Meet Axie Infinity, a lovely game with huge growth and a bigger vision.
Written by Packy McCormick
Meet Axie Infinity, a lovely game with huge growth and a bigger vision.
The game looks simple because of the cute Axies in it who look innocent. But when you're playing the game, it feels like playing chess. It is a strategy game .
--Axie Infinity Gamer Howard
In an Internet cafe in Cabanatuan City, Philippines, a 22-year-old named Howard described the blockchain game Axie Infinity as a "seemingly innocent" but "strategic" game. games to make a living. Axie Infinity is a Pokémon-like game based on the Ethereum blockchain. Players can buy digital pets called Axies. These Axies exist in the form of NFTs (non-fungible tokens) that players can raise and breed. and trade these Axies, which can also be used to fight other players. These Axies pets are cute and honest. Here's what the game looks like:
It's a game and pets are cute. The game contains blockchain stuff, it's fun! But there's a lot more under the cute exterior.
The whole idea behind Axie Infinity is as Axie co-founder Jeff “Jiho” Zirlin puts it:
The idea is to introduce something new and a little scary (cryptocurrency) through something fun and familiar and nostalgic. Then, add property rights and economic freedom to make this game very special.
Axie has a very bold master plan to reshape economic policy and local governance by showing the possibility of people working in the Metaverse . In its white paper, Axie's developer, Sky Mavis, made it clear: " You can think of Axie as a country with a real economy. "
It's a grand plan. Right now, much of the focus on Axie is its eye-popping growth... Axie Infinity is acquiring players and generating revenue at an unprecedented rate. Here's a chart of its monthly earnings:
Above: Axie Infinity's monthly revenue, in which revenue in the first 18 days of July this year has increased by 548% compared to June. Source: Axie World
In April of this year, Axie generated about $670,000 in revenue.
In May, its earnings were $3 million.
In June, its earnings were $12.2 million.
In just the first 18 days of July this year, its earnings have reached $79 million.
Delphi Digital , an independent research and consulting firm, expects Axie to hit $153 million in earnings this month.
The way Axie Protocol generates revenue is: Axie Protocol charges 4.25% when players buy and sell Axie NFTs on the marketplace in that game , and when players breed Axies to create new pets, Axie Protocol also localizes The form of tokens (including Axie Infinity Shards ( AXS ) tokens and Smooth Love Potion ( SLP ) tokens) -- nbsp; charge . AXS and SLP are denominated in ETH, which has more than halved since May; Axie's dollar gains have continued to grow even as ETH prices have fallen.
Above : Delphi Digital's projected Axie Infinity revenue.
Investors would be salivating if this were any business' annual revenue growth figure. 200x revenue growth in 3 years is almost unheard of, and Axie Infinity's revenue grew 200x in 3 months ? ! Incredible.
Delphi Digital expects Axies to hit $1.1 billion in December revenue, largely from fee income from its NFT marketplace and its need to breed Axies by hundreds of thousands of players each month. Currently, Axie Infinity has over 600,000 players worldwide, 60% of whom are from the Philippines .
While these revenue numbers are mouth-watering, they're not the biggest or fastest-growing numbers ever in gaming. But what's unique about Axie Infinity is that this insane growth is just the first step in a larger plan that includes vertical integration, aggregation, decentralization, and world building (which we'll describe below) ).
Even currently in the earliest stages of its master plan (the product is still in "alpha"), Axie as a blockchain- based game has achieved this growth while pioneering a whole new dimension at the intersection of work and play. Mode: " Play-to-Earn " (play while earning).
In the Philippines and Vietnam, many people quit their jobs to live a better life by playing Axie for a few hours a day. They will receive Smooth Love Potion ( SLP ), a Token (token) earned through the Axie game that can be exchanged for fiat currency, which in turn can be used to pay for food, shelter, medical expenses and other survival needs items. Some people who used to make $5 a day now make $20.
For the long-term success of cryptocurrencies, Axie has proven many important things:
NFTs are still prevalent and doing well, and their success does not depend on high-priced art sales. Quite the contrary, here is a glimpse of the real promise that NFTs bring!
Non-crypto users enter the crypto space through video games.
Cryptocurrencies can create new economic opportunities for all kinds of people around the world, not just whales, DeFi Degens, and Bitcoin maximalists, delivering on the promise of a more level playing field while capturing economic value. (Note: DeFi Degens refers to gambler-style DeFi traders and builders )
The network effects of cryptocurrencies can create fast-growing businesses with moats.
One of the main criticisms of cryptocurrency so far is that it has no real-world value or application , but Axie makes you reconsider what real-world value is. In Axie's case, the value comes directly from providing meaning, revenue, and opportunity to players. A typical game spends millions of dollars on marketing and keeps most of the profits; Axie spends no money on marketing and lets players keep most of the value created . This is expected to make the game stickier and have more expansion opportunities.
This is just the first act of Axie. It wants to reinvent work and create the most valuable intellectual property (IP) in history, all owned by players themselves . Famous venture capitalist Chris Dixon once said, "The next great invention will start out looking like a toy." Axie clearly fits that bill.
