The government of the Philippines is looking at play-to-earn games and Axie Infinity in particular, because they feel that both Sky Mavis and players should pay taxes over their earnings. In a local report covered by Coindesk Undersecretary of Finance, Antonette C. Tionko said that they will investigate whether Axie tokens are assets or securities.
Even though it’s great that people in the Philippines earn life-changing money through the play-to-earn game Axie Infinity, the local government will start paying attention. Income from play-to-earn games like Axie Infinity, could soon very well be taxed by the government of the Philippines. However, there’s still a lot of research to be done.
Obviously Sky Mavis doesn’t have a license to sell securities in the Philippines. Right now both the Securities and Exchange Commission (SEC) and the central bank are looking into the case. Tionko said that Sky Mavis should be taxes based on revenue generated through the local community.
More than 1 million players have been active in Axie Infinity, and more than half of them come from the Philippines. If they own 3 NFTs, the so-called Axies, they can start playing and earn Smooth Love Potions or SLP tokens. These tokens can then be used to create new Axie characters, or the owners can sell them on the open market. In addition Axie Infinity offers a governance tokens, AXS.
Best case scenario: Axie NFTs are assets. Worst case scenario, they consider the NFTs as securities. This will be a case that’s not only relevant for Sky Mavis and Axie Infinity, but also for other play-to-earn gaming projects. Above everything, it changes the paradigm of what it means to own something and to work somewhere. If you’re a scholar, are you employed? I’d say yes. Your earnings will be your salary. This could be considered taxable income. However, what does this mean for the scholarship providers? Do they need to pay taxes too?
More SLP rewards for PVP
Axie Infinity has changed their reward system, providing more SLP rewards for players climbing the leaderboards. On the other hand, the rewards for singleplayer adventure mode and the daily quests have been halved. There’s now a limit of 50 SLP per day, which is approximately $10. The daily quest reward now gives 25 SLP instead of 50, while rewards from competitive gameplay will increase at a steeper rate as the player’s rating improves. This way Sky Mavis wants to motivate unexperienced players to dive into the battle arena and start competitive gameplay.
These changes in rewards launched together with the 18th competitive season for Axie Infinity. This new competitive season will be 50% longer than previous seasons. In addition there will be more rewards, as now the top 1,000 players will win prizes. They have added $200,000 worth of AXS tokens to the prize pool. The number one of the competition will win 225 AXS, or $9,000. While the number 1,000 will get 1 AXS, or $66 at the current rates.
While Sky Mavis added more rewards to the game, they’ve also changed the fees for breeding. Instead of paying 4 AXS to breed, players now need to pay 2 AXS to make baby Axies. In addition players will need SLP tokens, but the amount depends on the Axie’s breeding experience. The more experienced they are, the more SLP gamers will need.
What is Axie Infinity again?
Let’s quickly talk a bit about Axie Infinity. The tactical battle game uses its own, native Ronin sidechain. In the game players need to use 3 Axie NFTs to battle opponents and earn Smooth Love Potions (SLP). Players need to use SLP to breed new Axies. In addition parent Axies can only breed children a limited amount of times. SLP has a demand, while the floor price for an Axie NFT is right now more than $200. In short, you need three $200 Axies to play and earn SLP tokens.
Earning SLP tokens has become a source of income for people in developing countries. Among those countries the Philippines is leading the pack. The organization and economics behind this, is also becoming more professional. Third party organizations like Yield Guild Games are building tools and communities to really turn people into gamers earning income by playing Axie Infinity.
Robert Hoogendoorn is a gamer and blockchain enthusiast. He got in touch with crypto in 2014, but the fire really lit in 2017. Professionally he’s a content optimization expert and worked for press agencies and video production companies, always with a focus on the video games & tech industry. He’s a content manager and creator at heart, working on Play to Earn. He’s also Head of Content for DappRadar.