Developing predictive model using LSTM on AXS

for Long- Term AXS Investors

Anna Mae Kathryn O. Co Jerwin A. Peralta Jericho M. Pilapil
BSCSSE Student BSCSSE Student BSCSSE Student
Feu Institute of Technology Feu Institute of Technology Feu Institute of Technology
coanna555@gmail.com jerwin.tuchi3@gmail.com jmpmellendrez@yahoo.com

Joshua Miguel R. Tuan Mr. Anthony D. Aquino Dr. Shaneth C. Ambat

BSCSSE Student Mentor Course Adviser
Feu Institute of Technology Feu Institute of Technology Feu Institute of Technology
itsjoshuatuan@gmail.com adaquino@feutech.edu.ph scambat@feutech.edu.ph

ABSTRACT K.4.1.1.4 [Computing Methodologies]: Machine Learning➝

Rapid technological advancement paved the way for digital
transactions to be available to society, where companies and
individuals are starting to accept the new digital currency called
Cryptocurrency due to its amazing applications. Cryptocurrency
made online gaming, trading, and interactions easy, safe, and
enjoyable through play to earn games through the use of NFT
assets where the increasing trend of NFT games became the
reason why people are starting to jump on the bandwagon due to
its fast return of investment. AXS (Axie Infinity Shard) is a
cryptocurrency which is a governance token used in the widely
popular NFT game Axie Infinity, where many people are starting
to invest immediately because of its short-term profit while
playing the game, and also trading from AXS themselves.
However, due to the volatility of the AXS or Cryptocurrency in
general, the majority of people who invested in such are prone to
loss of investments. The proponents of this study aimed to address
this volatility problem by developing an LSTM predictive model
that generates an accurate forecast that is fed with sequential
and/or temporal datasets and validated using RMSE as its scoring
rule, the predictive model’s forecast will be deployed into an
interactive website for the AXS investors or future investors to
analyze. The website’s quality, reliability, and overall design were
evaluated using ISO 9126 Criteria from the questionnaire that was
constructed by the proponents.
The same questionnaire is also used for capturing the attitude of
the AXS Investors in terms of Liquidating, Holding, Buying, and
Selling. The predictive model yielded an Accurate Normalized
RMSE value of 0.2495 wherein its forecast captured the
downward trend from October to November 2022, at the time
when this study is being conducted, also half of the sample from
the study who are prioritizing on Minimizing Loss are hesitant to
Trade/Play where the other half are confident enough from the
generated forecast from the website. The study shows that the
predictive model’s forecast which is deployed in the website
guided half of the sample, they are those who are prioritizing
Maximizing Profit which is AXS Investors and also those who
didn’t change their plan.
CCS Concepts
D.0 [Software]: General
Learning Paradigms➝Supervised Learning➝Supervised
Learning by regressions
K.4.3.3 [Computing Methodologies]:Machine
Learning➝Machine learning approaches➝Neural networks
K.4.5 [Computing Methodologies]:Machine Learning➝Cross-
validation
K.4.4.4 [Computing Methodologies]:Machine
Learning➝Machine learning algorithms➝Feature selection
1. INTRODUCTION
Bartering, the oldest form of commerce, involves directly trading
goods of value between two parties. However, it has several
disadvantages, including the lack of a common measure of value
and difficulty in making deferred payments, which led to the
development of currency over time. Coins made of silver and
gold, which were easier to count and had a standard value,
revolutionized trade. Paper money was introduced in the 7th
century in China for convenience and is still used today in modern
banking. In the 21st century, the emergence of cryptocurrency, a
blockchain-based technology, has offered advantages over fiat
money, including decentralization, low transaction fees, and
immutability. However, it also has drawbacks, including its high
volatility, the potential for use in illegal activities, and high risk as
an investment. This academic paper focuses on the high volatility
of AXS (Axie Infinity Shard), a cryptocurrency built on the
Ethereum blockchain, and its impact on its use in funding a
decentralized autonomous organization for gaming.
2. PROBLEM STATEMENT
Piad (2020) and Callon-Butler (2021) assert that the growing
number of players investing in Axie Infinity is due to the financial
freedom that the game offers. The game, which is a player-to-
everything (P2E) game that allows players to stake AXS, has
become a source of income for Filipinos who have lost their jobs
due to the Covid-19 pandemic, with top players earning up to $40
in their first few weeks. The game has provided an additional
source of money for families that were financially impacted by the
Covid-19 lockdown, enabling them to pay for necessities such as
medicine, bills, and internet access, and to support others in their
families and communities. Despite the high risk and decentralized
nature of Axie Infinity and other crypto-based games and
cryptocurrencies, as noted in an article by Business World (2022),
people are still cautiously optimistic about investing in them due
to their potential for profitability in both the short and long term,
according to Cruz (2021). Furthermorre, Gabby (Axie Infinity,
2020) believes that the Philippines has become a hub for Axie