You may have started hearing about Axie Infinity over the past few weeks, you may have read about it on Twitter, or read about it in crypto publications like Coindesk, Delphi Digital, and Bankless. Or maybe you haven't heard the word "Axie" until two minutes ago. But no doubt you'll hear it everywhere in no time. Today, we'll take a deep dive into Axie, and this article will cover:
Origin of Axie
The Modern History of Gaming Business Models
Play-to-Earn (play while earning)
Data Interpretation Axie: Unlimited Profits
Vertical integration in the LEGO world
Decentralization of the Axie Universe
01. Origin of Axie
In November 2017, CryptoKitties (CryptoKitties) was listed as the first NFTs digital asset using the ERC-721 standard. Less than a month later, in Vietnam, Sky Mavis founder and CEO Trung Thanh Nguyen came up with the idea to create Axie Infinity: What if the gameplay of Pokémon could be combined with the gameplay of CryptoKitties' NFT ownership and breeding?
Combined, it looks like Axie Infinity, "a Pokémon-inspired universe where players can fight, collect, raise pets and build a land kingdom for them." When it comes to the mechanism, his ideas yielded several key differences :
Instead of owning Pokémon cards, players buy Axies in the form of NFTs .
Players can earn a living by earning ERC-20 tokens that can be exchanged for local fiat currencies, not just holding cards or NFTs for appreciation.
Source: Axie Infinity White Paper
Trung started game building in December 2017. In January 2018, when the price of ETH crossed $1,300, he hired Masamune as art director and game designer. Meanwhile, Trung continued to play the CryptoKitties game, and there he met two other co-founders (who were also CryptoKitties enthusiasts): in March, Jiho joined and oversaw Axie's growth; in May, Aleksander Leonard Larsen became COO official. In July, Andy Ho joined the company as Chief Technology Officer. In the end, a joint founding team composed of these five principals was identified.
The team conducted a pre-sale of Origin Axies in February 2018 -- nbsp; (Note: Origin Axies are digital pets created during Axis Infinity's two-month pre-sale event in 2018, so are very rare and collectible ) , sold the first batch of Axies characters as NFTs and raised 900 ETH at a time when the price of ETH was starting to fall from its all-time high. Just as ETH was falling, they developed rapidly:
In March, they launched their own NFT marketplace where Axie collectors can trade.
In May, they released the Breeding feature, which allows players to breed Axies to create new pets.
In October, players can use their Axies to fight.
In January 2019, they raised 3,200 ETH by selling the “land” of Lunacia, “an open world owned, operated and controlled by players.”
Above: Axie Infinity was born during the crypto boom in 2017 and continued to build during the crypto winter that followed.
The idea first started at the peak of the crypto bull market in 2017, and has since turned into a job they love to do in the sluggish bear market dubbed “Crypto Winter.” When I spoke to Jiho and asked him what contributed to Axie's recent rise, he said it all started with " continuing construction during a bear market ."
This seemingly cursed time actually turned into an advantage. It has allowed the Axie team to carefully build and improve the product in relative obscurity, while attracting a small, loyal core of believers . This is important. One challenge that games and new crypto projects share is that they can attract a lot of hype and publicity, generate a lot of revenue quickly, and then die quickly. Jiho points out the paradox of building large-scale communities:
Before a community can become very large, it first needs to function as a small community . That's why Axie is so hard to replicate -- if you build an Axie competitor now, you're going to attract the kind of people who want to find the next Axie, not people who really want to move the game forward.
From having only a small community, Axie has now grown very large. On Friday, it surpassed 600,000 daily active players; its Discord server is the heart of the community, with more than 540,000 members. When I joined their Discord yesterday, a new member joined every five seconds .
Axie's development is objectively impressive, and it's even more impressive when you realize that new player engagement is much higher than the typical game you're familiar with. The Axie team has released a getting started guide with 6 steps to "learn how to play" the game, pictured below:
Screenshot source: https://axie.substack.com/p/axie-community-alpha-getting-started
As shown in the figure above, at the beginning, players need to obtain ETH, register MetaMask wallet, transfer ETH to MetaMask wallet, then download another Axie's own wallet Ronin, deposit ETH into Robin wallet through the Ronin bridge , and then use ETH buys 3 Axies on the Axie Market (this is the quantity required to play this game) , log in with MetaMask, and finally download the game application on the computer desktop or mobile terminal. 85% of Axie players are Android users.
Then there's the cost . To start playing, you need to buy 3 Axies . You can buy Axies on Axie's Marketplace, the cheapest of all 99323 Axies sells for 0.1 ETH, or about $195 at the time of writing .
Above: Axies pets and their prices listed on Axie's NFT marketplace.
The introduction here is relatively simple, and I may be missing something. Jiho has publicly stated that it was really hard to play Axie Infinity at first. Yet despite these hurdles, Axie is growing like crazy. Beyond these startup steps, there must be something magical pulling people in.
On the Invest Like the Best podcast, Gabriel Leydon, CEO of gaming company Machine Zone, lays out the counterintuitive idea that investors should be looking for opportunities that break the norm but are still growing: if something doesn't matter its design And UX, it's all going like crazy, then it must be offering something really innovative and catering to a previously unmet need.
In the case of Axie, that innovation is the " Play-to-Earn " model and the opportunity to make a living in the "metaverse" by playing games . To better understand why Axie is so innovative, we need to understand how games make money today.
02. The modern history of game business models
Axie Infinity isn't the fastest-growing game of all time, nor is it the highest-grossing game. To understand why Axie's development is so special, we need to first look at some other game business models.
