Axie Infinity (AXS) has outperformed the broader crypto market in January, rallying even as risk assets sold off on renewed geopolitical pressure and sector wide weakness.
The move followed a clear catalyst: a major tokenomics overhaul announced mid-month. While the price response has been decisive, both onchain activity and positioning data suggest the rally is being driven more by expectation and leverage than by improving fundamentals.
The catalyst was the launch of Bonded AXS (bAXS), announced on 14 Jan and activated with Origins Season 16 on 21 Jan. Under the new system, all in-game rewards are distributed as bAXS, a non-transferable utility token backed 1:1 by AXS. bAXS can be used for breeding, evolving and staking within the ecosystem, but conversion back to liquid AXS requires paying a variable Treasury fee linked to a player’s Axie Score. High-reputation players face lower fees, while bots and short-term farmers incur higher costs.
The intent is clear: suppress automated farming, reduce immediate sell pressure and keep value circulating within the ecosystem. From a supply perspective, the change is meaningful. In 2025, approximately 10mn AXS were distributed as gameplay rewards and flowed directly into the market. By locking rewards as bAXS, the supply no longer automatically hits exchanges, leading investors to anticipate a structural reduction in sell pressure.
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Onchain data suggests weak fundamentals Onchain data, however, paints a less supportive picture. Over the past month, daily active addresses have fallen to roughly 34,000, down from a 30-day average near 53,000 and a 90-day average around 69,000. Transaction activity shows a similar pattern. Contract-related transaction counts have dropped to approximately 420,000 per day, versus a 30-day average near 790,000 and a 90-day average above 1mn. This represents a decline of more than 50% across both metrics.
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Importantly, this deterioration has continued even after the bAXS announcement and launch, suggesting that the tokenomics shift has not yet translated into renewed user engagement. This aligns with the broader Great Filter narrative we have tracked, where established protocols must prove utility beyond speculative supply sinks to survive.
Derivatives driving the price action
Market metrics show where enthusiasm is coming from. Futures open interest has surged sharply, rising from roughly $15mn on a 90-day average to over $110mn by 23 Jan, a more than 7x increase. At the same time, funding rates have remained persistently negative. The aggregated all-margined 1-day funding rate has hovered around -2.5% to -3.0%, indicating that traders are either positioning short or hedging long exposure while price moves higher.
Spot and futures volumes have also spiked, with daily reported futures volume exceeding $2 billion around the bAXS launch. Taken together, the picture is clear. The rally is being driven by expectations of reduced supply and aggressive derivatives positioning, not by improving onchain usage. While the bAXS overhaul addresses real structural issues, price appreciation without stabilization in active users and transactions has historically proven difficult to sustain. Until onchain demand shows clear signs of recovery, Axie Infinity’s January strength looks more like a positioning-driven trade than the start of a durable trend.
