New Listing Project Analysis— Axie Infinity (AXS)

About Axie Infinity

Axie Infinity is a Pokémon-inspired universe where anyone can earn tokens through skilled gameplay and contributions to the ecosystem. Players can battle, collect, raise, and build a land-based kingdom for their pets. All art assets and Axie genetic data can be easily accessed by 3rd parties, allowing community developers to build their own tools and experiences in the Axie Infinity universe.

The key difference between Axie and a traditional game is that Blockchain economic design is used to reward our players for their contributions to the ecosystem. This new model of gaming has been dubbed “Play to Earn”. Axie has attracted thousands of players from developing countries in the pursuit of a new income stream during the Covid pandemic.

The Main Components of Axie Infinity

Axies

Axies are fantasy creatures that players can battle, collect, and raise. Each Axie has different traits which determine their role in battle. Each Axie has 4 stats, Health, Morale, Skill, and Speed. An Axie’s stats are dependent on two variables:  its body parts and its class. Each Axie has 6 body parts: eyes, ears, horn, mouth, back, and tail.

Class

Each Axie has a class that is similar to the “types” from Pokemon. Each class is weak and strong against other classes. “Creepy, Botany, Dusk”, “Water, Flight, Dawn”, “Mechanics, Insects, Beasts”, the three attributes of one category will be restrained by three attributes of the other categories, increasing or reducing additional damage by 15% during combat.

Battle System Mechanics

The Axie battle system is a turn-based card game where the goal is to eliminate all enemies your team of 3 Axies is facing. Each turn, a player must strategically play cards that maximize their chance of victory.

Land

Lunacia, the Axie homeland, is divided into tokenized plots of land which act as homes and bases of operation for their Axies. Plots can be upgraded over time using a variety of resources and crafting ingredients that can be found when playing the game. 

Lunacia consists of 90,601 plots of Land. These Land plots are represented as Non-Fungible Tokens and can be freely traded by players.

In addition, land-owners might find AXS tokens on their land plots, or use the Axies that occupy the land plot to explore resource nodes on the map. When interacting with resource nodes, Axies can find AXS and potentially other resources.

Lunacia SDK

The Lunacia SDK will initially be a map editor where players can use Axie Infinity art assets to create games and other experiences. Once a game has been created it is saved as a Non-Fungible Token and can be traded. These NFTs can be placed on land and players will be able to click on them to enter the game inside.

Breeding & Earning

Like real-world pets, Axies can be bred to create new offspring. These offspring can be used in battle, breed new offspring, or can be sold on the marketplace. In order to manage the Axie population, breeding has certain resource requirements. Each Axie can be bred a maximum of 7 times. And Breeds cost AXS as well as Small Love Potions.

Small Love potions can be earned by playing the game in PvE Adventure mode as well as the PvP Arena. SLP are also tokens that can be traded on the decentralized exchange, Uniswap. And since November 2020, SLP can also be sold on Binance.

Community Treasury

Once Axie Infinity lives, 100% of all fees and primary sales from the Axie universe will be deposited in the Treasury. Since the treasury will eventually be governed by AXS holders, the minimum market cap for AXS will be influenced by the size of the Treasury. The Community Treasury will create a base value for the AXS token.

Scaling Treasury Inflows

Once the Treasury is live, it’s likely that the Axie community will eventually turn its eye towards new monetization strategies.

Staking Rewards

A portion of staking issuance will also be directed towards the Community Treasury. This percentage starts high at 35% and gradually tapers off over time.

Main Team of Axie Infinity

Axie Infinity is being developed by Sky Mavis which is a technology-focused game studio founded in early 2018.  The founding team consists of 40 full-time employees and has its headquarters in Ho Chi Minh City, Vietnam.

Source: Cypherhunter

VC Fund Back up Axie Infinity

Axie Infinity has raised a total of $9M in funding over 3 rounds. Their latest funding was raised on May 11, 2021, from a Series A round. Axie Infinity is funded by 10 investors. 500 Startups Vietnam and Collaborative Fund are the most recent investors.

