AXS Token Value Analysis: Can Radical Tokenomics Reform Build Long-Term Value?

In the development history of blockchain games, Axie Infinity once served as a flagship project for the “Play-to-Earn” (P2E) model, leading the 2021 bull market wave. Its governance token AXS grew from an obscure token to a star in the crypto market. However, as the hype faded, the flaws of the first-generation P2E model were exposed, and AXS’s price experienced a decline of over 99%. Facing a survival crisis, the project team launched a series of radical tokenomics reforms in early 2026. This article, from Gate’s research perspective, deeply analyzes AXS’s fundamental value, the core of its reforms, and the sustainability of its long-term value.

The Development of First-Generation P2E Blockchain Games

To understand AXS’s current reforms, we must look back at the rise and fall of the first-generation P2E model. Axie Infinity built a “dual-token” economic system: governance token AXS and an unlimited supply of in-game reward token SLP. Players breed and battle to earn SLP, which can be exchanged for AXS or other assets for profit.

However, compared to other leading projects of the same period, Axie’s economic model appeared more “fragile.” For example, The Sandbox (SAND) emphasizes creator economy and the asset attributes of virtual land LAND, incentivizing continuous creation to consume tokens; Illuvium leans toward AAA-level gaming experience, trying to attract players through high-quality content. In contrast, Axie Infinity’s success overly relied on the expectation of “profits” rather than the game’s inherent “playability.”

The fundamental flaw of this model lies in its “Ponzi effect”: when new player entry slows, the unlimited issuance of SLP causes severe inflation, forming a complete value destruction cycle: “SLP unlimited issuance → players ‘farm and sell’ causing selling pressure → SLP price plummets → player earnings sharply decline → user churn → AXS governance value collapses.” From late 2021 to early 2026, AXS fell approximately 99.3%, bottoming at $1.06, reflecting the market’s reckoning with the unsustainability of the first-generation P2E model. This decline directly impacted AXS’s value capture ability and set the stage for the 2026 reforms.

AXS Tokenomics and Design

Unlike the unlimited issuance of SLP, AXS was designed from the outset to capture ecosystem value. To understand its reforms, we must first analyze its original tokenomics.

Overview of AXS Token Distribution

In terms of design, AXS has a fixed supply cap of 270 million tokens, establishing its scarcity and anti-inflation properties. Governance and staking are its core use cases. Holders can participate in DAO governance by staking AXS and receive protocol dividends. Despite the market downturn, about 30 million AXS are currently staked, indicating some “diamond hands” confidence in the project’s long-term development.

From a behavioral economics perspective, this design aims to convert short-term speculators into long-term ecosystem participants through staking yields and governance rights. However, risks also exist: the high concentration of holdings is a concern. Data shows that the top five addresses control up to 87.05% of open contracts, meaning the market price is highly susceptible to whale actions.

The Radical Tokenomics Reforms of 2026

Faced with persistent price depression and a declining ecosystem, Sky Mavis launched the largest economic overhaul since the peak in 2021 in early 2026—a bold “surgical” intervention aimed at “curing the disease.”

Completely Halt SLP Emission in Origins Mode

The first step targeted the root of inflation. Starting January 7, 2026, the project completely stopped SLP token emissions in Origins mode. This move not only cut off the vicious cycle of “farm and sell” but also had a significant quantitative impact: it is estimated to reduce daily SLP new supply (inflation pressure) by over 30%. This fundamentally alleviated long-term market selling pressure and marked a shift from “Play-to-Earn” to “Play-and-Earn”—players must genuinely enjoy the game rather than just mine for profits. This aligns with the broader trend in GameFi 2.0 toward de-risking and building sustainable, healthy gaming economies.

Introduction of Non-Transferable bAXS

A more disruptive innovation was the introduction of bAXS (Bonded AXS). This is a non-transferable bonded token that will gradually replace freely tradable AXS as the main in-game reward.

Its operational mechanism and value impact can be understood through the following logical flow:

This design creates a strong exit barrier from an economic standpoint. Speculators cannot immediately cash out earned bAXS; they must deeply engage with the game, using it for consumption to generate indirect value. Additionally, the project plans to introduce a burn mechanism: when players use bAXS for in-game actions, some tokens will be destroyed. This effectively creates a “burning furnace” for AXS’s total supply, directly converting player activity into deflationary pressure.

Historical Price Trends and Market Pricing Logic

Understanding AXS’s historical price essentially involves understanding how its pricing logic evolved across different phases. The process can be summarized in the following stages:

In the first phase, AXS’s price was mainly driven by sentiment and expectations, ignoring the model’s intrinsic fragility. In the second phase, as the death spiral began, despite a fixed total supply, the ecosystem collapse caused selling pressure, and the market voted with its feet, pushing the price back down.

The third phase’s reform is particularly critical. After the reform announcement in January 2026, trading volume surged, surpassing $100 million for three consecutive days, with a single-day increase exceeding 190%. The price, after breaking out of a multi-month downtrend, tested a strong resistance at around $1.50. These market reactions demonstrate that investors are now pricing in “genuine future consumption” and “sharp supply contraction.”

Long-Term Outlook and Sustainability of Token Value

The aggressive reforms have laid a new foundation for AXS’s long-term value, but sustainability remains challenging.

On the supply side, the value base has been significantly strengthened. Halting SLP emissions and replacing AXS rewards with bAXS greatly reduce natural market selling pressure. Future circulating AXS supply will mainly come from early unlocks and staking releases, not uncontrolled game mining. If the consumption mechanism of bAXS functions smoothly, AXS could even enter a deflationary state, which is highly favorable for store-of-value.

On the demand side, value capture depends on content quality. This is crucial for the success of reforms. The consumption scenarios for bAXS depend on whether the game is engaging. Upcoming content like the MMO expansion “Atia’s Legacy” must attract and retain a large base of genuine players. Only when players are willing to spend on skins, items, land (i.e., destroy bAXS) can the token’s consumption mechanism truly operate, forming a healthy “play-earn-spend” cycle. Quantitative estimates suggest that if monthly player retention exceeds 20%, bAXS destruction could reach 50% of new supply, pushing AXS into a real deflationary path.

From an execution perspective, the team and ecosystem must continue evolving. Sky Mavis’s technical execution (such as upgrades to the Ronin network) and ecosystem development are critical. Additionally, the high concentration of AXS remains a potential centralization risk; future governance efforts to decentralize will influence market trust.

Summary

Axie Infinity’s 2026 radical reforms represent a decisive effort to break the “inflation curse” of the first-generation P2E model. By halting SLP emissions and introducing non-transferable bAXS, the project aims to transform its economic model from “externally speculative” to “internally consumptive.” From Gate’s research perspective, this significantly strengthens the underlying logic of AXS’s value—improving supply-side fundamentals.

Looking ahead 12 to 24 months, AXS’s price behavior will be increasingly linked to on-chain data (bAXS consumption rate, player retention, active addresses) rather than just narratives. Whether this GameFi 2.0 reform can ultimately support long-term value depends not on whitepapers but on future gameplay. The success of the deflationary mechanism relies on genuine player enthusiasm; AXS’s long-term pricing ultimately depends on whether Axie Infinity can evolve from a “money-making tool” into a true “entertainment platform.” This reform offers a valuable case study for the industry on how to repair broken economies, and its final outcome warrants close attention.