First, Sky Mavis has implied that land in Axie Infinity is scarce; there will be no more than 90,601 plots available for sale. Second, land is necessary for production: not only is it the chief source of special resources generated by the land gameplay (upon which land owners have "first claim"), it also gate-keeps access to the Animal Crossing / Stardew Valley-style "upgrade and decorate my land" gameplay. Further, access to land is required to deploy minigames with the Lunacia SDK, and possibly even gate-keeps access to Chimera battles.
Third, the location of land matters:
- Every structure in Axie Infinity has space requirements. Some structures will require multiple connected Land plots to build.
- Your Axies will travel faster on land that you own.
- Connected plots can be managed and viewed all at once.
- Certain items will give buffs to Axies on connected lands as well.
This comment seems to imply that Axies must physically travel across this land somehow, which means that land situated next to something else valuable or important is itself more valuable to own, in the same way as an empty lot close to Times Square. The owner of the empty lot does no work to realize this gain in value; in fact, it is the productive activity of their neighbors that causes it.
The artificial scarcity of Axie Infinity’s digital land will cause a shortage where supply cannot rise to meet demand. Axie Infinity currently has over 2M daily active users, but only 90k planned plots of land. It doesn’t take much imagination to guess what this will do to land prices. As far back as February 2021, Sky Mavis ran a story on their own blog about a particular plot of land selling for over $1.5 million dollars.
For additional research on this subject, we reached out to MMO expert Raph Koster, famed designer of Ultima Online, Star Wars Galaxies, and MetaPlace, as well as CEO of the promising metaverse project Playable Worlds. Raph has a deep knowledge of virtual worlds going all the way back to MUDs, MOOs, and MUSHes at the dawn of the computer game era. He had this to say on the subject of how land obtains value:
The question of location as value driver, and the question of scarcity as value driver have both always existed, and even from the earliest days, some worlds tilted one way or the other, even in the days when worlds were all entirely non-Euclidean.
In games where harvesting (loot/monsters/etc) from the statically created landscape is a thing (e.g., every Diku-derived game such as WoW) the land is inevitably a "necessary factor of production." There isn’t anywhere else for that quest, those spawns, that dungeon entrance, to be.
Raph shares the following amusing anecdote about rent-seeking player behavior:
This latter topic opens up the issues like we had in Galaxies, where there was ample room for everyone to own a house if they chose – but people did things like build player cities atop the entrances to dungeons to monopolize access to resources.
Of course, for some designers this might be exactly the sort of conflict you want in your game:
I’d challenge whether this is always bad; the conflicts over private and public use of land, conflicts over territory, the question of whether a handcrafted or a procedural map are better – these are not simple. Some of them provide gameplay – getting players to try to tackle an enclosure problem (shades of 18th c. England…) is potentially a feature and a generator of fun, not just an economic crisis.
Whether or not Sky Mavis thinks this behavior is beneficial, it’s unlikely that the majority of players will be enthused that the new gameplay mode is aiming to treat over 95% of the player base as second class citizens.
Economic theory dating back to Adam Smith, David Ricardo, and Henry George, and supported by modern economists such as Nobel laureate Joseph Stiglitz, reliably predicts how this will play out. All of the land will be bought up by private owners who will directly or indirectly charge rent to access the fruits of the world of Lunacia and the value "co-created" by its players. As the population grows, demand for land will increase, but given that land is fixed in supply, and there is no cost to holding it, it will always be more valuable for speculators to hold land out of use than to spend time and resources putting it to its most productive use.
This is exactly what happened with EVE Online soon after its launch; fortunately economist Ramin Shokrizade identified the root cause of the problem — unchecked speculation in land-like access — and came up with a solution. He directed the development team, acting as the "government," to apply a high holding cost to owning land-like assets, so only players who intended to actually put them to productive use would want to own them. Ramin didn’t know it at the time, but he was re-deriving Henry George’s famous Land Value Tax from first principles, and it worked exactly as George predicted: it drove speculators out of the market and freed up the land-like assets (spaceship factories in this case) for productive owners, unsticking the economy and laying a clean foundation for EVE, which has gone on to enjoy tremendous success, with emergent player-driven society, drama, and economy at the heart of its ecosystem
Sky Mavis is currently planning to release land in phases, but because the total amount is capped and known in advance to land speculators, this will do little to alleviate the problem. There are a number of other policy options they could choose to pursue; they could follow EVE’s lead and impose a Land Value Tax, or they could embrace the digital nature of their platform and do something we can’t do in the real world: just make enough land for everybody.
Unfortunately, by committing upfront to a land presale Sky Mavis has established a class of landed gentry who will likely put up fierce resistance to either choice. This forces Sky Mavis to choose between two implacable coalitions — "aristocrats" who bought in early on the promise that land would be a scarce and predictable generator of revenue — and new players who are now landless "peasants" must pay high rents or else be excluded from the gameplay features and resources that land ownership provides. The land economy, as currently designed, doesn’t look like a good way for Sky Mavis to transition to a system that doesn’t depend on perpetual growth and speculation.
There is one way Sky Mavis may try to not push away new users while still keeping the letter of their promise to land owners, and that’s "digital land dilution." This is when you keep the literal amount of digital land scarce, but you subtly change the utility and function of it. There are many ways to do this:
•Embrace non-euclidean geometry. Make it "bigger on the inside" and fractionalize the inflated hyper-dimensional land into new sub plots
•Introduce new gameplay features that provide access to the same resources and benefits that land provides so land becomes merely "nice to have" rather than "necessary for production"
•Introduce new travel mechanisms (such as portals and teleporters) that reduce the locational value of land
Axie Infinity’s coming update will make landowners the gatekeepers of the Axie universe. Out of 2M daily active users, only a maximum of ~90k will be allowed to deploy interactive experiences, and the initial phase will be limited to a mere 12 thousand or so plots; it seems strange to apply such tight prior constraints when seeking to build out a software platform. Furthermore, instead of making sure to allocate land to the most creative and industrious players, Sky Mavis risks letting it fall in the hands of land speculators who will demand a high price for the privilege of building interesting things. With developers in other sectors putting up fights over fees charged by app stores, it’s not clear how they will feel about paying literal rent for the privilege of building value for Sky Mavis.
Larsen was coy when we asked him about Sky Mavis’ plans for land gameplay, but acknowledged they were aware of this issue: "In terms of product design for land, I think the only thing I can say is that the spec is evolving as we realize that the player base of Axie is larger than we had maybe originally intended."