Source: Crunchbase

Number of Fans on Each Social Media

source: CoinGecko

About Axie Infinity Token— AXS

Token Economic Model

Axie Infinity Shards(AXS) are an ERC-20 governance token for the Axie Universe. AXS holders will be able to claim rewards if they stake their tokens, play the game, and participate in key governance votes. Players will also be able to earn AXS when they play various games within the Axie Infinity Universe and through user-generated content initiatives.AXS is primarily used to manage the Axie ecosystem compared to the in-game currency SLP. The supply of SLP is unlimited, while the maximum supply of AXS is limited to 27 million.

From the token economy model, player activities in the Axe Infinity universe require the use and consumption of AXS. 4.25% of the amount traded by players trading Axie in the market and all fees incurred by Axie’s reproduction are attributed to the Community Treasury module. Community vaults will reallocate AXS, including player pledge AXS token rewards and game ecology governance. This means that AXS circulating in the market continues to flow into community vaults during player activities, while Axie Infinity encourages players to pledge AXS in community vaults.

The expansion of community coffers provides strong support for AXS prices and creates a more stable economic system. Players in Axie Infinity for the AXS demand to ensure the circulation of the market, AXS gradually returns to the community vault to ensure the effective management of the game ecology, the community vault of AXS absorption for AXS market price and token pledge to provide income guarantee. Game eco-governance is primarily reflected in the creation of usage scenarios and utility for NFT (Axie), which enhances the fundamental value of NFT (Axie), and the increase in the added value of Axie in terms of collection and playability ensures the sustainability of the benefits. This means that the player size will continue to grow, ensuring strong demand for AXS.

Overview of Token Assignments and Unlocks

AXS will be unlocked in a pre-determined schedule which lasts for 65 months from the public sale. The initial circulating supply is set to 59,985,000 AXS – 22.22% of the total supply.

The above chart illustrates the maximum possible issuance of AXS over the coming years, and the total supply will never exceed 270,000,000.

Play to Earn

The Play to Earn issuance represents 20% of the total AXS supply. The goal of the play to earn tokens is to attract a wide range of players to the Axie ecosystem in the hunt for token rewards and to give ownership and stake to the most active community members.

The play to earn a portion of the issuance to reward key behaviors within Axie Infinity’s ecosystem such as:

  • Competing in the arena and winning matches.
  • Winning tournaments.
  • Interacting with and tending to your land plots.
  • Using the Axie Infinity marketplace.
  • Breeding Axies.
  • Using future Axie products that haven’t been announced yet.

‌The Play to Earn allocation can be seen as a marketing budget for the Axie ecosystem. When certain game modes and products are ready to be promoted, its Play to Earn allocation could be increased.

Staking and Staking Rewards

Starting in early 2021 players will be able to stake their AXS to earn weekly rewards. These rewards will initially start out high to incentivize user growth and gradually decline as Axie Infinity reaches maturity. AXS staking rewards will be escrowed for 1 year from when they are claimed and can be vested once the escrow period has concluded. 

As the AXS yield is reduced the stakers can, through governance, vote in additional rewards from the DAO reserve pool.

Ecosystem Fund

The ecosystem fund will initially be managed by the Sky Mavis core team, and its core purpose is to grow the Axie Infinity community. 

To preserve the integrity of the fund the Sky Mavis team will prepare yearly statements that include a high-level overview of what the funds have been used for. A framework for spending is currently being drafted and is expected to be ready by late 2021

The principles for the fund are as follows:

  • Clear value added to the broader Axie Infinity community
  • KPIs and goals that unlock funds (if applicable)

As time passes the ecosystem fund will be integrated into the DAO and stakers will be able to vote on who should receive funding.

Sky Mavis

Sky Mavis is the team behind Axie Infinity and should remain incentivized to keep building after a successful token sale. By locking up the majority of the allocated supply the team, community and investors have aligned incentives.