In June, Japanese mobile game " Ni No Kuni: Cross Worlds " set a record for revenue generation, generating $100 million in 11 days, even though the game was only released in five markets.
Above: Screenshot of Japanese mobile game "Ni No Kuni: Cross Worlds"
Just like Pokémon Go , the fastest game to reach $100 million in revenue, Honor of Kings , the highest-grossing mobile game of all time ($9.97 billion), Epic’s hit Fortnite, and most of the most popular now Like other games, " Ni No Kuni " is also a "color: rgba(0, 0, 0, 0);">Free-to-Play” (free game) .
Most "Free-to-Play" games provide players with full game content for free and make money by selling virtual game items such as skins and emotes . Chris Dixon (famous venture capitalist) -- nbsp; points out how successful this model is in the video game industry :
Take Fortnite, for example. In Fortnite , you can start the game with normal characters for free, but if you want to upgrade to Wolverine, you can use Fortnite's in-game currency V-Bucks through the Item Store from the game's development Buy the Wolverine skin from Epic Games.
Above: The "Free-to-Play" mode for the game characters in Fortnite is a great way . In 2020, Fortnite generated $5.1 billion in revenue. Importantly, in Fortnite , everything a user buys is cosmetic : buying a specific skin doesn't give you a better chance of winning a battle , just like buying a new shirt in real life doesn't. will make you stronger. Your purchase is just to show off, or you have your own style, or for some other reason people buy expensive stuff. Fortnite is a game, but it's also a "metaverse" prototype and community . Its Discord server has 805,000 members. It's a mini-economy that is centrally managed by Epic Games and makes huge profits from players.
Two of the fastest growing mobile games, Ni No Kuni and Pokémon Go, also use " Free - to - Play " games, but critics argue that these two games are "Free-to-Play" The "dirty subset" of the pattern, a pattern known as " Pay-to-Win ":
In " Pay-to-Win " games, players can spend money to buy items or skills to gain an edge in the game . The Ni No Kuni attack on Reddit quoted above highlights the problems with this mode: "It's a massively multiplayer online game where you get stuck in a level and can't move forward because of the experience points. , equipment and pet gacha looks like a giant Pay-to-Win, you can hardly get coins." (Note: gacha refers to the virtual machine that sells props in the game) . Basically, pay or get stuck . There were also many reddit users who questioned the claim that the game was generating $100 million in revenue due to weak download numbers, arguing that either the earnings figures reported by SensorTower were inaccurate, or that the game was getting above-average spending from whale players. benefit from it.
Even a seemingly simple game like King's Candy Crush can cost players a lot of cash to buy things like more game lives . When the game first took off, the internet was full of horrific stories of parents checking their credit card bills and discovering that their kids had spent thousands of dollars on Candy Crush with their credit cards. In 2014, Apple refunded $32 million to parents of children who purchased in-game items in various "Free-to-Play" games without parental authorization.
Above: Screenshot of Candy Crush game
Another well-known game, Roblox , was founded in 2012 and is mostly played by children. It is also a " Free-to-Play " type of game, but it is innovative in some ways . First, parents can buy a certain amount of " Robux ," the virtual currency in the game, to let their kids spend, rather than plugging in a credit card and letting their kids spend at will. Second, instead of making all the content itself, Roblox has built a platform where other developers and designers can make their own games and props and sell them to users in exchange for " Robux " proceeds . In the first quarter of 2021, Roblox generated $387 million in revenue and paid out $118 million (31% of revenue) to all developers on the platform.
According to the company, 27% of every dollar spent through Roblox goes to all game developers on the platform, 25% goes to the app store, 12% goes to investing in and supporting the platform, and 27% goes to the platform. % goes to Roblox itself. See diagram below:
Games/ worlds like Roblox and Minecraft are a big step forward. Users can not only pay game developers, but also earn money by developing games for this ecosystem. However, it really isn't Bill Gates' definition of a "platform" (Gates once said: "If everything built on top of that platform makes more money than the platform itself, then it's a platform. ”) , because such gaming platforms themselves make as much money as the developers. In Roblox , the average user can earn a living by gaming. This is a victory. In the past, people could only make money by winning eSports tournaments (only a few elite players could participate) or "gold farming" - nbsp;
As described in a 2007 New York Times article, some Chinese employees earn $0.30 an hour by spending 12 hours a day collecting World of Warcraft gold coins and other digital assets. And their boss earns $3 by selling those coins to an online retailer, who then earns $20 by selling those coins to American or European players who don't want to spend all their time collecting them currency. " Playing gold " is considered a form of exploitation and is banned by major games . If only players around the world had a way to make money for themselves ...
All of this brings us back to Axie Infinity--nbsp ;.
03. Play-to-Earn (play while earning)
With the help of blockchain , Axis operates a brand new game: " Play-to-Earn " (play and earn) . Unlike traditional " Free-to-Pay " game models (where developers sell game items to players to earn) or models like Roblox (where other developers can also make money by publishing games on the platform), " Axie Infinity is a player-to-player game .
