Axie Infinity — An NFT gaming tale
This is not a guide on how or why you should play Axie Infinity. I stumbled into the rabbit hole off Axie a couple of months ago, and I can imagine from an outside perspective spending thousands on wannabe Pokemon can look a little insane.
This is me trying to explain why Axie became so successful, how NFTs will revolutionise the gaming industry and hopefully give you inspiration to see how they can effect your industry next.
Numbers
As I imagine most people haven’t heard from Axie Infinity, here are some numbers to show it is more than an under ground crypto phenomenon.
That is over 1 billion in revenue in just 30 days, to put that in perspective, Zynga one of the largest mobile gaming companies (Farmville etc) has an annual revenue of 2.5 billion. Epic games (Fortnite) has an annual revenue of 5 billion.
These revenue numbers aren't exactly the same but just the give you the idea, the numbers are big.
All of this with the game just in alpha, so not officially released on the app stores.
NFT?
So one last step before I can show you some cute Axies, what the heck are NFTs? You most likely know or even own some Bitcoin. Blockchain technology as a currency is the most famous use case, but crypto is actually way more exciting than just a way to replace our fiat currencies.
For example Ethereum is a blockchain platform that people can use to build their own applications on. This resulted in all the decentralised finance applications (Defi) basically using blockchain to replace banking.
After the Defi hype we saw the NFT boom. Where most crypto before were fungible, each coin had the same value. One bitcoin is equal to all the other bitcoin out there. You can actual store any type of data on the blockchain. So the Non Fungible tokens (NFT) could be your artwork, music or a gaming asset.
NFT first got mainstream recognition when artists started selling the NFT off their art them for a lot of money.
So an NFT game, is a game where all the assets are stored on the block chain and owned by the players instead of the game developer.
Sounds pretty abstract but hopefully at the end of the post you realise how revolutionary this is.
The game
To play be able to play Axie infinity you need three Axies.
The axies
The cheapest Axie at right now is 0.069 ETH or 227 USD. To get a balanced decent team you probably need to spend at least 0.30 ETH for your 3 Axies. If you want to be able to compete at the highest levels it is going to a multiple of that.
You pay premium for Axies with great stats and abilities.
If you are a collector and want to buy one of the less than 1400 limited edition (ie. Mystic) Axie you are looking to spend at least 24 ETH.
When you are new to the game the only way to get your hands on new Axies is buying them on the market place from other players. As these are all NFT assets living on the blockchain.
This is major key; in traditional gaming you paid the game developer for the CD/DVD/Floppy disc/download off all the assets before you could start playing. Lately you also see a lot of games that free to play but you would pay the game developer for cool outfits and skins (ie. Fortnite).
So you pay the game developer for something you don’t even own. To say it with the words of Jiho.
Another way to look at is that if you own any Axie assets you are co-owner of the game. Imagine your bank account now if at the start of the Fortnite hype you were a co-owner of the game.
Breeding
So if you can’t buy Axies from the developer where do the new Axies come from? It is a tale as old as time.
Players can breed their Axies. Just select 2 Axies, add some SLP and AXS (the Axie governance token currently trading at 80USD), and whoohoo. The result is an egg that will hatch in 5 days.
But you shouldn’t just breed any Axie, you are looking to create some ultimate meta Axies. Breeding is a game on itself.
The dominant genes determine the look of your Axie, but each Axie has also recessive genes. These come into play ones you start breeding.
Playing
Axies look adorable but they can actually fight! Play the game by fighting with your Axies against an opponent. This opponent could be another player (arena) or just versus the computer (adventure)
The looks of your Axie determine it stats and the available cards. The game is played in rounds. Every round you get 2 energy and three new cards. Every card has a cost of 0,1 or 2 energy to play it. With cards you can attack and do damage, put up a shield, steal energy, slow your opponent, etc..
The team who is last standing wins the game.
Like any good game it is very easy to start and hard to master. If you need proof of this watch Indes go in depth on what Axies best.
Earning
By playing the game you can earn Smooth Love Potions (SLP). SLP is a crypto currency by Axie Infinity that you can also trade on your regular crypto exchanges.
You can get 100SLP/day for playing in Adventure against a computer, a 25 SLP bonus if you play enough games that day. Also in Arena you can earn more but it really depends on your ranking and win rate.
Most players would be able to earn around 200 SLP (32 USD) a day, once you are experienced you could do it in about 2 hours.
There is one really important rule whoever, one person can only play on one account.
Why did it blew up
Axie is not the only, was not the first and also has been around since 2017, so why did it all of a sudden blow up?
It is a perfect storm. Part design, part luck.
1. Axie is for everyone.
You can play Axie on any PC/Mac or on mobile. You don’t need the latest high-end device to play. A lot of Axie players don’t even own a computer or a bank account for that matter. It is also easy to learn and hard to master, so it stays interesting long term.
