Is Axie Infinity a Good Investment? How It Works, Major Benefits, Warnings and More

Axie Infinity (AXS) is one of the latest cryptocurrencies rising in popularity amidst the generally low sentiments around the market. What is Axie Infinity and is it just a trend or will it stand the test of time?

What Is Axie Infinity?

A cute NFT pet game called Axie Infinity is currently raking in more protocol than Ethereum and Bitcoin, CoinDesk reported.

According to its whitepaper, Axie Infinity is a Pokemon-inspired universe allowing anyone to earn tokens through skilled gameplay and contributions to the ecosystem. Players can battle, collect, raise and build a land-based kingdom for their pets as well.

Working on the Ethereum blockchain, all art assets and Axie genetic data can be easily accessed by third parties. This allows community developers to build their own tools and experiences within the Axie Infinity Universe.

Even in early access, active users have ranked Axie as the number one Ethereum game "daily, weekly, and monthly." It has so far generated over 13,000 ETH in revenue, close to over $16 million.

Users can earn the Axie Infinity Shared token (AXS) and the other in-game token, Smooth Love Potion (SLP), Fool explained. Each Axie is a cute and unique digital pet and a non-fungible token (NFT) that can be bought or sold.

To participate in the game, a player must buy three Axies.

Should You Invest in Axie Infinity?

This "play-to-earn" model has found success in an area often overlooked by tech companies. The Philippines makes up to about 60 percent of the half-a-million daily active users of Axie Infinity, CoinDesk said.

Some critics of the fame call the pursuit of SLP a "meaningless grind" but have not understood the difference of decentralized gaming from the otherwise exploitive business models of the traditional gaming industry.

Before investing in Axie Infinity, it is best to understand crypto gaming, similar to other investments that require due diligence. It is an interesting and new segment of the cryptocurrency industry, but entering this segment simply with the hope to see your money rise isn't the best approach, Fool said.

Like other crypto assets, when buying the crypto, you also buy into the community. Active participation in the community is actually one of the surefire ways to reap the full rewards of the coin.

Axie will soon introduce staking and allow token owners to tie up their coins for interest. But staking Axie tokens is correlated to the owner's active participation. When considering purchasing Axie, one should also consider if they are interested in playing the game.

Some experts are a bit skeptical, as they usually are, with novel assets gaining too much speed at a short time frame. The crypto market is known for being volatile and when a coin rallies to 550 percent in a month, one has to question how much higher it can go.

With how young it is, it has tried setting itself up with as much reputable credit, providing a whitepaper with a defined roadmap and goals. Its team has experience in both blockchain and gaming and it is making money, raking up to $40.2 million in the past seven days alone, Fool added. Mark Cuban has also joined in on Acie's latest funding round, adding $7.5 million into the crypto.

But there are some big risks with considering Axie Infinity as a safe hold for your money in the long term. Axie can experience server issues or a different technical problem that may wipe users clean. If Axie's price reaches its peak and begins to fall as it can no longer meet the selling pressures, the players may not want to continue playing as it is not so lucrative anymore and the community may move on.

Considering the fast-paced nature of the crypto world, there is always a chance of a new and shiny thing grabbing the attention of the players and knocking Axie Infinity off its top spot.

Axie is also not yet listed in the major U.S. cryptocurrency exchanges, which some investors are not comfortable with. However, given its popularity, it may just be integrated soon.

If you are interested in purchasing the Axies to join in on the Internet hype or learn more about cryptocurrency gaming, no one is stopping you. It does look like things are optimistic for the NFT game in the short term. However, volatility grants immunity to no one and so you must be able to protect yourself should anything go wrong with your purchases.

Like all other trades, cryptocurrency or otherwise, risks are involved and traders must take the time to learn and assess how to mitigate those risks.