" Play-to-Earn " is a new mode that "rewards players for the time and effort they put into playing the game and developing the gaming ecosystem."; According to Axie's documentation:
Axis has a real money economy that is 100% owned by the player. Rather than selling game items or dungeons, game developers focus on developing the economy among players and charging a small fee to make money. Axies are created by players using in-game resources (SLP & AXS tokens) and selling to new players/other players. Holders of AXS tokens are like governments receiving tax revenue. Game resources and items are tokenized, which means these tokens can be sold to anyone on an open p2p marketplace.
Axie is clearly not a "Free-to-Play" model . To start playing Axie Infinity, you'll need to convert fiat to ETH to buy 3 Axies, the cheapest of which is $195 at the time of writing, as mentioned above. But unlike paying developers to rent avatars (or land, props, or prop packs), you own ownership of your Axies . By playing this game, you own the game and can decide the future development of the game or earn real income by completing tasks. If you want to stop playing the game, you can sell your Axies, AXS and SLP tokens.
When new players enter the game, they don't buy Axies from Sky Mavis (the startup behind Axie Infinity) or Axis Infinity, but from other players who either sell their own Axies , or breed new Axies and sell them. As Jiho puts it, it's like "the player sells a ticket to this universe." The Axis protocol charges a 4.25% commission for every transaction on its market, plus a fee when the player breeds new Axies Fees (charged in AXS and SLP tokens) .
Unlike the traditional mode, in Axis' "Play-to-Earn" (play while earning) mode, 95% of the trading income is owned by the player . Jiho said, "Axie's first principle is: In the attention economy , users who pay attention to us should be rewarded ." A special economic model with a view to maximizing future commercial benefits). why?
Playing this game is an important job. You need a lot of people playing at the same time to make the game fun. Part of what makes PvP (player-versus-player) games fun is that players play against other players of the same skill level as you, and in order for that to happen, you (the developer) need to quickly match players against other players to match. The "Play-to-Earn" model makes Aaxis more fun by adding player liquidity; it's worth investing most of the money in making it happen.
Roughly 5% of the proceeds from the Axis protocol will go into its “ Community Treasury ”, which currently holds 4,600 ETH (~$95 million at the time of writing) and is controlled by token holders , including but not limited to the developers of Sky Mavis (holding about 20% of the governance token AXS).
Above: The growth of funds in the Axie community vault and its composition ( purple areas represent fees from the platform's marketplace, yellow areas represent fees from breeding Axies). Source: AxieWorld
Axis is creating more than just a game; it's building a virtual nation with its own economy. But it all starts with the game. Here's how Axie Infinity works (should be familiar to Pokémon players, may be unfamiliar to others):
In Axie Infinity, players collect, raise cute digital pet Axies and eventually use them to fight other Axies. Combat is at the heart of the game : either player versus player (PvP) or player versus environment -- nbsp; (PvE).
Each Axie has 4 attributes: Health , Morale , Skill and Speed , giving them advantages and disadvantages in battle.
Additionally, each Axie's attributes depend on its class (beast, reptile, aquatic, insect, plant, bird, moon, nut, and star) and body parts (eyes, ears, horns, mouth, back, and tail). Some types of Axies are better at attacking, some are better at taking damage; Axies are grouped in groups of three (forming a team) , and each group's skills are partly derived from the configuration of "attacker" and "tank" (tank) Hybrid forms, assembled in the best way to fight against other groups of Axies' configurations.
During combat, both sides take turns using their Axies' cards to attack each other. Cards may have different effects, depending on the type of Axie you play against. For example, attacking a "Beast" Axie with a "Bird" card will deal an additional 15% damage. The relationship between each group of categories is as follows:
As the player Howard mentioned at the beginning of the article said, this is a " strategy game ". Playing the game is more about skill than luck . If you want to dig deeper into the Axie game itself, start here:
For player purposes, the most interesting is that by winning PvP and PvE battles and completing daily quests, players can earn Smooth Love Potion (SLP) tokens , so named because players need SLP to breed new Axies . This is where "Play-to-Earn" comes in.
Top PvP players can earn up to 600 SLP per day ; but for the average player, up to 200 SLP , which equates to $52 at the SLP price of $0.26 at the time of writing. In the US, that's not a lot of money, but in many developing countries, more than $1,500 a month is a meaningful, potentially life-changing sum. With these SLP tokens, players can do a few things :
Breed new Axies . Axie Infinity doesn't cast new Axies pets out of thin air. In order to meet the needs of new players (each new player needs to use ETH to buy 3 Axies to start playing), existing Axies holders can breed new Axies from a pair of existing Axies. Each Axie can breed up to 7 times, the cost of each is 4 AXS plus a certain amount of SLP (The more times a particular Axie breeds, the more SLP it needs to spend increase accordingly, see figure below). A "Virgin Axie" (primary Axie) -- nbsp; costs 4 AXS + 150 SLP (about $108.92 at the time of writing). Given that each Axie starts at $195, breeding new Axies is a lucrative deal.
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Speculation . SLP token holders may want to hold SLP for price speculation. In the past year, the price of SLP has increased by 21.8 times, from $0.0122 to $0.2664, see the chart below.
It was the third use case that captured the public's imagination and drove the explosive growth in Axie usage. During COVID-19, many people in developing countries have lost their jobs and are scraping by, turning to Axie Infinity to make ends meet . There's even a documentary called "Play-to-Earn" about the phenomenon:
Video source: https://youtu.be/Yo-BrASMHU4, the copyright belongs to the original creator
The documentary shows a small Filipino town called Cabanatuan, where the Axie game spread from one person to many, including a 75-year-old couple, Lolo and Lola (pictured below), who played Axie The revenue from the game complements the $5-6 a day they earn from their small store to pay for their medical bills.