activity due to the country's high unemployment rates and
struggling economy caused by the Covid-19 pandemic. When
players learned that they could make a living by playing Axie and
farming Small Love Potion tokens, word spread quickly, leading
to rapid growth in the Filipino community.
However, Gola (2022) reports that the value of Axie Infinity
(AXS) has declined significantly, falling about 90% from its peak
of $172 in November 2021 leading to a huge decrease in the
player-base of the game "Axie Infinity" resulting to many players
and investors alike who invested in AXS suffering a huge amount
of loss.
Social pressure factosr, dominance through social media
platforms, and curiosity of crypto players were the major
influence as to why they invested in such despite knowing the
risks of the implications of cryptocurrency’s high volatility, still
because the majority of Filipinos highly expect a massive
investment gain in a short period. Furthermore, one of the results
from a study by De Jesus et al., (2022) supports the findings by
Francisco et al., (2022) that since most Filipinos that are invested
in crypto and NFTs (specifically Axie) aim for short-term return
of investment, the findings from the study of De Jesus et al.,
(2022) in which all of their respondents did not consider axie as a
permanent source of stable income therefore implying that
Filipinos mostly invest in crypto or NFTs mainly for quick
income.
Cryptocurrencies are known for their volatility, which can lead
inexperienced investors to suffer significant losses if they do not
understand the fundamental analysis and volatility of the assets in
which they are investing. Considering the risk involved in
investing in AXS, a predictive model will assist investors,
particularly those new to the field, in making informed decisions
about investing in AXS. And with that, a predictive model is
proposed for providing guidance to help mitigate the risk of AXS.
3. OBJECTIVES
3.1 General Objectives
Develop a predictive model using Long-Short Term Memory
Neural Network with an acceptable to guide AXS investors in
identifying potential risks involved in investing in AXS.
3.2 Specific Objectives
The study is intended to conform to the general objectives by the
following tasks: (1) To clean and split the raw data to develop the
predictive model, train the model using that data, measure the
model's accuracy using RMSE, and deploy the predictive model
(LSTM) on a website for users to use. (2) To construct a
questionnaire for users of the website to collect feedback and
satisfaction for indicating whether the predictive model deployed
as a web-based prototype 22 guides the users, as well as assessing
the project's compliance with ISO/IEC 9126 by assessing user
satisfaction after use.
4. SCOPE AND LIMITATION
4.1 Scope
Since this study will only address the volatility problem of AXS
in terms of analyzing and identifying risk within the market in
order to do so, developing a predictive model from a large data set
will be done and for the researchers to do it, applying Machine
Learning along with the use of Big Data. The model to be
developed is intended for long-term, and realistically speaking
with the time constraints that this study will be conducted only for
the whole duration of the researchers’ academic term (3 months)
and also considering an RMSE value of ≤ 0.5 of but not = 0 since
there is no ideal model that can predict in real world scenarios
with an accuracy of 100%. The price of the AXS that is displayed
is from February 1, 2021 to the current date.
4.2 Limitation
After the predictive model is developed it will be deployed on a
website for public access intended for guiding AXS investors. The
system to be developed focuses on the following:
 Display the predicted price of AXS that spans from the
current date up to 3 months
➢ Forecast Analysis
➢ Monthly forecast for Starting and Ending
Price, Change and Average Change
➢ Downloadable Individual Forecast Table
 Display the live price of AXS real-time
 Display current news trend articles on AXS in the
website
 Displays the current price, weekly change, and trading
volume realtime.
 Displays Price from Last 7 Days
 The following features are from Streamlit which are all
built-in:
➢ Has Dark and Light Mode
➢ Record a Screencast
➢ Wide Mode
5. CLASSES/FUNCTIONS USED
The following are both the built-in and user-defined functions
used from imported libraries within the program:
5.1 User Interface
5.1.1.1 Current and Historical Price, All-time and
Last 7 Days Chart
Figure() – instantiates the Figure class
add_trace() – displays candlesticks with x and y argument for the
date and open price respectively
update() – updates figure layout
update_xaxes() – updates x-axis of the figure layout
update_yaxes() – updates y-axis of the figure layout
update_layout() – sets the height of the figure layout
plotly_chart() – displays the chart with first argument being the
figure that was instansiated using Figure class, and second
argument using the container width

5.1.1.2 Forecast Future Price Button

display_forecast() – displays forecast
to_datetime() – converts forecast date column to datetime object
add_annotation() – fully customizes the forecast figure by adding
annotations, colors and size
round() – rounds off price
5.1.1.2.1 Download Button Figure 4. Last 7 Days Chart
download_button() – downloads the generated forecast as csv file

