Why Were Axie Infinity and The Sandbox Among 2022’s Worst-Performing Cryptocurrencies?

Despite the fact that Bitcoin (BTC) and other cryptocurrencies overcorrected in 2022, the bears were more severe with Axie Infinity (AXS) and The Sandbox (SAND). The goal of this article is to explain why this collapse occurred.

What about the other cryptocurrencies that underperformed as well? The declines of altcoins such as Terra Classic (LUNC), FTX Token (FTT), and Solana (SOL) are obvious. After all, they are all linked to the 2022 blockchain industry’s biggest scandals.

One of the great highlights of decentralized finance was the former Terra (LUNA) (DeFi). It was, however, linked to an algorithmic stablecoin, and when it lost its peg to the US dollar, billions of LUNA units were created to maintain this peg. As a result of this blunder, the altcoin’s entire capitalization vanished.

FTT is the token of FTX, one of the most promising cryptocurrency platforms. However, in November, a massive scandal broke out when it was revealed that the cryptocurrency exchange did not keep its customers’ money in custody, but instead transferred it to Alameda Research, another company owned by Sam Bankman-Fried (SBF).

Furthermore, a press release revealed that the reserve values of the SBF companies were backed by the token issued by FTX itself. The market rejected the entire situation, and rumors of insolvency proved true, prompting investors to abandon FTT.

Solana (SOL), one of Ethereum’s (ETH) main competitors, also played a negative role in this story. Investors decided they would not be in the same boat as SBF, who supported the altcoin, and Alameda, who owned many units of the cryptocurrency. Even meme altcoin Shiba Inu managed to outperform the altcoin in terms of capitalization (SHIB).

What about Axie Infinity and The Sandbox, though? Why have they dropped so dramatically in the last year?

The market for NFT and metaverse is declining.
Early adopters suffer the most when the crypto market begins to correct. This is due to the fact that they are regarded as the most dangerous. It is possible to analyze this clearly by looking at how cryptocurrencies have corrected. BTC was affected, but not as badly as Ethereum, which lost less capitalization than its competitors.

DeFi, on the other hand, has outperformed non-fungible tokens (NFTs) and the metaverse industry because it is a crypto market environment that has been developing for some time, resulting in investor confidence in decentralized finance.

Furthermore, the hype surrounding the NFT arts in 2021 harmed the market’s image. The art was sold solely for profit and did not provide value that matched the price, instilling fear in those looking for projects that provided value for their investment rather than being a fad.

Of course, the gaming industry played a role in this as well. Crypto investors who have been following the market for a while know that Axie Infinity is the best project for NFT games. The AXS game was well-known for the high profits it provided to its players. Some players have even quit their jobs to focus solely on the card battle game with cute avatars.

Surely, this was never going to work because, if the game was the primary source of income, the tokens earned in the game would be converted into cash because people need to survive outside of the game. The sale of tokens reduced the market capitalization of the asset received for playing, SLP, making Axie Infinity less appealing to casual players.

Axie Infinity and other NFT games demonstrated, just as in the arts, that players were only there for the money and not for the gameplay, and this could never be sustained. Although updates to the popular blockchain game have been made, they have not been able to bring attention back to Axie Infinity, which no longer has players and may never have again.

So, how about The Sandbox?
Aside from the decline of the gaming industry, the metaverse is no longer a hot topic in the crypto community. Many companies, institutions, and countries have decided to embark on a virtual universe, but this does not imply that they are interested in purchasing tokens such as SAND.

Some experts in the crypto market, gaming, and technology are already skeptical of the metaverse, believing that it requires significant development. The Sandbox is not yet completely user-friendly enough to warrant a large-scale migration to it.

This is not to say that The Sandbox team has been idle this year. There were developments, but they fell short of being a bullish catalyst for SAND, which has lost 93% of its market capitalization in the last 12 months, as has AXS.