What Can Axie’s 6500% Revenue Growth Teach Us About Blockchain Gaming?
Not all NFTs are created equal. While some can be more easily dismissed and forgotten, others belong to a wider blockchain ecosystem representing gamified finance. Axie Infinity is the latest example of this in action.
NFT Sales On the Rise Again
At the beginning of June, the Tokenist reported a steep decline of NFT sales, down by 89%. However, within that downward trend, collectibles and metaverse NFTs have shown their market staying power. Not only did GameStop enter the NFT game, but legacy companies such as Mattel and Warner Bros did as well.
In the sports arena, DraftKings, the Dallas Mavericks, and NBA Top Shots are pushing the envelope to monetize the fan experience, fusing tickets with NFT collectibles. It appears that this institutional push reinvigorated the NFT scene, leading to March-level activity at nearly $200 million monthly sales.
Charities are also taking advantage of NFTs. Last week, an NFT titled “On the Wings of an Angel” by Sacha Jafri, broke the fastest-selling auction record, selling for $884k in under one minute. While these are still highly speculative assets, other NFTs go beyond being merely isolated collectible. They represent the pinnacle of the NFT space – metaverses with Axie Infinity taking the lead.
What is Axie Infinity?
If you have seen the movie Ready Player One, you are already familiar with the metaverse concept. In the movie, Oasis is the virtual world in which players share a virtual space, participating in events through their in-game avatars. More importantly, the virtual world is persistent, having evolved into a sophisticated economy and staking through the actions of all avatars.
Add a blockchain to that concept and you get Axie Infinity on a less grand scale. While multi-billion-dollar metaverses like World of Warcraft and Fortnite have their own economies and currencies, none are as comprehensive as Axie Infinity. Within this metaverse, players don’t engage in combat per se but manage virtual ecosystems populated by Axie creatures.
Players – AXS stakeholders – build kingdoms by purchasing land plots and evolving Axies, both of which are available as NFTs. This way, many see the metaverse as combining the most popular aspects from Pokemon and Minecraft. Similar to many DeFi protocols, Axie’s tokenomics consist of dual assets – SLP and AXS.
SLP stands for Small Love Potion, earned by completing daily quests and events in the game’s adventure mode. AXS is the game’s governance token, also earned through playing the game. When players stake AXS – lock them in liquidity pools – they can claim rewards which represents yield farming.
Of course, the game itself is also an NFT marketplace, so AXS can be used to buy Axie Infinity NFTs. During this year, such NFTs regularly visited top-selling charts, with Genesis Plots having sold for $1.5 million or equal to 888.25 ETH at the time.
Just in the last 30 days, the Axie Infinity ecosystem transacted in a $385.13 million trading volume. Many crypto exchanges cannot boast to match such activity, so it is worth understanding why that is the case.
Massive Rise of AXS Value Explained
In the late 1990s, the ‘Tamagotchi’ toy stormed the world as a handheld digital pet, having sold over 82 million units since. Pokemon became even more popular, with experts putting forth evidence that suggests their popularity is rooted in evolutionary psychology. Axie Infinity then built upon that layer with world-building by borrowing basic sandboxing elements from Minecraft.
These are the entangling factors that had first drawn in nearly 200k users, to the credit of Vietnam-based Sky Mavis developers. With such a thriving economy in place, breeding Axies translated not only into income for AXS stakeholders but also developers. In July, Axie’s revenue jumped by 6150%, from a humble $1.92 million in January to over $120 million in July.
Correspondingly, AXS price jumped by 424% from July 1st at $5.78 to $30.3 at press time, with MACD’s blue bullish line overshooting the red signal line.
As you can see from the chart, May’s crypto crash had less of an impact on AXS than on most cryptocurrencies and tokens. Although it suffered a 37% drop on May 19th, AXS had remained stable all the way to July. Now that Bitcoin’s price is recovering, AXS has been unleashed to follow its previous trajectory, bolstered by the fact that AXS and SLP stakeholders receive 95% of Axie’s total revenue at a steady staking unlock schedule.
However, such a sharp price spike can also fall quickly due to market exuberance and heavy shorting. As with the stock market, one should always avoid buying assets at their peak value. On the upside, Axie Infinity had already generated 18,000% profits for its early stakeholders.
Therefore, Axie is a rare example of a blockchain game that combines NFTs with yield farming, and expertly gamifies that DeFi experience for maximum mass appeal. Perhaps, direct staking into blockchain games will gain more traction in the future as opposed to proxy staking through GameStop shares. After all, the former lacks the centralized market maker – brokerage vulnerability.
Have you ever tried blockchain games as a source of passive income? Let us know in the comments below.