Token's price drop illustrates challenge in play-to-earn gaming

The long decline in the price of Axie Infinity's Smooth Love Potion (SLP) token illustrates the challenge of play-to-earn (P2E) gaming: players need more than a way to earn some random token, the token needs mechanics that enable it to hold value.

The big picture: P2E worked great, particularly with one game, Axie Infinity (whose treasury clocked $1.3 billion in revenue last year), until profits took a dive in early December that it has never recovered from, as Token Terminal shows.

Details: The "Smooth Love Potion" (SLP) token is the fuel that Axie Infinity runs on.

• To access the game, players need once valuable NFTs called Axies. Axie owners can breed more Axies with their Axies, but they need to spend SLP to do so.
• Users spend SLP in the game and it gets destroyed, decreasing the supply. That's supposed to help maintain the price, but there's been too much earning and not enough burning.
• The token has been in a long fall since the peak of its strength last July, because too few players are using SLP to make more Axies, analytics firm Naavik contends.

By the numbers: On July 13, the time of SLP's all time high, the game would send $2.8 million from players to the treasury, according to Token Terminal.

• Its best revenue day was still ahead, though, bringing in $17.5 million on Aug. 6.

State of play: Daily revenue to the Axie Community Treasury now amounts to a little over $40,000.