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Token of the Week: Axie Infinity AXS

In 2020, unique applications of blockchain technology emerged that could finally make the innovation mainstream. The rise of Non-Fungible Tokens is an excellent example of how digital assets are now being adopted by the general public. But another more intriguing example is the rise of Play-to-Earn online games. 

Axie Infinity is a pioneer in this new segment of the digital assets landscape. The game went from obscurity to front-page news earlier this year, when revenue on the platform exploded beyond $1.5 billion on an annualized basis. Here’s a closer look at this week’s token and its role in a virtual nation of playable NFTs.

Background

Developed by Vietnam-based Sky Mavis, Axie Infinity is described as a mix of Pokemon, Neopets and Tamagotchi. Players can enter the virtual world to collect pets (known as Axies) which can then be bred or used in battle with other players. The more you play, the more in-game tokens you earn which can then be used to buy other Axies or breed them together to generate new ones. 

Axies, game tokens, love potions and parcels of land all live on the blockchain as NFTs. That’s what makes Axie Infinity unique. Co-founders Trung Nguyen and Aleksander Leonard Larsen designed the game to be an open and free alternative to the traditional walled-garden experience of other online games. 

Use cases

The obvious use case of Axie Infinity is entertainment. The virtual world and characters are all designed to be cute and interactive to enhance the experience. However, since the gameplay elements live on the blockchain and can be traded on NFT marketplaces, the platform has also become a source of income for many. 

Players in the developed world (particularly in Venezuela and the Philippines) have taken up part-time gigs in Axie’s virtual world. They have income-sharing agreements with investors who hold special Axies and allow ‘scholars’ to borrow them for battle. Some spend their time playing the game to earn Secret Love Potion (SLP) – the crypto token that facilitates breeding and is worth $0.071438 per unit. In some cases, the game generates more income for the player than the median salary for a conventional job in their local economy. 

Tokenomics

This year, Sky Mavis introduced a new governance token called AXS. Holders of this cryptocurrency can stake it to earn passive income and participate in the network’s development process. Each AXS unit is entitled to a small portion of all the fees generated on the network as a result of gameplay. According to the developers, this ERC-20 token “represents a real slice of the game universe.”

The total supply of AXS is capped at 270 million. Much of this will be distributed to the community over the next five years. At the time of writing, there are 65.5 million AXS in circulation, each worth roughly $145. That means the AXS ecosystem is worth $9.4 billion in aggregate. 

Recent developments

While the game’s ecosystem generates $1.5 billion in annual revenue and the governance ecosystem is worth $9.4 billion, the developer has recently raised funds at a valuation of $3 billion

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