Screenshot source: Documentary "Play-to-Earn"
You might ask: "How can Lolo and Lola afford the 3 Axies needed to start the game? Doesn't the cheapest Axie cost $195?"
I'm glad you asked that. That's one of the most fascinating things about the Axie economy: Associated scholarship programs are popping up all over the world, giving aspiring players the Axies they need. The scholarship essentially rents Axies to players and is rewarded with a revenue share of SLP token earnings.
The documentary highlights Cabanatuan's local scholarship program, which provides Axies and training for local players, as well as the Yield Guild Games, a blockchain union organization that provides global support for Axie Infinity --nbsp ; Emerging games like The Snadbox and League of Kingdoms offer the same service. Every day many people apply for this scholarship by sending real, well-typed resumes to Yield Guild and other scholarship programs, showing not only their professional credentials but also their gaming experience.
Because the needs of players exceeded what the Yield Guild could meet, the organization launched a "Sponsor-a-Scholar" program, where donors provided players with their start-up capital. Li Jin’s recently announced “Leaping Corgi Scholarship” project, which uses the proceeds from an NFT sale to fund a total of 87 scholarships. Proceeds from this NFT auction are used to fund those in developing countries who want to make a living by playing NFT-based games in the Metaverse. This is wild.
CoinGecko recently put together a list of 10 Axie scholarship providers (see image below). Most of these providers are based in the Philippines . It can be said that it is not developed countries exploiting developing countries, but people in developing countries helping each other and continuously building bigger business on Axie's platform.
In a world rapidly moving online, where blockchain-based businesses and economies have a market fit , Axie Infinity is more likely to be a glimpse into the future of work than a flash in the pan . Wherever people live, they are building businesses in the Metaverse.
The "metaverse" has arrived, and it's evenly distributed.
In addition to these scholarships, some sponsors are already supporting players and offering their own "Play-to-Earn" missions. For example, the DeFi protocol is the first batch of larger sponsors to reward the native tokens of the DeFi protocol to Axie players who complete tasks: for example, Maker rewards players with the stable currency DAI, Aave rewards players with AAVE tokens, and Digix rewards players with real gold. In other words, these sponsors are directly rewarding players who follow them.
The opportunity to make a living by playing games is enough for hundreds of thousands of people (about 60 percent of whom are in the Philippines) to go through Axie's more complex startup process. Axie's current roughly 600,000 players represent a fraction of the Philippines' population of 111 million, let alone "Play-to-Earn" players worldwide.
Even before the craze of the past three months, the appeal of the Axie model had created a flood of demand into the ethereum network, and ethereum's high gas fees, in turn, had dampened Axie's growth . So Sky Mavis, Axie's development company, decided to fix the problem itself.
04. Introduce Ronin
Last June, when the DeFi summer was just getting started, Ethereum woke up from a two-year slumber due to huge demand for block space . At the time, Axis Infinity deployed its most commonly used Axie NFTs and SLP tokens on top of the Ethereum blockchain, while placing the lesser used Land NFTs and Item NFTs on the Loom sidechain , and had not released its governance code at the time. Coin AXS.
The activity of Axis NFTs and SLP tokens contributed to the congestion on the Ethereum network and was affected when the price of Ethereum Gas surged. In a blog post in June, the Axie team also wrote that congestion on the Ethereum network is “our perpetual obstacle . ” To that end, in the article, they announced that they are building their own sidechain : Ronin .
Axis needed a long-term solution that would enable quick, cheap and seamless participation in the Axis game and economy. We need this scheme to be fun and easy! That's why we're announcing today Ronin -- an Ethereum sidechain designed specifically for Axis Infinity . The original meaning of Ronin refers to the samurai who had no master in the feudal period of Japan, and the Ronin sidechain represents our desire to take the fate of the product in our own hands.
Many dApps (decentralized applications) built on Ethereum are feeling the pain of network congestion. But few applications build their own sidechains, opting instead to use other L2 scaling schemes (such as Polygon and Optimism). Even Uniswap, which consumes the most gas on Ethereum, decided to launch v3 on the Ethereum mainnet and Optimism instead of building its own solution.
But that's not the case with Axie. Axie built a sidechain with its own wallet. Given the sheer volume of transactions so far, this is an ambitious plan. Given that in June 2020, Axie's revenue was only $2,044.09, its ambitions are considerable. But they moved on, going through a year-long build, and in early May of this year, Axie Infinity migrated to Ronin .
After the migration, everything in the Axie universe happens on the Ronin sidechain, bridging to Ethereum when needed. Currently, mainly SLP tokens and AXS tokens are bridged to Ethereum ; and ERC-721 assets in Axie (including Axie NFTs, Land NFTs and Items NFTs) cannot be transferred through this bridge yet. Jiho said that the current Axie Users of Infinity have not requested this feature yet. These assets are more valuable in the Axie universe than anywhere else, and thanks in large part to Ronin, there is more activity in the Axie universe than anywhere else in web3.
05. Interpret Axie from a data perspective: unlimited benefits
We're talking about games today, so let's play a game: find out where Axie releases Ronin in the image below.
