The rapid rise of everything related to cryptocurrencies has been accompanied by the same warning: beware what inflates so much and so fast, because it explodes. Some wanted to see that the bubble had burst when the general fall of these digital currencies took place a few months ago, a challenge that they seem to have resisted. The problem now is the other legs of the sector, the NFTs (non-fungible tokens, for its acronym in English) and the games and platforms related to these assets. Everything has the same cause: the loss of interest in them and the scandals that surround the most important platforms. Ever since Mark Zuckerberg announced Facebook’s turn towards the metaverse, everyone has been wondering how he will launch this virtual space and, also, if it won’t look too much like failed projects like Second Life. Today, the closest thing to a universe of this type are the ‘play to earn’ games like Axie Infinity, the best known, and platforms like Decentraland or The SandBox.

All of them work with their own cryptocurrency, something that forces them to have a careful economic design that meets different characteristics.

“It has to be stable or growing over time, otherwise it will have no value in the real world. Inflation cannot be higher than the growth of activity on that platform”, explained José Antonio Bravo, an economist specialized in cryptocurrencies, in a Teknautas report on this issue. There he also pointed out that a greater supply than demand of these coins would make them “lose their value and usefulness”, something that can be solved by increasing circulation, so that “people spend them in the game with an internal economy that feeds it thanks to the constant attention, but it is something very complicated, almost practically impossible”. That is the crossroads at which the three aforementioned initiatives are. After the initial bombing, fewer and fewer users come and its internal economy has collapsed. The value of one of Axie Infinity’s coins, Smooth Love Potions (SLP), has gone from being worth $0.4 to $0.01 in a few months, a level very similar to when it was barely known, back in 2018. Another of its coins, AXS, came to trade at 160.36 dollars at the exchange rate. Today it is already at 45 euros, according to Coin Market data.

The cascade of valuation drops has made many ask the big question: has the ‘crypto’ bubble burst? Fernando Gutiérrez, investor and specialist in crypto assets, is cautious about a hypothetical bursting of the bubble. “I don’t think it’s breaking down, or at least you can’t tell that from the price decline, because it’s pervasive across cryptocurrencies in general, even if unrelated to NFT or metaverse, and all risky asset classes. In a context of rising rates and inflation, everyone tends to reduce risks,” he explains in conversation with this newspaper, where he also stresses that “Nasdaq has lost 14% and there is a lot of symmetry: the best values are not affected, but others are “.

In addition, these usually have a total explosion, not a small puncture that deflates them little by little. “It is more of an exhaustion because the demand does not accompany the asset. It is something that should be corrected with the purification of the market to expel those assets that do not have continuity and also revalue the rest,” he comments in a conversation with this newspaper, where he highlights that “the economy is bad, but crypto assets are not managing to redirect capital to the market, as is happening with other assets”. As pointed out in the specialized medium CoinDesk, the performance of the currencies of Axie Infinity, Decentraland and The Sandbox has been “significantly inferior” to that of bitcoin, and that the cryptocurrency par excellence has not had its best figures this year either (it has lost 25% of its value in the last twelve months). “Historically, bitcoin holds up better than the rest of the falling markets; when things go wrong, it usually becomes a refuge value within cryptocurrencies,” Gutiérrez responds on this question. “Volatility doesn’t bother me because it’s everyday, but less so in this context: crypto assets are increasingly related to other assets, such as traditional ones.”

In addition, these usually have a total explosion, not a small puncture that deflates them little by little. “It is more of an exhaustion because the demand does not accompany the asset. It is something that should be corrected with the purification of the market to expel those assets that do not have continuity and also revalue the rest,” he comments in a conversation with this newspaper, where he highlights that “the economy is bad, but crypto assets are not managing to redirect capital to the market, as is happening with other assets”. As pointed out in the specialized medium CoinDesk, the performance of the currencies of Axie Infinity, Decentraland and The Sandbox has been “significantly inferior” to that of bitcoin, and that the cryptocurrency par excellence has not had its best figures this year either (it has lost 25% of its value in the last twelve months). “Historically, bitcoin holds up better than the rest of the falling markets; when things go wrong, it usually becomes a refuge value within cryptocurrencies,” Gutiérrez responds on this question. “Volatility doesn’t bother me because it’s everyday, but less so in this context: crypto assets are increasingly related to other assets, such as traditional ones.”

Of course, the available information indicates that the debacle of Axie Infinity began much earlier. Sky Mavis data collected by ‘Bloomberg’ indicate that in March they had about 1.5 million monthly users, 45% less than in summer, their best time. On the other hand, DappRadar calculates the ‘wallets’ that interact with the ‘smart contract’ of this ‘cryptogame’; that is, they encourage the economy of the game, but not all those who are in it. According to this estimate, it has never had more than 63,000 active daily users and, in addition, it would have suffered a drop of 11% in the last month. When it comes to Decentraland and Sandbox, which have received large investments from all kinds of brands, the data is even worse. At their best, they barely managed to exceed 200 active players, but today they barely have fifty a day.

In the case of Axie Infinity, it must be taken into account that a significant part of them are in the Philippines, where they work full time through a “scholarship” system: someone who can afford the initial investment required by the game offers access to your account in exchange for winnings. How many play because they like it and how many for the money? It is a mystery and, in any case, the usage data is well below that of traditional video games such as Counter Strike or FIFA. “The ‘pay to earn’ model has pyramidal features, although it is not 100%. As you don’t organize the economy very well, when you let in new people you have a big problem, which is that you can’t continue being ‘play to earn’ ‘”, says Álex Granados, head of the NFT Community in Spanish, an outreach group.

This is added to the fact that, in January, the ‘marketplace’ OpenSea – the largest NFT trading website – recognized that 80% of the content they hosted were false, plagiarized works or, directly, related to some type of scam. In addition, the different technical problems that had facilitated theft and sales well below the market price. Circumstances that fueled competitors like LooksRare, who were already surpassing him in sales volume. The problem is that it has now been revealed that 95% of the transactions that take place on this platform were from people selling NFTs to themselves to inflate prices, something that may have caused the fall of NFTs not to be seen with all its rawness. In fact, although some of the most important video game companies, such as Ubisoft or Electronic Arms, have threatened to incorporate NFTs into their creations, in the end they have thrown themselves aside. During the last Game Developers Conference, the organizers conducted a survey to ask about the possibility of including crypto assets in their developments: 7 out of 10 said they were not interested.

They are not the only ones who have lost interest. Just take a look at Google searches to see how interest in both these tokens and the metaverse has dropped among the general public. There are also those who continue to see potential in this technology. Y Combinator, one of the most powerful startup accelerators in the world, announced a few weeks ago its bets for this year and almost all of them were related to the world of NFTs and metaverses.