-to-Earn gaming phenomenon in the Philippines. Find out how she got the inspiration for the documentary and what she discovered from visiting these people to learn about their backstories.

Documentary on Filipinos earning from Axie Infinity

• The film was launched in May 2021

• Originated from an article she wrote in Aug 2020 about a place called Cabanatuan City in the Philippines

• Got wind of this story where 100 people on a street in this rural area were playing a blockchain game amid the Covid-19 lockdowns and earning money from it

• Sounded too good to be true so she had to investigate it

• This story took off because people in emerging economies that share similar demographics were also stuck at home and had no income to support their families

• Yet if they had a mobile phone and internet connection, they can still earn a living playing this game

• Gabby Dizon from Yield Guild Games called her to make a documentary about it

• And so Leah went to see where these people live and visited them to learn their backstories

"I got a call from Gabby Dizon at Yield Guild Games. And he said you know, this story that you've heard, it's kind of really hit a nerve. What if we turned it into a video? And look, I've never made a documentary before. But I was kind of thinking out, but how hard could it be?"

- Leah Callon-Butler

How did people stumble upon Axie Infinity?

• Filipinos speak English and are super tech-savvy, spending more time on social media than anyone else in the world

• They also love games so not surprising they gravitated towards the idea of a cute fun game that could make money

• Spread through word of mouth and community network effects, family and friends helping each other to learn how to play and earn the tokens and cash it out

Earnings from Axie Infinity

• Smooth Love potion (SLP) is the token that is earned within the game

• Initially in the game, there were very few caps in terms of how much SLP you can earn in the game so people are playing it in shifts to earn as much SLP as possible

• Better earning opportunity than actual real-life jobs in the Philippines

"I think a lot of people in western economies might sort of think, oh, that's not really that much like $400 a month. But over here, it's well above minimum wage, and often for a lot of people a lot more than they were earning even before they went into the lockdown."

- Leah Callon-Butler

• Top players can earn 10,000 pesos, around $400 USD a month

• Does not seem a lot to western economies, but in Phillippines, it is well above minimum wage and people are in fact earning more than before the lockdown

How to turn SLP into cash?

• In the past was quite difficult - need to swap SLP for Ethereum on a decentralised exchange like Uniswap

• Now the Philippines has a sophisticated on and off-ramp network

• E.g. if you want to buy Bitcoin, you can go to the local 7/11 or supermarket, deposit cash and get it

• This facilitates the ability to swap SLP for other tokens and send it to another exchange to off-ramp for cash

• Now because the demand is there, some exchanges are even offering a direct SLP to Philippine peso trading pair

The popularity of Axie Infinity in the Philippines

How big is Axie Infinity in the Philippines?

• Leah checked with Jiho, who is the head of growth at Axie Infinity

• Back in Aug 2020, Axie had less than 500 daily active users

• Today they have half a million in less than a year's time, with at least 50 to 60% of them coming from the Philippines

• Expanded from this rural area of Cabanatuan City to other cities now

• Most people from rural areas don't have a lot of options and are struggling in the fallout of the pandemic

• So when people learnt that it is a fun game to play and you can earn money from it, they are interested to find out more

Demographics of people playing the game

• Seems to be attracting a completely different user base than what people would expect of both crypto and gaming

• Attracting people who are not even part of the target market for traditional video game

• In Leah's documentary, there is an elderly couple who are in the high-risk category during the Covid-19 lockdown

• They run a sari-sari store, which is like a convenience store in the Philippines but the lockdown cut off the income stream from running the business

• They were isolated and found out about Axie Infinity through their neighbours and became addicted to it

• Can earn an income to buy medicines, but also serves as a way to escape from the harsh reality

• In another example in the documentary, there is a mother of 2 who lost her job and used her last savings to buy 3 Axies to start playing the game

• It was a risky move but she earned back the money in a month and start making profits

• Used the money to spend it on digital devices and an Internet connection so that her kids can do homeschooling

Scholarship programme

• There are people with lots of Axies because people breed them

• Started lending to people who cannot afford them to get them started on playing to earn

• Gabby Dizon from Yield Guild Games did the same too and realised that people who are initially unable to afford the upfront capital cost can now earn back the reward tokens to buy their own teams

• These lending programmes are called scholarships and they can improve the economic situation of the scholars

"I guess, particularly with the demand within the market, as people have found out about this game everyone wants in, there's just not enough in-game assets to go around. So the idea of a scholarship emerged, where people would loan or rent their in-game assets, and they split the earnings. So it's essentially like an uncollateralized loan of an NFT asset that people can generate yield from."

- Leah Callon-Butler

• Yield Guild Games takes a cut of 10%, the community manager who does the recruiting and training takes 20% and the remaining 70% is given to the player

• For other scholarship managers, the split could be different

• Some criticisms that there are some managers that did not give back enough to the player, exploiting desperate people wanting to get into the game

Yield Guild Games Initial DEX Offering (IDO)

• Yield Guild Games IDO at MISO by Sushiswap was sold out in less than a minute and bought up by 32 wallets

• The criticism is that the people buying are just whales and normal people didn't stand a chance to have a shot at the offering

• Leah mentioned that while it did sell out in 31 seconds to 32 wallets, that represented only 2.5% of the total tokens supply which is a small amount

• Yield Guild Games has got 45% of their token allocation earmarked for community rewards, so their goal is to give back to the community

• If people are participating members of the community, they will have airdrops, so there are ways for people to earn the tokens 45% of the total supply, rather than to buy them 2.5% of it

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