Advisors

Axie Infinity provides 7% of the total supply for its advisors ,about 18,900,000AXS  will gradually unlock over 4 years. Public Sale & Private Sale

The Public Sale of 29,700,000AXS is Instant unlock,which amounts to 11% of the total supply. Axie Infinity raised $864,000 in a private sale of AXS to strategic investors in the middle of 2020. These investors purchased AXS at a 20% discount.

20% of the private sale tokens will be unlocked during the AXS public sale. The rest of the private sale tokens will be unlocked quarterly over the next 2 years.

Holder Wallet Address of AXS

Source: Etherscan

Top 10 Holders of AXS (From a total of 7998 holders)

Source: Etherscan

Value Analysis Of AXS

1. ” Play to Earn”

Axie Infinity combines NFT with DeFi through the “Play to Earn” game mechanic. The kernel of DeFi was introduced into the token design of AXS, where players collect rewards in the form of NFT and then convert them into real coin gold, enabling the game’s inclusive financialization. Through DeFi’s Farming, Axie Infinity solved the drainage problem with significant early revenue. Axie Infinity launched a documentary named《Play to Earn: NFT Gaming in the Philippines》on Youtube in March 2021,  in which a Filipino player says:

“At first I didn’t believe I could really make money by playing games, but I tried and earn money. Because of the COVID-19, we have no way to make money. That’s one of the reasons Axie spread rapidly in Cabanatuan.”

During the outbreak in 2020,many Southeast Asian countries chose to lock down the city, people had to stay at home, and normal work was severely restricted. The appeal of Axie’s gaming revenue encourages those who would not otherwise be exposed to blockchain to get started. Making $300 or $400 a month may not make much sense to cryptocurrency investors, but for poor income earners in some underdeveloped regions, it may even be well above the normal local wage level for a month. That’s why Axe Infinity’s user base is Concentrated in the Philippines, Venezuela, and Indonesia.

At a later stage, The “Play to Earn” game mechanic ensures the greatest difference between NFT (Axie) and general encrypted artwork, and in addition to the added collection value, NFT in Axie Infinity has usage scenarios and utility benefits that greatly enhance the fundamentals of Axie’s value.

2. Community (Players Guild)

Axie’s community of users is very strong. On the one hand, on Youtube and Twitter, many KOLs spontaneously make educational videos to get more people into Axie’s world. On the other hand, the community has even spontaneously launched unofficial forms of organization such as the Axie Academy, the Axie Scholarship, and the Axie Guild. Axie Infinity’s success depends on the support of the Players Guild.

Axie Infinity’s entry threshold requires players to purchase three Axies teams to play the game, each costing more than $300. Scholarship providers have created a win-win solution through the Axie Scholarship to remove this barrier. Idle Axies can be lent to “scholarship students’ ‘ whose SLP income from the game is divided (player 65% / supplier 35%) – making Axies a revenue asset in the hands of scholarship providers.

YGG and AK are the major player guilds on Axe Infinity, and to date YGG Guilds have paid 13.93 million SLPs to their scholarship students, and AK Guilds have paid 7.5 million SLP to their scholarship students. YGG expects to grow by approximately 600-800 scholarship students per week, and AK is expected to grow by 10% per week.

3. Low Cost and Low Threshold

Exclusive Ethereum Side Chain Ronin

Ethereum’s high transaction costs are one of the factors that discourage many players who want to enter. With the growth of the number of users and the increase in transaction volume, Ethereum network congestion will naturally lead to a surge in fees and will give users a very bad trading experience.

The launch of Axie Infinity’s exclusive Ethereum sidechain Ronin was a key catalyst for the game’s explosive growth over the past two months, with daily users (DAUs) soaring from 38,000 at the end of April to 252,000. Ronin’s launch has made Axie Infinity’s expense structure even better. Ronin’s Gas charges are negligible compared to Ethereum’s, and players don’t have to pay ETH gas costs, but only pay 2 AXS. Users can reproduce more easily, driving growth in Axie numbers, breeding costs, and market turnover.

