Blockchain gaming has become a very popular aspect of the greater blockchain community over the past few years. One blockchain game – Axie Infinity – has become the clear leading in this emerging industry. In this article we will cover how and why Axie Infinity is beating all the competition.
What is Axie Infinity?
Axie Infinity is an blockchain videogame that uses NFTs. It allows players to battle or trade axies (read: axolotls) with each other. The big thing with Axie Infinity is that it’s basically a platform for users to earn money by breeding axies or fighting their axies.
That is a very high level overview of the game. If you actually want to play it, then it is fairly easy to start. The game lives on the Ronin sidechain on Ethereum, so the fees required to play it are far less than standard Ethereum games.
How is Axie Infinity Beating The Competition?
Axie Infinity is beating the competition in a few different ways. This section will outline some of the different ways that Axie Infinity beats the competition. And why the company has received so much attention over the past month.
Axie Infinity Generated More Revenue
The main reason Axie Infinity has received so much attention is that the protocol has generated more revenue than literally every protocol on Ethereum.
It has even generated more revenue than Ethereum itself.
Axie Infinity has generated around $366 million over the past 30 days compared to $365 million by Ethereum.
That is only $1 million more than Ethereum. However, the next closest competitor is OpenSea at $53 million and PancakeSwap at $57.7 million.
We know, generating more revenue explains why Axie Infinity has dominated the news cycle. But it does not offer any explanation for why Axie Infinity has generated so much revenue in the first place. In fact, we still have not covered how Sky Mavis – the Vietnamese company behind Axie Infinity – actually earns revenue.
The purpose of Axie Infinity is to breed axies, sell axies, fight axies, and even own land. This is also how Sky Mavis earns revenue.
No, they do not breed their own axies. Sky Mavis simply takes a cut of revenue from breeding axies and selling axies on the marketplace.
This works out to quite a bit of money because over a billion dollars worth of transactions has occurred on the platform.
The Ronin Sidechain Means No Transaction Fees
Axie Infinity has been around for a long time. The company was launched all the way back in 2018.
It was mostly unknown until a few months ago, however, because it was simply too cost prohibitive for users to play the game.
This is because the game ran on the Ethereum mainnet. The Ethereum mainnet has extremely high gas fees, which scared off all but the wealthiest players.
Sky Mavis realized this. The company worked hard and released the Ronin sidechain on Ethereum. The Ronin sidechain only requires two Ethereum gas fees (to enter and exit the sidechain).
Outside of that there are no transaction fees because, well, Sky Mavis decided not to charge transaction fees. Remember, they collect fees when users breed or sell axies.
Basically, Sky Mavis is incentivized to increase the popularity of the game to increase revenue. That is why there are no transaction fees on Ronin.
Anyway, players joined the game in droves once Ronin was released in 2021. In January 2021 the protocol was generating only $100,000 in revenue.
As we mentioned earlier, the revenue over the past 30 days is nearly $400 million.
Bad Economy Means People Play For a Living
Finally, Axie Infinity is simply the leader in play to earn video games. It is interesting that play to earn video games emerged right at a time when the economy contracted quite a bit due to the COVID-19 pandemic.
It’s also important to note that while the income earned by a game like Axie Infinity is not much for someone in a fully developed country (ie. USA, UK, Norway, etc.), it is often more than the monthly salary in developing countries like Vietnam or India.
Is Play to Earn Gaming Here to Stay?
Yes, pay to earn video games like Axie Infinity are absolutely here to stay.
Games like this are not simply a fad or trend. The path of video game development will slowly move to a model more Axie Infinity than the current microtransaction or DLC model that most studios use to maximize revenue.
Really, game theory can be used to determine the most likely model to succeed. Pay to earn works the best because all parties are properly incentivized.
Developers are incentivized by producing a quality game that becomes popular because they collect in-game transaction fees. Players are incentivized because they can earn income.
This is opposed to traditional game studios that do not have nearly as much incentive to create a good game or, more importantly, to release particularly good DLC.
The thing is that the differences are not that much when it comes to the studios. Game studios still want to release good games because that means more revenue from DLC, microtransactions, or game sales.
The big difference is that players will gravitate toward pay to earn games because earning money from these games can provide a sizable income for some people.
Is Axie Infinity a Scam?
It does not appear that Axie Infinity is a scam. The project would likely have rugged a long time ago if it was indeed a scam.
Mark Cuban and Alexis Ohanian (co-founder of Reddit) have both invested in Axie Infinity, which should provide a little reassurance that Sky Mavis is legit. It is important to note that Cuban lost his entire investment with Iron Finance, but this is a different situation than Iron Finance.
To summarize, we would not worry about Axie Infinity being a scam. Whether or not the game is a good investment is a different question, but it is most likely not a scam/rug.
Is Axie Infinity a Good Investment?
Axie Infinity will certainly not be the last play to earn video game that become popular. However, it has a major first mover advantage as the first popular play to earn blockchain game.
Now, a big part of the investment into Axie Infinity hinges on the native token for Axie Infinity getting listed on Binance. If that happens, then the value of it will likely rise to a more more accurate, higher level.
That sums it up for what exactly Axie Infinity is doing and why it is doing it better than everyone else. It really comes down to the fact that Axie Infinity is simply one of the more popular blockchain games because it has no transaction fees and allows players to earn revenue.
This will likely change at some point as competitors start to copy the strategy that Sky Mavis has devised.