Curriculum·S202 Token Analysis and Tokenomics·about 31 min
The sector map
By the end of this lesson you can
- →Place any token in a sector by what it does rather than by how it is marketed
- →Identify the load-bearing assumption a sector depends on, and what would falsify it
- →Distinguish demand that comes from users from demand that comes from an incentive being paid
- →Recognize when a sector's economics require perpetual growth, and compute the point of failure
Sophomore · enrolled learners
This lesson opens with Axie Infinity and play-to-earn, 2021 to 2022.
- What happened
- Axie Infinity reached a reported peak of about 2.7 million daily active users in 2021, built on an economy in which players earned Smooth Love Potion, a token with an uncapped supply. Token issuance was driven by gameplay while the demand for it came primarily from new players buying in, so the sustainability of the model depended on continuing user growth. By February 2022 daily active users had fallen to about 1.7 million, down roughly a third from the start of that year. SLP fell about 94 percent from a July high of $0.39 to around $0.01, a decline of roughly 99 percent across seven months. The developers stated that the economy required drastic and decisive action or risked total and permanent economic collapse, and cut emissions from several game features to zero from a level above 130 million SLP.
- The decision point
- Every component of the model was disclosed and the arithmetic was available throughout. Issuance was uncapped and driven by activity, while the demand absorbing it was new entrants rather than end users of anything, which makes the required condition perpetual growth. A sector whose economics require perpetual growth has a failure date rather than a failure risk, and the only unknown is when.
What you will be able to answer
- →How do you place a token in a sector?
- →What is a load-bearing assumption?
- →How do you tell real demand from paid demand?
- →What did Axie demonstrate?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.coindesk.com/tech/2022/02/08/axie-infinity-reduces-slp-emissions-to-prevent-collapse
- https://www.axios.com/2022/04/12/fall-of-play-to-earn-gaming-p2e-axie-infinity-slp
- https://corpgov.law.harvard.edu/2023/05/22/anatomy-of-a-run-the-terra-luna-crash/
- https://public.bnbstatic.com/static/files/research/low-float-and-high-fdv-how-did-we-get-here.pdf
Confidence low·Volatility high·Reviewed 2026-08-05·Owner unassigned
Contested
This lesson is marked low confidence deliberately. Sector taxonomies are a snapshot of a moving field and any list of current sectors will be stale within a year or two. The durable content is the method for placing and interrogating a sector; the specific sectors are examples and should be revised freely.
Whether Axie's decline was primarily an economic design failure or was compounded by the March 2022 Ronin bridge theft is a fair question, and both were real. The emission arithmetic and the developers' own statement predate the bridge incident, which is why this lesson uses the February 2022 timeline.
Do not let a revision use this lesson to name sectors as good or bad investments. The method is falsification, and P10 forbids implying profitability in either direction.