Axie Infinity Sparks GameFi Craze: Will Play to Earn Propel Blockchain Games?

AXS+8.90%

The explosive popularity of Axie Infinity has ignited discussions about GameFi and set off a wave of Play to Earn enthusiasm. According to community surveys, players can earn 151-200 SLP daily through the game, equivalent to a monthly income of $1,665, making it particularly popular in countries like Indonesia, the Philippines, and Venezuela. Some have even purchased two houses in the Philippines through game profits. Does this sound a bit like Roblox, the "metaverse first stock" that listed on the NYSE this year, which we mentioned in "Exploring the Metaverse: Unleash Your Imagination with Blockchain Technology" , where over 1,250 players earned at least $10,000 in Robux (Roblox's in-game token that can be traded and bought/sold), and over 300 players earned $100,000 or more.

According to data from Token Terminal, Axie Infinity protocol revenue reached $167 million over the past 30 days, 4.2 times the combined revenue of protocols ranked 2-10 network-wide. For 8 days during this period, its daily revenue exceeded the average daily revenue of Honor of Kings, currently the most popular mobile game.

If the metaverse outlines a virtual feast for us, then GameFi—Game Finance (adding financial elements to games) or more specifically Play to Earn—further perfects the NFT ecosystem matrix and blockchain game scenarios in the metaverse, approaching us with even greater intensity.

Axie InfinitySurpasses Honor of Kings to Become the Highest-Grossing Game

On July 13, data released by mobile app analytics firm Sensor Tower showed that Tencent's flagship mobile game Honor of Kings continued to perform well, ranking first with $277 million in monthly revenue, averaging $9.23 million in daily revenue. However, even such a lucrative mobile game was surpassed by a blockchain game.

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DApp analytics firm Token Terminal shows that Axie Infinity's revenue on July 16 was $9.7 million, already exceeding Honor of Kings' average daily revenue of $9.23 million. Its record single-day revenue of $17.3 million on July 30 was 1.87 times Honor of Kings' average daily revenue.

What kind of game is Axie Infinity, and why does it have the magic to surpass Honor of Kings? Axie Infinity is a decentralized turn-based strategy game inspired by Pokémon. Players take on the role of "tamers" in the game and can buy, sell, trade , and breed cute digital pets—Axies. Like Pokémon, players can use Axies to battle other players, earning game tokens by winning battles and completing necessary quests, hence the Play to Earn concept.

Axies are digital pets within the game. Uniquely, they are also NFT assets, with each Axie having different traits and attributes that determine their abilities in battle. There are 3 classes of Axies, each with 3 types: (Reptile, Plant, Dusk), (Aquatic, Bird, Dawn), and (Beast, Bug, Mech). Their type advantages are shown below, with Axies in advantageous relationships dealing 15% extra damage.

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Each Axie has 4 basic stats: Health, Speed, Skill, and Morale. Health is the maximum damage an Axie can withstand before being knocked out; Speed determines attack order in turns, with higher-speed Axies attacking earlier and also reducing the chance of being critically hit; Skill can increase extra damage when an Axie uses multiple cards in battle; Morale can increase critical hit rate. The sum of the 4 basic stats is 164, with a maximum of 61 for any single stat. Different stat distributions determine whether an Axie is better suited as a "tank" or "DPS" in battle.

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Each Axie's body consists of 6 parts: eyes, ears, horn, mouth, back, and tail. The horn, mouth, back, and tail determine the 4 skill cards an Axie can use in battle.

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An Axie's 6 body parts are controlled by 3 genes: Dominant (D), Recessive 1 (R1), and Recessive 2 (R2). Like real pets, Axies can breed to create new offspring. When an Axie breeds, each gene has a chance to be passed to offspring with probabilities of D (37.5%), R1 (9.375%), and R2 (3.125%). To prevent excessive growth in Axie numbers, breeding is limited to a maximum of 7 times per Axie.

The initial cost to play Axie Infinity is now somewhat high, as it requires owning 3 Axies that players must purchase (or borrow). If players decide to buy, the cheapest Axies on the market currently require 0.1 ETH (approximately $256.07), making the entry cost around $1,000.

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If you've played turn-based games like The Legend of Sword and Fairy, quickly getting started with Axie Infinity will be no problem. Axie Infinity's battle system can be understood as a turn-based card battle game, where victory is achieved by defeating all 3 of the opponent's Axies first. Battle is mainly divided into Adventure mode (PVE, player vs. computer) and Arena mode (PVP, player vs. player).

