Axie Infinity overview
Emerging capability through token economics: converting human labor into income. E.g. play to earn. Axie was the first to unlock income potential through gameplay.
Since play to earn...no longer competing with other games (e.g. Fortnite). Actually competing with work. Powerful paradigm.
TAM: Internet-connected people in countries where average income is less than $500/mo. >> 1.9 billion people. Huge target market.
Basis of work: offering something useful andor entertaining to people.
Potential shift towards pareto distribution: 20% earn income from game, 80% pay to/for community
End stage of Axie Infinity has to be user generated content.
NFTs are an excellent platform play...individual ownership + user generated content = unique and vast individualized experience for every player, bundled with economic incentives.
Approach: (1) fill up Axie with many users (playing Sky Mavis-made games, then (2) shift towards UGC as universe matures.
Economic items
- Axies: game characters, each unique, can be bred and used across Axie world(s)
- SLP: in-game currency
- AXS: governance token; holders vote on ecosystem decisions
- Land: 96,000 in-game plots of land, can build e.g. games on top of land
Currently the metaverse is on Ethereum — e.g. when browsing OpenSea one is walking through the metaverse.
Axie Infinity has a similar dynamic but has not yet build the front-end.
Ronin Ethereum side-chain
- Block space is one of the most valuable resources
- Axie team best understand their issues and needs for a side-chain so must build it themselves
- "Ethereum maximalists" because that's where most of the builders are
- Modified Ethereum code to be more centralized to speed up transactions...build using Solidity, but with own set of validators
- Focused on showing benefits of Ethereum-based gaming through doing
- Main benefit: since building on same framework as Ethereum, whenever there is innovation on Ronin that can also be reused on Ethereum
Bridges (e.g. Ronin Bridge to Ethereum)
- Enables interaction across chains (e.g. Ethereum <> Ronin)
- Smart contract
- Ensures 1:1 input/extraction
- E.g. if inputting 1 ETH into Ronin, ensures 1 ETH is extracted from Ethereum
Risk factors
- Better game with better economic design
- Biggest risk by far is smart contract risk — unknown unknowns — particularly due to the fact that much of this in genuinely new so lack history of flaws and attack vectors
- Regulation: e.g. in Philippines looking to tax players. Want to lean into regulation as long as it makes sense
Biggest version of this story
- Gateway to the metaverse
- First step into digital economies (including e.g. the unbanked)
- Rival Pokemon; could be bigger
- DeFi is unsexy...gaming is a better onramp
The investor's perspective
- Key feature to understand is that the assets exist independently of the interface
- In crypto: can pick any interface to interact with assets (because assets are custodied by the user) — vs. equities, where assets are custodied by the interface and gain lock-in as a result
- vs. centralized gaming: don't even own the assets...and locked into game owner's interface
- This becomes an ecosystem of invested players (literally) because they own the assets
- Idea that's here to stay: the players own the game. (the characters, the board (land), character breeding, etc.)
Big idea
Inserting markets and prices and low friction into every ecosystem with assets...e.g. installing defi into a gaming ecosystem.
Could do this for any ecosystem, which unlocks human behavior via price discovery through markets.
Assessing new opportunities
- Ways in which crypto can unlock new behavior
- Focus: deploying labor to earn money (defi beyond capital)
- Axie examples: play to earn, breed Axies, participate in governance
To try out Axie
- Follow AxieInfinity on Twitter
- Buy AXS tokens
- Axie is an island right now...need to swim to get there
- Axie origin coming in next 6-9 months