As you can see from the chart above, Axie has seen explosive growth since it solved the congestion problems caused by Ethereum in May. At this rate of revenue growth, Axie's revenue will be...
...but even this chart doesn't explain its ins and outs very well.
This is almost unprecedented growth in scale for any company. Roblox , a public company with a market value of $43 billion, earned $144 million in April in its 17th year of operation.
It's one of the best-performing games of all time in gaming, and Axie's performance is even more impressive considering Axie broke the "Free-to-Play" model that has dominated the past decade.
From its 4.25% cut alone, Axis is on track to generate more than $150 million this month. On Tuesday alone, its total transaction volume reached $32 million , which is very close to the best revenue for a "Free-to-Play" game.
When you compare it to other blockchain-based applications and the blockchain as a whole, it's really crazy.
Let's compare Axie with all other dApps and blockchains on a revenue basis, see the graph below:
Source: Token Terminal
As you can see in the chart above, Axie has generated $39 million in revenue over the past 7 days, compared to $4.5 million in Bitcoin. In the past 7 days, Axis Infinity has generated more total revenue than any dApps or blockchain except Ethereum . Interestingly, if you deduct the ~$2.2 million in gas Axis paid to Ethereum over the past week, Axis regains its lead.
Source: Token Terminal
Over the past 30 days, data from Token Terminal (see chart above) shows that Axis' protocol revenue is 7% behind its competitor PancakeSwap (the leading DEX on Binance Smart Chain) times more. Axie also beat DeFi giants like Compound, Aave, SushiSwap, and MakerDAO. What's even crazier is that Axis has generated $81.5 million in protocol revenue over the past 30 days , more than any other dApps or blockchain listed in the chart above.
Source: Token Terminal
As a lovely game, this performance is not bad. But how does it compare to other NFT markets in terms of total trading volume? There's no way people can buy Axies that are worth more than all the NFTs they buy on NFT marketplaces like OpenSea or CryptoPunks, right?
However, as the chart above shows, Axis Infinity has traded more than any other NFT marketplace in the past 24 hours, 7 days, and 30 days , including open marketplaces like OpenSea, Foundation, and Rarible, as well as CryptoPunks, NBA TopShot, and SoRare, among others Market for specific NFT assets. Axie is now number 3 by total all-time trading volume, and surprisingly, Axie's trading volume over the past 30 days alone is enough to put it at number three!
While the majority of activity occurs on the Ronin sidechain, data from the past 24 hours shows that Axis remains the third-largest app in terms of gas consumption on Ethereum . See below:
Image source: EtherScan
Finally, let's talk about the token itself. Axie Games' governance token AXS was released in early November 2020 and has since grown 10,964 %, reaching a market cap of $1.1 billion. See below:
According to Delphi Digital, despite its rapid growth, AXS still trades at a price-to-earnings ratio of just 7.7 (Delphi is an investor in Axie, one of the best web3 research firms that helped design the AXS token, so they are very interested in the game understanding is second to none). In contrast, Roblox is still unprofitable, and TakeTwo, the developer of Grand Theft Auto, trades at 33.5 times earnings. If Axie can maintain its current levels, these levels will look pretty cheap.
But it's not just about money. Axis surveyed players’ main motivations for playing Axis Infinity, 48% said they play for financial gain , thus forming a solid foundation for making a living on the platform, but 37% said their main motivation was the community . The community lives primarily on Axie's 549,000-member Discord server. It is one of the few Discord servers in the world with over half a million users. Until recently, Discord did not support a community of more than 500,000 people. By comparison, Fortnite's Discord community has about 800,000 members.
Data may be faked, but users' love for the community and the product cannot be faked.
Over the past week, Axie has seen so much transaction volume that its servers have gone down. The company posted on its Discord:
Linking games to blockchain data is a new creation; it's something no one has done before in front of so many players. Up until the first few weeks, everything was going well, but when we hit 500,000 daily active players , the servers started crashing.
This is a big question. Many Axie users cannot play the game. After experiencing continued revenue growth, Axie's revenue numbers appeared to be stagnant for a few hours yesterday due to server failures. However, people are still trying to get into the game. They couldn't stop playing Axie Infinity. When everything is back to normal, they will come back quickly and violently.
Most surprising was the community's reaction to its server outages, many of whom depended on Axie for a living but were temporarily shut out due to server failures. Jiho told me his biggest concern is whether the community will remain "close, civil and fraternal" as it scales. But this server outage seems to prove that all is well, which is important because community love is a key part of Axie Infinity's strategy.
06. Vertical integration in the LEGO world
If we can build a community of millions of blockchain-educated users by bringing in new people, then we can build a behemoth that devours other products.
--Jiho, co-founder of Axie
Remember that quote I quoted at the beginning of the article? Axies' cute and innocent image belies the fact that it's a strategy game . The same goes for the overall strategy of Sky Mavis, the startup behind the game, combining vertical integration and decentralization like never before .
We know that part of the beauty of web3 is that you can integrate existing protocols, smart contracts, blockchains, L2s and dApps like Lego bricks . This is called composability . This means companies can move faster and develop increasingly complex and exciting products with fewer resources.
That's not what the Sky Mavis team did with Axie Infinity .
