Axie Infinity Revenue $1.9B, exceeds Roblox

Axie Infinity is taking the world by storm. It’s a multi-faceted ecosystem where community members can earn by competing in 1v1 battle with Axies, breed Axies, sell Axies, lend Axies for income, borrow Axies to earn, purchase land that yield AXS tokens in the future, and more.

The AXS token is a near equivalent to a stock. For example, AXS was issued to raise money to build Axie Infinity. AXS holders will receive dividends and voting rights. The primary difference is that AXS can also be used as currency to create Axies, which adds additional utility that a stock don’t have.

Below are key data points about Axie Infinity’s growth:

1. The Axie community is strong and growing rapidly, now with the 2nd largest discord group in the world at 726K members. Likewise, Axie streamers are regularly in the top 20 on Twitch. Axie influencers have collectively garnered more than 50M views on YouTube.
2. 806K Daily Active Users (DAU) with 2,121% increase in the past 4 months.
3. Current annualized revenue is $1.9B and growing rapidly. Axie Infinity’s annualized revenue is more than the 2020 revenue of high growth publicly traded tech companies like Roblox, Unity, Twilio, MongoDB, and Snowflake.
4. Most of Axie’s revenue comes their robust marketplace. Similar to Amazon, 3rd parties can pay to breed Axies and sell them to other players and breeders on the marketplace. Additionally, community members can by and sell digital land, land items, and rare Axies.
5. The marketplace currently generates an annualized $7.9B in volume and is growing by more than 54% per month.
6. In July 2021, Axie produced higher fees through the marketplace and side chain (Ronin) than all other crypto protocols including Bitcoin, Ethereum, Uniswap, and Binance Smartchain.
7. Axie’s treasury currently holds $387M worth of crypto currencies ETH, AXS, SLP. The treasury is growing by more than 24% per month.
8. Axie’s treasury holds $249M in retained digital land not yet sold, which brings the treasury to a total value of $616M.
9. AXS holders will receive an estimated 20–40% annualized distribution of AXS tokens through a mechanism called “staking,” where AXS holders lock up their AXS and then receive more AXS from the treasury.
10. Axie Infinity is tripling their headcount to build out a launch a compelling roadmap including their own exchange (DEX) where the community can swap their cryptocurrencies for purchases, staking for dividends, and a 2nd version of the game which will be even more fun for players.

FAQ

1. How does Axie valuation compare to other high growth tech companies?

Axie and the AXS token is severely undervalued when compared to high growth tech companies.

For example, the AXS market cap is 6x their annualized revenue. By comparison, the publicly listed high growth tech companies viewed below are trading at anywhere from 36x — 139x their revenue multiple.

If Axie Infinity had the same multiple revenue as Roblox, then an AXS token will be worth $320 (which is 808% greater AXS’s price at the time of this writing at $42).

2. How does Axie Infinity’s marketplace work?

Axie Infinity’s marketplace functions much like Amazon’s marketplace. Instead of buying and selling physical goods, 3rd parties pay to generate digital Axies. The Axies can be used to sell 1v1 battles or be sold to other breeders. Everytime an Axie or is created and sold, Axie Infinity receives a ETH 4.25% fee. Additionally, every time an Axie is created, Axie Infinity receives 4 AXS (currently valued at $164 per breed). Likewise, Axie Infinity will charge a fee for buying and selling land and land items.

3. What about Axie Infinity’s servers? I heard there are issues because Axie’s user base is growing so fast.

Axie Infinity did experience server issues during the 2nd half of the July. On July 27, Axie experienced one of it’s worst server days and 86.2% of respondents said the servers were good to decent. So, Axie continues to grow in spite of the bottlenecks that are being actively resolved. And, Axie community members continue to come back to play, create Axies, sell Axies, buy land, and spend time together on the 2nd largest discord group in the world.

Equally important, even when there are server issues in the 1v1 battle, Axie community members are transacting in massive volumes on the marketplace. So, Axie Infinity continues to generate accelerated income despite server issues when they happen.

4. How do you value Axie Infinity’s token (AXS) when comparing Axie to other tech companies? What price target do you have for AXS?

If we use the gaming company Unity’s valuation of 36x multiple that will give AXS a token price of $255, or 607% higher than AXS’s the current price of $42. However, Axie Infinity is growing faster than Unity, much faster.

If we use Roblox’s revenue multiple 47X then AXS is worth $320, or 761% higher than AXS’s current price. Again, Axie Infinity is growing revenue faster than Roblox.

If we are to use Shopify’s revenue multiple of 59X then AXS is valued at $413, or 983% higher than AXS’s current price. Part of Shopify’s rich valuation is not only their growth, but also their profitability. Currently, Axie Infinity’s profitability is unknown.

Given AXS’s high community growth, DAU growth, revenue growth, and the recent server issues that are actively being fixed, the base case for AXS price is currently $255 or 36x multiple revenue.

However, if over the next few months Axie Infinity continues their extreme revenue growth through the marketplace, and their annualized revenue exceeds companies like Shopify, then AXS price target should exceed $400.

5. Where can I go to learn more about Axie Infinity?

Here is a good summary on YouTube.

Here Axie Infinity’s white paper.