What is Axie Infinity?
It is an ecosystem built around the online game Axie Infinity. The platform was developed by the studio Sky Mavis. The project uses the Play-to-Earn concept.
Gameplay unfolds in a virtual world populated by Axie creatures. The platform lets users breed them to create new characters. Players earn from winning battles and selling virtual creatures.
The project’s metaverse features player-owned land. Plots are used for gameplay and resource gathering, and can also be sold or rented.
The GameFi project Axie Infinity was initially built on Ethereum. A full ecosystem was deployed on the Ronin sidechain.
The platform uses two ERC-20 tokens: Axie Infinity Shards (AXS) and Smooth Love Potion (SLP). The developers also announced the release of the Ronin (RON) coin.
Axies, virtual land and items exist beyond the game itself. All objects are represented as NFT on Ronin. They trade on the Axie Infinity Marketplace. To move assets between Ronin and Ethereum a cross-chain bridge is used.
The platform allows AXS staking. ERC-20 token swaps on Ronin are carried out via the DEX Katana. The exchange supports AXS, SLP, USDC and WETH, and lets users provide liquidity to pools.
Who created Axie Infinity?
The Vietnamese studio Sky Mavis unveiled the game’s concept in December 2017. The company’s founder and CEO, Trung Thanh Nguyen, also is a co-founder of the social network Lozi. At launch, the team received backing from 500 Startups Vietnam.
The marketplace has operated since March 2018. The developers added Axie breeding in May that year.
In October 2018, virtual battles were introduced, enabling rewards. The next phase brought virtual land, granted to users as property.
In November 2019 the project raised $1.5m in seed funding from Pangea Blockchain Fund, Hashed, ConsenSys and Animoca Brands. The Axie Infinity token sale launched on Binance Launchpad in October 2020, netting $2.97m. At that time AXS was priced at $0.1.
As part of a Series A funding round in May 2021, the project raised $7.5m. Investors included Libertus Capital, Collaborative Fund, billionaire Mark Cuban and Reddit co-founder Alexis Ohanian.
How do you play and earn in Axie Infinity?
The main characters are Axie creatures. They can be bred, making Axie Infinity similar to CryptoKitties. Creatures fall into several classes: beast, plant, aquatic, bird, bug and reptile. Additional types include “dusk” and “dawn”. Class can be inferred from a creature’s colour.
Axies have different attributes: health, speed, experience and morale. Classes have strengths and weaknesses. For example, birds are characterised by high speed, while plants have significant health.
Creatures have six body parts: eyes, ears, mouth, horn, back and tail. Each Axie has its own set of elements, making characters unique.
Individual traits determine battle performance. The better they are, the higher the chances of victory. Creatures with specific combinations of attributes are especially valuable.
Breeding two Axies produces offspring. To prevent overpopulation, breeding is capped. Each creature can produce offspring no more than seven times. Breeding requires SLP, with the amount increasing at each subsequent stage.
Breeding involves randomness, so it is impossible to determine an offspring’s traits and value in advance. Body parts are inherited with certain probabilities. The chances are determined by heredity.
Parents have dominant (D), recessive (R1) and minor recessive (R2) genes. The highest inheritance chance corresponds to the dominant gene: 37.5%. For R1 and R2, the chances of passing on a body part are 9.375% and 3.125% respectively. You can estimate the probability of getting a creature with certain traits using a calculator.
Axie development takes time. It takes five days for a creature to reach maturity, after which its attributes become known. Breeding yields unique characters of varying rarity. Unusual creatures typically have better battle characteristics and fetch higher prices. Unmatured Axies are also sold, but at lower cost.
Additional breeding restrictions also curb overpopulation. For example, parents cannot be bred with their offspring, nor can siblings be bred together.
Axies can be used in virtual battles. You need three creatures to participate. Victories earn SLP token rewards. Wins also award rating points. A higher rating increases rewards, but you will face stronger opponents.
Beginners can fight monsters that attack virtual land. Victories earn utility-token rewards. The chances of winning in such battles are high, but the profit is small. Against strong opponents, it is hard for a newcomer to prevail.