Deposits in Legal Tender

Axie Infinity has an integrated ramp. Network, the legal tender deposit platform, into Ronin Chain, making it easy for players to purchase ETH with a credit card. Players who are not involved in encryption can therefore also top up ETH into their Ronin wallets and purchase Axies from the market in an easy way. French deposits currently only support the purchase of ETH and the sale of encrypted assets. On June 22nd, the legal tender trading platform On-Ramp traded a record high of about 130 ETH, less than 20 ETH a month ago, which means very strong growth.

Potential Risk Analysis of AXS

1. Can the Game Mechanic of “Play to Earn” Change the Nature of “Pass the parcel”?

On November 28, 2017, a blockchain cat game called Crypto Kittys was launched, the ancestor of all blockchain games. CryptoKitties is a virtual development game based on Ethereum’s underlying technology, created by Vancouver and San Francisco design studio AxiomZen. At present, Crypto Kitties play relatively simple, with only three operations: buy, breed, and sell. And that’s where Axie Infinity’s “Axie” deal comes from. The way players make money on CryptoKitties is simple: by buying and selling virtual kittens.

When a cat goes from a few dollars to millions of dollars. Countless participants and onlookers asked the same question: “What’s the value of this thing?” “But when people find out that no matter how much they spend on a silly cat, they pay more for it, it leads you to “make some quick money.” Eventually, the drumming will reach its end, and the last person to make quick money will sell the cat to the first “wrong man” and the market will stagnate or collapse.

The same problem may also exist in Axe Infinity, where Axie Infinity attracts a large number of users to stay and earn money through the main Play to Earn game mechanism, which means that it is the revenue that attracts the user to retain the revenue rather than the play. And an analysis of the trading market makes it clear that most people breed for sale, and the nature of Pass the parcel does not seem to have changed, with the money of new players who keep entering the market still the main source of user revenue in the past.

2. Other Gameplay into the NFT Field

Axie Infinity’s own gameplay category is actually a bit like RPG hand-playing. It is divided into PvE and PvP two modes, where PvE parts are classified by map, each map is equivalent to a chapter, which has a certain number of levels, players in turn through the level will see Boss at the last level. The PvP section is the “arena”, where the two sides match in real time in the form of card games. With the explosion of Axe Infinity, a more rich play of traditional games is being moved into the NFT world.

Big Time

Big Time is the first 3A-rated online action role-playing game (ARPG) to incorporate NFT, a bit like World of Warcraft, Upper Scrolls and more. Here, players can create their own characters, choose races and skills, explore maps, teams, fight and trade, and more. When players are shuttling through different times, they can enhance their characters by collecting NFT, even get rare skins, and customize their own portals. Big Time was founded by Ari Meilich, former CEO of Decentraland, a decentralized virtual world, and its team is owned by head games companies such as Epic Games, Riot Games and Blizzard Entertainment.

Blankos Block Party

Blankos Block Party is an EOS-based multiplayer online role-playing game (MMO) that is currently available on PC. In this game, players can collect, upgrade and sell an NFT doll called Blankos. In June, Blankos Block Party announced the launch of the NFT virtual doll in collaboration with fashion brand Burberry and music artist Deadmau5 at the 2021 E3 show.

Blankos Block Party’s development team is Mythical Games, founded by former Blizzard, Activision and Yahoo executives and employees, with founder Rudy Koch involved in the development of the hit films Call of Duty and World of Warcraft. Not long ago, Mythical Games received a $75 million investment from WestCap Group.

ZED RUN

ZED RUN is the first AR horse racing game on the Ethereum Layer2 blockchain launched by Virtual Human Studio (VHS), which combines horse breeding, horse racing, watching races and more with a one-stop NFT horse racing experience where players can view the horse’s information, data and status from multiple angles in real-world environments, and even take selfies with AR horses.

Risk Warning

The new listing project analysis content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.