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3 Reasons to Buy Axie Infinity

By Chris MacDonald – Dec 15, 2021 at 9:30AM

Key Points

  • Metaverse-related cryptos with exposure to NFTs such as Axie Infinity are growing in popularity for a reason.
  • Axie Infinity is planning a major upgrade that will enhance game functionality and invite more players to the platform.
  • Axie Infinity has launched its own decentralized exchange, which could prove to be a game-changer.

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The metaverse is red-hot right now, making Axie Infinity a high-powered crypto pick.

What do cute, fuzzy creatures, the metaverse, and cryptocurrencies have in common? Well, these interesting features of the NFT-based game Axie Infinity (AXS) happen to be the primary basis for why many investors are considering this token.

Axie Infinity is one of a number of metaverse-related cryptocurrencies making waves lately. Following a strong surge into early November, Axie Infinity peaked at a year-to-date gain of more than 30,000%. In other words, for token holders who bought in on Jan. 1 and held for approximately 10 months, that's a 300-bagger. 

This sort of price performance is enough to entice many investors to look at this token. However, there are a number of other reasons investors may want to consider this play-to-earn game. (Play to earn refers to the ability to earn monetary rewards simply by playing an online game.)

Let's dive into why investors may want to consider Axie Infinity Shard, the governance token of the NFT game Axie Infinity. 

Candlestick chart, with a line chart overlayed on top.

Image source: Getty Images.

1. The launch of staking has caused a surge in valuation

One of the key catalysts driving the recent outperformance Axie Infinity token holders have seen is a late-September airdrop and a move to enable staking of the AXS token. This announcement brings new incentives for investors to hold Axie Infinity, over and above the utility created by playing the Axie Infinity game. 

Most tokens that undertake an airdrop (giving away "free" tokens to investors simply for being early adopters) have seen interest surge as a result. This was certainly the case with Axie Infinity. 

However, the staking implementation for this platform is something that may prove to create more "sticky" interest over time. Allowing investors to stake their tokens, and earn AXS rewards simply for holding these tokens, provides a whole new investing thesis for those bullish on the play-to-earn metaverse space.

It's expected that Axie Infinity's AXS token will be the in-game currency for this metaverse platform by Q1 of next year. Accordingly, investors looking to get in early and gain exposure to the upside of this token while earning staking rewards for holding these tokens now have a number of reasons to do so.

2. Version 2.0 will introduce millions of new users to the game

Having a leading play-to-earn metaverse game is one thing. Keeping Axie Infinity relevant for users is a whole other.

It appears the developers behind the Axie Infinity platform aren't sitting on their hands. In October, the Axie Infinity team announced plans to move toward a 2.0 version of this game. This new and improved Axie Infinity will include all the usual suspects, along with game play improvements and the addition of a free-play entry to the game. This amounts to potentially hundreds of dollars of savings for those interested in playing the game, given the entry fees to build a team and start playing.

Additionally, new lands are being added to the game, providing more opportunities for investors to grab a slice of this digital world. While it is possible to purchase some land now, this is a relatively small piece of the Axie Infinity model. Users focus on acquiring a collection of Axies (digital creatures, similar to Pokémon), and battling others. The addition of yet another investment angle to this platform has some investors excited by the growth potential ahead for Axie Infinity.

3. The Katana decentralized exchange is something to watch

Axie Infinity happens to provide investors with more than just a leading metaverse game. That's the key draw for most crypto enthusiasts.

Recently, the Axie Infinity team launched its own decentralized exchange called Katana. While trading pairs are limited, this decentralized exchange allows investors to engage in yield farming, creating yet another potential passive income stream for holders of the AXS token.

Those who hold Axie Infinity tokens and put these onto the Katana exchange can earn rewards for simply doing so. This exchange also allows investors to swap out AXS for other tokens, enabling relatively easy withdrawal from this ecosystem.

More liquidity may lead to more volume, and with interest around Axie Infinity and its AXS token growing, expectations are that the Katana exchange could be an overlooked aspect many investors are missing with the Axie Infinity ecosystem.

Final thought

Cryptocurrency investing is inherently speculative. With the recent downturn in the stock market, the cryptocurrency market also took a dip. But this hasn't stopped high-flying tokens such as AXS.

The extent to which this sell-off will continue or prove to be a short blip on the radar as Axie Infinity marches toward -- dare we say it -- infinity remains to be seen. However, given how far and how fast this token has run, some caution is likely warranted when considering AXS at these levels.

That said, there's certainly a myriad of reasons as to why this token has been such an impressive winner this year. These three reasons alone make for an interesting investment thesis for those looking at the crypto world from the outside. Axie Infinity is far from the only blockchain-powered metaverse game out there, but it's also among the most intriguing. 

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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