In terms of core gameplay, Axie Infinity can be summarized in two parts: first, combat, where players earn rewards through PVP; second, breeding, where players can raise new generations of Axies. Frankly, this gameplay isn't complex, and many traditional games are similar, with even grander story backgrounds and more exquisite graphics. So why did Axie Infinity stand out? We believe the main reason is that Axie Infinity creates a perfect closed loop among players, Axies, and AXS/SLP tokens—the Play to Earn model is what made it explode in popularity.

Axie Infinity has issued two tokens based on Ethereum: AXS (Axie Infinity Shards) and SLP (Small Love Potion). AXS is the native ERC-20 utility token of the Axie world, used for governance (AXS token holders can stake tokens to participate in platform governance voting), token staking (holders can earn weekly rewards by staking AXS tokens), and payments (holders can use AXS tokens for in-game payments). The total supply of AXS is 270 million, with current circulation of 55.26 million.

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The Axie Infinity team's vision for AXS is to achieve two goals: first, encourage players to participate more in the game and incentivize them to become token holders through the method of earning additional rewards; second, decentralize ownership and governance of Axie Infinity. This is also what distinguishes Axie Infinity from other traditional games—it's no longer controlled by a single entity, but a game truly owned and operated by the community that plays it.

SLP is a utility token in the Axie Infinity ecosystem (can be simply understood as a game item), mainly serving two functions: players earn SLP by playing the game, and spend SLP and AXS when breeding new generations. As mentioned earlier, to prevent excessive Axie growth, the game sets a maximum of 7 breeds per Axie, so the amount of SLP required increases with each breed. SLP has unlimited supply, with current circulation of 622.7 million.

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Both AXS and SLP can be traded on secondary markets. OKX has recently listed AXS/USDT trading, AXS margin trading, savings, and AXSUSDT perpetual contracts . Its price once surged to $56.98, a 711x increase from its private placement price of $0.08. Currently, AXS price has retreated somewhat, standing at $40.04 at the time of writing. According to CoinGecko data, SLP's price peaked at $0.3645 (May 2, 2021), with a historical low of $0.0033 on July 5 last year, representing a maximum increase of 109x.

Axie InfinitySparks GameFi Craze

Axie Infinity is not a newly born application but a game that has been operating for 3 years, so its "breakout" has some elements of chance but is more the result of its continuous iteration of features, gameplay, and underlying systems. Reportedly, in January 2019, the game expanded beyond Axie breeding and battle gameplay to include land NFTs in the game world, raising 3,200 ETH through land sales. Since then, the Axie Infinity team has continued optimizing the game, most notably launching the Ronin sidechain, built specifically for Axie Infinity's needs to break free from Ethereum's underlying limitations.

According to the Axie Infinity roadmap, Q3 2021 will see the launch of AXS staking, with the AXS ecosystem launching in late 2021 or early 2022. By the first half of 2022, virtual land gameplay will be launched.

From The Block's weekly trading volume, we can see that NFTs were led by NBA Top Shot and CryptoPunks in February and April, but by late May, Axie Infinity began to emerge. By mid-to-late July, it even accounted for 65% of weekly trading volume (though surpassed by CryptoPunks in the past week).

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Nonfungible data shows Axie Infinity ranks first in NFT collectibles sales with total sales of $863.8 million.

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Axie Infinity also ranks first among all protocols with total revenue of $96.03 million over the past 7 days and $208.8 million over the past 30 days.

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Axie Infinity's governance token AXS currently has a total market capitalization of $2.49 billion, ranking 46th among all crypto assets, with an 86x increase in market cap since the beginning of the year.

Axie Infinity's popularity has pushed GameFi concept heat to new highs, with many projects positioning themselves as "the next Axie Infinity." Andre Cronje (AC), founder of Yearn.finance (YFI), emphasized GameFi as early as September 2020, saying "The current DeFi industry mainstream is still TradeFi centered around trading, but the future may enter GameFi, which is more game-oriented. DeFi token policies may become more gamified, and users' funds will become equipment used in DeFi games."

Beyond Axie Infinity, projects like Sandbox, Decentraland, and Zed Run have also ridden the GameFi wave to development, with MANA up 32.12% in July and SAND up 186.51%.

Currently, Axie Infinity's popularity is largely driven by the Play to Earn model, of course with the help of gaming guilds. Main players remain from countries like the Philippines, Venezuela, and Indonesia. Judging purely by standards of fun and visual quality, it still cannot compete with traditional games. Therefore, once the earning effect diminishes, the project's popularity may be difficult to sustain. However, blockchain games are just beginning, with various research and development underway intensively. Compared to 3 years ago, progress is already very evident, so we still hold great expectations for their prospects. With GameFi's further development, the blockchain world will become richer and more fun!

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