In the Axie community, the analogy between Axie and Tesla/SpaceX seems to be common. In a conversation with me, Jiho made a similar comparison, saying that when you're building something really complex, you need to build everything in-house. Tesla makes its own batteries, software and components; SpaceX's entire supply chain, from rocket engines to electronics, was built from scratch. Sky Mavis gba(0, 0, 0, 0);"> also building everything myself.
This starts with intellectual property (IP), Axies itself. Sky Mavis created the Origin Axies and other mascots and still stores them in its own wallet.
Next up is Sky Mavis -- a game developed and drawn by itself .
Next, Axie built its own NFT marketplace in early 2018 , although OpenSea was already launched in December 2017. As mentioned earlier, Axie's NFT marketplace has had more volume than OpenSea over the past 30 days, even though Axie's NFT marketplace only includes its own Axie NFTs.
Axie is also forging its own world -- Lunacia -- and started auctioning "land" in 2019, merging Axie and the land market later that year. In the near future, the company plans to release land-based gameplay, opening up new ways to engage the community and, more importantly, provide players with new ways to earn money , as detailed here:
Sky Mavis also launched its own in-game currency, SLP , which can be exchanged for fiat via ETH, and launched its own governance token, AXS , in November .
As we discussed, Sky Mavis was dissatisfied with Ethereum's congestion and gas fees, and was not satisfied with other people's L2 solutions, so built and merged its own sidechain Ronin and related Ronin wallet , users need to install Ronin wallet to play the game.
Axie has such a huge appetite. That's what the team has come up with so far. What's next?
Let's think about why vertical integration makes sense, especially when there are good enough modular components. If vertical integration can reduce the cost of Axie and create a better user experience, then it will be preferable . Currently, players spend transaction fees outside the Axie universe mainly when they need to exchange SLP for ETH on a DEX (decentralized exchange) such as Uniswap, and then into fiat currency.
Therefore, the next step for Axie’s vertical integration is to build its own DEX.
Currently, the plan is to make it easier for players to exchange Axie-related tokens for real-world spendable currencies, which is critical for the "Play-to-Earn" model. As this gamer Noah Ralston puts it, that in itself saves a lot of trouble:
This also gives the Axie protocol more incentive to tokenize more things (like experience points, the Ronin sidechain itself), which can all be traded on the Ronin DEX. Jiho told me that he thinks it can become the most user-focused DEX ever .
One of the biggest challenges facing cryptocurrencies so far is how to address mass adoption and use cases . If Axie can amass the largest user base in the cryptocurrency space, help users earn a living, and keep them happily engaged, it can be a prairie fire. That's why they are vertically integrated now -- they have users, and they want to take advantage and improve the user experience.
Axie isn't just creating games, it's building web3 aggregators and back-integrating owning as much of the value chain as possible.
Also, by creating something interesting and attracting a lot of eyeballs, Axie is attracting capital that is not looking for a return! This is very rare in the crypto world. This lowers its cost of capital and generates revenue in a way that DeFi protocols cannot. To give a few examples:
People who buy Axies as pets . There are 2 billion pet owners around the world, and 99.99999% of them buy a pet knowing they will lose a lot of money. Axie has attracted a lot of people who just bought Axie as a pet with no expectation of anything in return.
Just people who love this game . 15% of Axie players cited its gameplay as their primary motivation for the game, not due to financial gain or community.
eSports competition . Axie is great for esports competitions, and with the recent activity, its ratings on Twitch (the live streaming site) are also on the rise. These competitions will bring sponsorship money to the ecosystem for more attention.
Sponsors providing external capital . As other aggregators like Facebook and Google have made clear, when you have a large number of users, you have a money printing machine. Sponsors such as Aave are already injecting exogenous money into the system, and as Axie's daily active users climb into the millions, sponsorship opportunities will continue to emerge. This sponsorship relationship can be accretive rather than extractive, as the revenue goes into the community coffers controlled by the player.
But what's even crazier is that Axie is decentralizing while vertically integrating , rather than putting the money and power in the hands of a small core team of 40 at Sky Mavis.
07. Decentralization of the Axie universe
Axie is decentralizing in a few ways.
First, later this year, “the AXS ecosystem will launch.” Axie sold 11% of AXS tokens to the public in November 2020 with a public sale of AXS governance tokens, in addition to private sales, advisory shares, Sky Mavis The team and an ecosystem fund, at that time 22.2% of the total circulation of AXS (270 million pieces) began to circulate . As more AXS tokens are unlocked over the next 65 months, Sky Mavis will slowly lose voting rights until it loses its absolute voting advantage by the end of 2023.
Source: Axie Infinity White Paper
So far, the game's " Play-to-Earn " has been primarily about earning SLP tokens, but in the coming months, players will also be able to earn AXS tokens through gameplay . At the same time, AXS holders will be able to stake their AXS for more staking rewards, and vote on the future direction of the game . In the white paper, the team lists a few things that the community should be able to vote on:
Should Axie Infinity use the marketplace created by Sky Mavis?
How should the community treasury be used to reward AXS holders and the wider Axie community?
Should community treasury funds be linked to other yield farming/staking services (like Yearn.finance or Rari.Capital)?
