What is Axie Infinity (AXS)?
Axie Infinity is an NFT-based blockchain game filled with creatures, called Axies, that players can collect. The game allows players to battle, breed, collect, raise, and build kingdoms for their Axies. The Axie Infinity universe has a player-owned economy where players can truly own, buy, sell, and trade resources they earn in the game through skilled gameplay and contributions to the Axie ecosystem.
Who Created Axie Infinity?
Axie Infinity was created by the Vietnamese game developer company Sky Mavis, which has specialized in creating games with real player-owned economies running on blockchains. The game was first released in February 2018 and has turned out a success from the beginning. In November 2019, Sky Mavis raised $1.46 million in an investment round. The round was led by Animoca Brands (which is also heavily invested in The Sandbox) with participation from Hashed, Pangea Blockchain Fund, ConsenSys, and 500 startups.
In May 2021, Sky Mavis raised an additional $7.5 million to further develop Axie Infinity. Investors included, among others, the crypto-asset investment firm BlockTower Capital and billionaire investor and Dallas Mavericks owner Mark Cuban.
In October 2021, another $150 million were raised in a Series B funding round, putting Sky Mavis at a $3 billion valuation. Investors included renowned venture capital firm a16z, FTX, and Samsung Next.
Who Owns Axie Infinity?
As of today, the majority of Axie Infinity is still owned by Sky Mavis and its investors. But in the spirit of blockchain philosophy, Sky Mavis has laid out a road map that will transform Axie Infinity into a Decentralized Autonomous Organization (DAO).
Through their token, AXS, Axie Infinity will gradually evolve into a community-owned Decentralized Autonomous Organization. This process occurs as AXS is distributed among players and stakers. The distribution schedule ensures that Sky Mavis’ ownership is becoming less concentrated over time. Currently, only about 25% of the AXS tokens are in circulation, with the remaining 75% being released over the next 4 years. Estimates are that Sky Mavis will no longer have a majority vote by October 2023.
Currently, AXS holders can participate in governance by staking their tokens and voting on proposals brought forward by Sky Mavis. At the latest in 2023, AXS holders will have a major say in the development of the game and the community treasury. Only decisions like the token supply will not be up for debate as they are already iron-clad in smart contracts.
Axie Infinity works similar to Pokémon and has card-game elements. Players can breed virtual pets, called Axies, which they can use to battle other players. There are countless unique Axies with varying body parts, appearances, and stats that players can collect and level up. To play the game and battle, players need a team of at least 3 Axies.
Axies can either be purchased on the official marketplace or get transferred from another player. Due to the game’s success and the large number of players entering the universe, prices for Axies can be relatively high, posing an entry barrier for new players. Each Axie is represented as an NFT on a blockchain and can be stored in the owner’s wallet. Axie Infinity runs on the Ethereum sidechain Ronin, which allows for nearly instant transactions and low fees.
Within the Axie Infinity universe, players can battle with their Axies either in Adventure Mode (player vs. environment) to battle monsters in Lunacia — the Axie Infinity homeland — or they can compete in Arena Mode and battle other players in real time. The winner gets rewarded with an in-game token called Smooth Love Potion (SLP). This token can be used to breed new Axies or can be traded on crypto exchanges against other cryptocurrencies.
Breeding valuable Axies is an important part of the game and requires knowledge and skill. Each new Axie is bred from two ‘parent’ Axies. To avoid hyperinflation of Axies, there is a maximum amount of times an Axie can be bred before it turns sterile. Each Axie has 6 body parts as well as a body shape. For each part, an Axie possesses 3 genes: a dominant, recessive, and minor recessive gene. The 3 types of genes have decreasing probabilities (37.5%, 9.375%, 3.125%) to be passed down to the offspring. Players aim to breed Axies with the best possible genes or a specific strength, as this will help them win in battle and give the Axies a high resale value.
A key difference between Axie Infinity and a traditional computer game is that blockchain and NFTs unlock the ability to have a complex player-owned economy, which rewards players for reaching advanced levels of skill. Through the investment of time and skill, players can potentially earn resources that have a real monetary value. This is all thanks to an open economic system and demand from other players. Axie Infinity is a pioneer in the genre of Play-to-Earn games and is one of the originating forces behind Game Finance, also called GameFi.
Players in Axie Infinity can currently earn resources by doing activities such as:
- Competing in battles to earn Smooth Love Potions (SLP) as well as win leaderboard prizes.
- Breeding Axies to produce new ones with particular body-part combinations.
- Collecting and speculating on rare Axies such as Mystics and Origins.
Note: Axie Infinity has become known for its large player base in the Philippines, where an above-average proportion of the population started playing the game to earn extra income, especially during the Covid-19 outbreak, as other streams of income had eroded due to the pandemic.
The Axie Infinity Tokens (AXS, SLP, and Land)
The Axie Infinity universe has created 3 different tokens that make up its economic system.
Axie Infinity Shards (AXS) is an ERC-20 governance token for the Axie Universe, which is deployed on the Ethereum blockchain. It has a hard cap of 270,000,000 tokens. AXS is the project’s main token and comes closest to tracking the game’s overall success. AXS holders can stake their tokens to earn rewards and participate in the governance votes.
AXS token holders will also govern the Axie Infinity Community Treasury, once the network has become sufficiently decentralized. The Community Treasury receives 4.25% of all marketplace transactions, a portion of the breeding cost, and additional revenue streams will potentially be added in the future. Even though the Community Treasury was only launched in early 2021, it already contains AXS and ETH worth more than $1 billion.
Smooth Love Potion (SLP) is an ERC-20 token on the Ethereum blockchain. Smooth Love Potions can be earned by playing Axie Infinity in both the Adventure Mode (play vs. environment) as well as the Arena Mode (play vs. other players). SLP is the main source of income for players. The SLP has no hard cap but is continuously generated by those who play the game. Simultaneously, SLP gets burned every time new Axies are bred. SLP is not directly sold by Axie Infinity but can only be earned or purchased on secondary markets such as crypto exchanges.
Land. Lunacia, the Axie homeland, is divided into 90,601 plots of land, called Terra, which are represented as NFTs on the blockchain and can be freely traded by players. Land acts as home and base of operation for Axies and can get purchases on the in-game marketplace. Landholders can upgrade and customize their plots to host shops and produce resources. Similar to blockchain games like The Sandbox and Decentraland, developers, content creators, and companies will be able to build on and design their personal land plots. Currently, the Land gameplay is still being actively developed and will be released in phases over the coming months.
How to Buy AXS, SLP, and Land
AXS has a market capitalization of over $1 billion, SLP of over $100 million They, therefore, have large trading volumes and deep liquidity and are listed on most of the big crypto exchanges. To buy AXS and SLP, investors have 2 options:
Land can currently only be purchased on the Axie Infinity marketplace.