Deconstructing Pegaxy’s Economy

Vader Research
5 min readJan 25, 2022

The Next Axie Infinity or a Temporary Fad?

Pegaxy has been pretty popular among the Axie managers and scholars in recent weeks. PGX is trading at $400m FD market cap and went up 15% in the last 7days while ETH went down 40% during the same period. Pegaxy is a horse-racing game where 12 Pega NFTs compete to finish in the top 3 of each race. The economy is very similar to Axie Infinity’s; PGX is the capped governance token (AXS), VIS is the uncapped utility token (SLP). Pegas (Axies) are NFTs required to play the game and each Pega can be bred up to 7 times.

Pega ROI & Growth

There are different classes and bloodlines of Pegas but none of those have any meaningful impact on the earning potential. Each Pega can play 25–40 races per day and have a win rate between 20–25% meaning a Pega owner wins 1 out of every 4–5 games. There is no entry fee per race and Pegas don’t have a max race/energy limit, unlike Thetan Arena.

12 Pegas compete for each race; #1 earns 105 VIS, #2 earns 44, #3 earns 26. A Pega owner can earn 350–400 VIS per day. Unlike Axie or Thetan Arena, the game doesn’t require any skill or luck to play.

Pegaxy Gameplay

The floor Pega is trading at $900 and VIS is trading at $0.1. Assuming one can earn 350 VIS per day, the payback period for the floor Pega is 27 days which is equal to an annual return of 15x. These returns are much more attractive than what NFT holders can get from Axie Infinity (90 days payback period, 4x return) or Thetan Arena (1.2–1.4x return). Pegaxy has been pulling return-driven managers/capital away from Axie Infinity into its own ecosystem. Higher ROI has driven higher NFT growth as the Pega supply doubled in only 24 days from 51k on Jan 1, 2022 to 102k+ on Jan 23, 2022. Strong demand for Pegas provided support for PGX price in recent weeks while the whole crypto market has crashed.

Source: Apollo Pegaxy

Scholarship Marketplace

Pegaxy built an internal scholarship marketplace tooling that allows Pega holders to automatically be matched with scholars in addition to automating the delegation and payment processes through smart contracts. This tooling enables Pega holders to choose from 2 different scholarship models; a)profit share, b)fixed rent. Pegaxy also built an asset management dashboard that enables Pega holders to track their Pegas and scholars’ earnings.

Scholar Earnings

Assuming a Pega earns $35 per day, even with a 5% earnings share, a scholar can earn $2 per day by just clicking a few buttons without any skill or stress. An average-skilled Axie scholar that earns 150 SLP per day, with a 60% earnings share, can earn $1 per day. Pegaxy designed the economy in a way that scholars would be willing to pick the game over Axie Infinity and create word-of-mouth growth among other Axie scholars and eventually their managers. This is a smart growth hacking strategy that so far has been working well for them. Out of the 53 people Pegaxy team, 33 are based in the Philippines and are mainly focused on community management, targeting Axie’s largest geographical scholar base.

Economy & Sustainability

The key sustainability indicator of any dual token P2E game economy is the burn/mint unit economics of its utility token. Let’s look at the burn/mint unit economics of VIS:

  • Average VIS burnt per Pega breed = 7.5k VIS
  • Average daily VIS minted per Pega = 200 VIS
  • VIS payback period = 7.5k/200= 38 days
  • VIS Inflation per Pega in 1 yr = 65k VIS
  • VIS Inflation per Pega in 3 yrs = 357k VIS

Every new Pega player results in additional net 65k VIS supply inflation to the economy in a year. This figure is 20k SLP for Axie Infinity and 4k THC for Thetan Arena. In other words, Pegaxy’s VIS token is 3 times more inflationary than Axie’s SLP. Pegaxy will have even bigger inflationary problems than Axie and will face a steeper VIS price decrease unless devs do something.

The current daily burnt VIS is higher than the mint ratio. This is just a temporary period due to the low amount of Pega supply and rapid growth. Don’t be misled by this figure and think that Pegaxy’s economy is more sustainable than Axie. They’re just early in the curve and will have the exact same problems.

Breeding Cost & Profit

Pegaxy has learned from Axie’s breeding cost formulation mistakes and prioritized more VIS burnt (growth) rather than more PGX earnings (profitability). VIS share of Pega breeding cost has never fallen below 94% whereas SLP share of Axie breeding cost has been in the 15–60% range for the last 3 months.

Source: Apollo Pegaxy

Breeding a virgin Pega and selling it on the marketplace has been a lucrative profitable trade as one can earn $1k+ by breeding a Pega 2-3 times and selling the baby Pegas on the marketplace. As more Pega owners benefit from this arbitrage and breed, I expect Pega prices to decrease and converge towards the 1st breeding cost.

Source: Apollo Pegaxy


Unlike Axie Infinity, Thetan Arena and most other GameFi projects, PGX portion of the breeding fees and marketplace fees don’t go to the PGX treasury. Fees earned in year 1 go to the company that developed Pegaxy and will go to PGX treasury in year 2 onwards. This is a red flag in my opinion.

Additionally, the team portion of PGX tokens will be locked in the first year and be vested linearly over the second year. This raises concerns about how long-term committed the core team is. For reference, Sky Mavis’s portion of AXS tokens is locked in the first year and will be vested semi-annually over 3.5 years. YGG founders’ portion of YGG tokens is locked in the first 2 years and will be vested over 3 additional years.


Pegaxy has been growing rapidly through a smart growth hacking strategy through higher scholar earnings and higher manager ROI but in essence, Pegaxy’s economy is 3 times more inflationary than Axie’s and will face the same problems unless devs do something. If you want to learn more about blockchain games, you can follow me on Twitter and YouTube.



Vader Research

Web3 Game Economy & Token Design Consultancy dedicated to the long-term development of Blockchain Gaming.