Gameplay requires initial investment. To breed Axies or fight, you must buy creatures. The game also features items that increase the chances of winning. These can be purchased on the marketplace. Users can also rent Axies. Such services are provided by gaming guilds.
Beyond battles, there is gameplay in the metaverse called Lunacia. It consists of lands where users can find virtual items and resources. AXS tokens can also be found there.
The metaverse contains 90,601 plots represented as NFTs. Lands are divided into regions. Only part of the plots are owned by players.
Users have several ways to earn income. One is breeding and selling Axies. Another is rewards for victories in virtual battles.
Users can also sell discovered items. Game objects can be bought and later resold at a higher price. Trading takes place on the Axie Infinity Marketplace.
Axie Infinity can generate income for players. The average earnings of a gamer amount to $500. Axie Infinity is particularly popular among Filipinos, many of whom even quit their jobs to play. The Philippine authorities have said gamers should be taxed.
How does Axie Infinity’s tokenomics work?
Initially, ERC-20 tokens and NFTs were hosted on the Ethereum blockchain. At the time of writing, assets are issued on the Ronin sidechain. The latter supports AXS, SLP, USDC and WETH (wrapped ETH). NFTs representing Axies, land and in-game items are issued on the sidechain.
AXS is the ecosystem’s main token. SLP coins are used in gameplay for rewards and breeding Axies. Their maximum supply is capped at 3.2bn, and all tokens are in circulation. To pay rewards in the ecosystem, the developers plan to use RON coins.
The maximum AXS supply is 290m. Tokens are released gradually. Assets are allocated to the project team, the Play-to-Earn programme, staking rewards and other purposes.
21% of AXS is reserved for the developers. The team is incentivised to develop Axie Infinity because their tokens unlock on a set schedule. 20% of AXS issuance is used for Play-to-Earn payouts. These funds can be viewed as Axie Infinity’s marketing budget. The current release schedule is presented in the white paper.
A treasury operates on the platform and began full operations in 2021. It receives trading fees (4.25% from each NFT sale). It also collects a share of Axie breeding fees.
The white paper provides for regulating the number of Axies via sinks. This is designed to reduce the population and limit the price of virtual creatures.
How is the Axie Infinity ecosystem structured?
Axie Infinity launched as an online game using blockchain technology. Its evolution has made it a leading GameFi project offering financial opportunities.
Axie Infinity allows users to stake AXS. The portal provides analytics: total value locked, daily rewards and projected annual yield.
The project’s functionality expanded after moving to the Ronin sidechain. The block explorer lets users track transactions and other network data. To use the sidechain, a Web3 wallet, Ronin Wallet, is required. At the time of writing, other solutions are not supported. Each user has access to 100 free transactions.
For deposits and withdrawals to the sidechain, the Ronin Bridge cross-chain bridge is used; it interacts only with the Ethereum network. The solution also allows fiat deposits.
The ecosystem includes the Katana decentralised exchange. The trading platform is built on Ronin. It allows swapping AXS, SLP, USDC and WETH tokens.
Swaps use liquidity pools to which users can contribute funds and earn rewards. Liquidity provider fees are 0.3%.
How is Axie Infinity evolving?
The ecosystem’s functionality is expanding and gameplay is being improved. The roadmap for 2022 includes land gameplay in Lunacia and the launch of the Lunacia SDK alpha. This is a map editor that allows landowners to create mini-games and virtual real estate. Since 2021, gameplay has been available on iOS and Android, broadening the project’s audience.
Initially, game assets were hosted on Ethereum, but in 2020 NFTs were moved to Ronin. The creators plan to use the sidechain as a GameFi-oriented platform. Ronin will allow third-party developers to launch games and decentralised applications.
At the time of writing, Sky Mavis coordinates the ecosystem’s components. This creates risks for users. The stated goal is a transition to a decentralised governance model. A key step will be the ability to vote using AXS. This feature is planned for 2022.
At the end of 2021, the Katana DEX was launched. The addition of WETH and stablecoins to the exchange supported ecosystem growth. The ability to convert project tokens into “stablecoins” quickly enables players to keep funds on the platform. This reduces exchange-rate risks caused by the high volatility of GameFi token prices.