2. Ronin — no transaction costs.
This one is a little bit more technical but crucial. Axie started off on the Ethereum blockchain, every time you ‘save’ something on the block chain it comes with a gas fee. Which makes it very expensive to do anything.
That is why they created a Ethereum side chain, Ronin. Which doesn’t have any transaction costs. Full migration was end of april if this year, which coincides with the start of the boom.
3. Scholarships.
The first two were by design, scholarships was actually an initiative from the community.
Spending 1500 USD just to to start playing a game is a big hurdle. The early adopters of this game (including me) had gains from earlier crypto investments.
So how do you convince 1M people in a month to do so. While making 32 USD a day is a good deal for many, spending 1500 USD is for the same people out of the question.
Scholarships are the answer to this. While you can only play on one account at a time, you are allowed to own multiple accounts. The manager of the Scholarship Program creates the accounts with 3 Axies, and looks for a Scholar to play the game.
All of a sudden you have an incentive to invest and reinvest in Axie as the pool of scholars is unlimited. For example a company like Yield Guild Games raised millions to invest in scholarship programs.
The SLP earned will be split between both, splits ranges from 50/50 to 80/20 in the advantage of the scholar.
Most scholars are from countries in South East Asia and South America. Where 450USD to 800USD a month, not only in Corona times, can have a huge impact on someones life.
While there are crazy big numbers in this post and countless stories of people becoming a millionaire from NFTs; it feels irrelevant compared to all the people who are able to feed their families, pay for school, afford health care or can even build a house by just playing a game.
What is the risk?
In the end of the day it is still an alpha of a never been done before product in the crypto space; if you are saying that this isn’t a high risk investment you are lying.
The three biggest risk I see are :
1. Economy
You can’t grow at this rate forever. What happens if growth and demand slows down? How do you make sure your economy doesn’t collapses?
While you will find all the answers to this in the roadmap, the reality is those solutions will only come with one of the next versions of the game.
Not even the Axie team predicted this growth so the question is, will they manage to develop everything before that inevitable collaps happens.
2. Community
The value of any NFT project is in its community, this also the answer if you ever wondered why a weird pixeled punk image can be worth more than your house.
While Axie had one of the best communities in the NFT space, if you scale a community too fast you run the risk of losing its values.
You can already see some cracks in the community. They will have a hard time scaling their support system and keeping the ever growing discord community moderated.
3. Competition
What if other projects or bigger IP start to enter the space? I do believe that in 2022 we will see a crazy amount of new (playable) projects.
NFT games are easy to hype, but extremely hard to build. I feel that the Sky Mavis (parent company of the Axie brand) has a big head start on most, definitely with the Ronin infrastructure.
The future
For Axie
This is just the alpha, it is just the start.
In the near future you will be able to play other games with the same Axies. Planned for next year is land play, . You can already get some land, cheapest plots are 4 ETH or 13000 USD.
But it goes much further. Axie is an economy on itself. Most of Axie players don’t even have bank accounts. No doubt we will see Axie debit cards in the near future.
This is IP though not unlike Lego, Star Wars or Pokemon. Think merchandise, movies, mangas,..
For gaming
The cat is out of the bag now, our children won’t believe that we spend hours days playing games without any payment.
The are many other NFT games in the pipeline and no doubt that traditional game developer from AA tot indie is looking at this space.
For all other industries
This is just a good example how block chain technology, by allowing a new business model, can turn a huge industry upside down.
This is not the first and won’t be the last. Doesn’t matter what industry you are in, block chain will impact your industry in the future.
My money is on music industry next.
Should I get into NFTs, Axie or other games?
The classic answer is DYOR, do your own research as you should not give financial advice if you are not qualified.
Here is my very unqualified opinion.
If you are a person who wants to be with the times.
Invest some money that you don’t mind losing in NFTs. You can read everything there is about it, but you can’t compare it owning NFTs and being part of a NFT community. Get on Twitter, get Discord.
You are a casual (mobile) gamer.
Just get yourself an Axie team, it is definitely a great game. Why would you play hours every day and not make any money? That sounds weird.
Your kids spend their days, and nights, gaming.
Put some ETH in their Metamask accounts and point them towards NFT gaming. This way you don’t have to worry about their college fund.
You used to be a hardcore game but are now too old for that sh*t.
Consider setting up a scholarship program, you will finally find use of all these skills you build up gaming over the years. You won’t get a back pay on all those hours played but at least you might recoup some this way.
You would love to but just don’t have time, but you do have a lot of money and don’t mind a little risk.
Buy land. When the land game start, it will generate a passive income for land owners.
You are excited, convinced that Axie will be the next big thing but don’t want to go anywhere near a game because you are an adult.
Go to your favorite crypto exchange and buy AXS, this is the closest you will get to buying stock in Axie Infinity. In the future AXS holders will get part of the profit of the game through staking.
You hate risk.
Don’t invest anything but start researching how block chain will affect your industry in the future. This way you might avoid the risk of missing the train and be coming obsolete.