As the second part of achieving decentralization, Sky Mavis will open an SDK for other developers to build new things . Jiho calls it the "Internet Monster Protocol, where people can take that IP and create stuff." The team envisions being able to use Axies in many user-generated games in the Axie universe.
font-family: -apple-system, system-ui, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', sans-serif; font-size: 16px; background-color: #ffffff;"> Currently, the community Some of the members have already started creating Axie content, albeit just for fun and not expecting anything in return, as shown in the image below:
Over the next two years, if all goes according to plan, Axie players will dominate the direction of the community, primarily by voting on the use of community treasury funds, and will be able to expand the Axie universe themselves while earning tokens. They might even decide to cancel Axie's vertical integration, or create new and better marketplaces, sidechains, wallets, and exchanges.
If they succeed, Axie will have better profit margins and better incentives. Axie may become a more important part of the "metaverse", a guiding light for people to build a decentralized online world, blurring the lines between work and play.
08. Infinite Possibilities
Under what circumstances does the virtual world intersect and affect the real world?
Today, now, thousands of people make a living playing video games in virtual worlds. They are participants in the virtual economy, using their loot to improve their fortunes in the real world. Children in the Philippines, Vietnam, Brazil and more apply for Axie scholarships just as they would apply for college or a job, hoping to set their trajectory upward.
In the virtual realm, Axie Infinity will expand and leverage its IP (intellectual property) in predictable ways:
content . It's almost impossible not to see Axie-related movies or Netflix shows in the next few years. Does NFT ownership of Axies used in movies generate royalty streams for their owners? Is it possible for owners of Mystic Axies to negotiate directly with the studio, or create their own characters online, as people are considering using Bored Apes (ape-themed NFT avatars) and CryptoPunks ( Cypherpunk NFT avatar) like that? (Note: Mystic Axies are Axies that have at least one Mystic Part, and they have a limited supply, which makes them valuable.)
Universe expansion and UGC (User Generated Content) . The Axie team has stated that they cannot create enough content and experiences to meet the growing user demand, and they want to ask players for help. Will Axie Infinity become a platform like Roblox that allows other developers to develop, giving creators more tools to make money?
Crypto expansion . After already having hundreds of thousands and soon millions of new crypto users, will Axie provide these crypto newbies with more and more tools to not only make money, but to manage and grow their stacks?
That might sound like an exaggeration, but Axie Infinity could still be the most valuable IP of all time. It will be interesting to witness this, but the real big impact will come when Axie Infinity realizes it is shaping real-world policy and helping the world adapt to a future where people no longer need traditional jobs to survive.
Before launching Axie, Jiho grew up collecting fossils and insects before studying military and economic history at Yale, where he wrote about Alexander Hamilton's debt restructuring Planned thesis. Axie is the intersection of these two nerdy passions, and an opportunity to use his knowledge and passion to help design the new economy.
When enough Axie players make a living from the game, the team can work with the government to conduct controlled experiments on the effects of Universal Basic Income (UBI). It's difficult to accurately measure the impact of UBI in the chaos of the real world, but governments can experiment with giving UBI to specific Axie players and measure whether they're still active players, builders, and community participants.
Note: Universal Basic Income (UBI) is a redistributive scheme with a simple idea: every citizen (or every adult) receives a regular income supplement from the government, and there are no strings attached to the claim. , people can get rid of the need for work and freely pursue their dreams.
One of the big challenges of UBI is that work isn't just about money, it's about meaning, belonging, and self-worth. As more and more automation requires less and less manpower, we will need new ways to deliver these things and checks. In Kurt Vonnegut's first novel, Player Piano , released in 1992 , he describes a future world where automation replaces the need for most jobs, and in response, governments hire people to dig holes over and over, and then put them back together. Fill the hole back. In the Metaverse, Axie may help usher in a more fulfilling and fun era of work.
Am I talking too soon? really. A lot of things can go wrong:
The whole crypto world could collapse (I don't believe it, but it could happen).
Even if the crypto space doesn't collapse in the long run, another ongoing crypto winter could reduce the amount of money people get through "Play-to-Earn," stop Axie's momentum, and divide the community.
Axie integrates vertically rather than using existing best-in-class products and protocols, which means there is a greater chance of screwing up.
Decentralization and empowering the community can lead to unpredictable outcomes.
Its servers may crash again due to load, causing players to feel like they can no longer rely on Axie for income.
The gaming industry is notoriously fickle, and a hit game one month can be old news the next.
But I feel like something special is going on here. The "Play-to-Earn" (play while earning) model can attract new users who want to make a living and retain them in a way that is more like a long-term career than a one-time gaming fad. Turning Axie Infinity into a user-owned and managed platform can create stickiness through network effects and high switching costs, which are customary for platforms. The Metaverse needs more than entertainment, it needs to blur the line between entertainment and employment. Axie has shown that this is possible .
Axie's rise comes at a time when the crypto market is sideways, the NFT craze is fading, and people are questioning whether the whole web3 will really have any real-world impact, and Axie's outperformance seems to be something to watch.
When we look back 10 or 20 years from now, I believe that this period in Axie's life was just the beginning of a big event, a small dot on a bigger chart in terms of benefits and impact. In the medium case, it will be a player-owned, Pokémon-sized behemoth, a prime example of vertical integration; in the best case, it will be a new "nation" in the "metaverse" ”, improving the lives of millions of people around the world.
Not bad for a cute little game.
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Hearing the echoes from Metaverse.