5.1.1.3 AXS Scraped News

display_news() – display news where the argument indicates how
many number of news article to be displayed

6. FIGURES/CAPTIONS

Figure 1. AXS Analysis

Figure 5. Forecast Analyiss

Figure 2. Price Chart

Figure 6. Scraped News Trend about AXS

Figure 3. RSI 7. CONCLUSION
The study gives grounds that using Open, High, Low, Close Price,
and Moving Average as feature variables can accurately forecast
the price of AXS cryptocurrency over 3 months, as demonstrated
by the Accurate Normalized RMSE value. The performance of an
LSTM Neural Network depends on lags, the correlation of the
feature variables, and its architecture. A single layer is sufficient
for the model to learn effectively and generalize to new data. The
website on which the model is deployed meets the Usability,
Efficiency, Reliability, and Portability criteria of the ISO-9126
standard. in terms of liquidating, holding, selling and buying as a
basis of AXS Investors’ actionable insight, the majority of them
changed, and only one is Neutral about deciding. Those who are [5] De Jesus, S. (2022, January 21). Play-to-Earn: A Qualitative
Buying initially and changed to Liquidate are confident enough Analysis of the Experiences and Challenges Faced By Axie
towards the forecast and the information that the website has Infinity Online Gamers Amidst the COVID-19 Pandemic.
provided since they want to mitigate or reduce potential loss. And Figshare.
those who consider changing their plans also gained more https://figshare.com/articles/journal_contribution/Play-to-
confidence from the forecast in terms of initially Holding to Earn_A_Qualitative_Analysis_of_the_Experiences_and_Cha
Selling, Holding to Buy, and Holding to Liquidate. Therefore, the llenges_Faced_By_Axie_Infinity_Online_Gamers_Amidst__
system or the website contributed positively for guiding those __the_COVID-19_Pandemic/18856454/1
aforementioned decisions among the AXS Investors and didn’t
contribute well at the same time for those who are determined to
not change their initial decision and therefore, satistfied the [6] Infinity, A. (2021, December 15). Player Spotlight: Gabby! -
objectives of the study. Axie Infinity. Medium.
https://axieinfinity.medium.com/player-spotlight-gabby-
8. RECOMMENDATION 1c6d8a4ebc36
The results of this study proves that the feature variables (Open,
High, Low, Close Price and Moving Average) as a predictor of
the target variable ‘AXS Price‘ can be a basis of developing an [7] Francisco, R. D. F., Rodelas, N. C. R., & Ubaldo, J. T. U.
accurate and acceptable predictive model. However, the findings (2022). View of The Perception of Filipinos on the Advent of
do not suggest that the feature variables used in this study will Cryptocurrency and Non-Fungible Token (NFT) Games.
always be a good predictor when developing a predictive model stepacademic.net.
with different sequential or non-sequential dataset and therefore https://stepacademic.net/ijcsr/article/view/294/120
needs more extensive studies to confirm, the hyperparameters of
the tuned model that were configured does not also imply that its
forecast will be accurate to similar sequential datasets that this
study has used simply due to the fact that its learning weights is
dedicated for the specific dataset for this study. As for other
studies similar to what this paper tries to investigate, the
researchers suggests that even with a developed accurate model
still, the findings of this study should be carefully taken into
account for the reason that even with similar forecasting and/or
regression problems that this study tackles, the feasibility and the
relevance of this study will depend on different variables,
hyperparameters, NN architecture and type of dataset.

9. REFERENCES

[1] Gola, Y. (2022, June 11). Axie Infinity: AXS price risks
deeper losses despite 90% drawdown already. Cointelegraph.
https://cointelegraph.com/news/axie-infinity-axs-price-risks-
deeper-losses-despite-90-drawdown-already

[2] Cruz, N. (2021, September 20). Filipinos Earn Income

Through Axie Infinity. Here Are Some Pros And Cons,
According To Players, Investors. www.onenews.ph.
https://www.onenews.ph/articles/filipinos-earn-income-
through-axie-infinity-here-are-some-pros-and-cons-
according-to-players-investors

[3] Nicolas, B. D. (2021, November 11). Filipinos find financial

freedom in pandemic with cryptocurrency game | Bernadette
D. Nicolas and Tyrone Jasper C. Piad. BusinessMirror.
https://businessmirror.com.ph/2021/11/10/filipinos-find-
financial-freedom-in-pandemic-with-cryptocurrency-game/

[4] Callon-Butler, L. (2021, September 14). For Filipinos, Axie

Infinity Is More Than a Crypto Game.
https://www.coindesk.com/business/2021/05/11/for-filipinos-
axie-infinity-is-more-than-a-crypto-game/