Axie Infinity developer Sky Mavis is valued in billions of dollars. How does Axie Infinity, a pioneer of crypto play-to-earn games, make money?
Vietnamese studio Sky Mavis released Axie Infinity in 2018, as a blockchain-based videogame project that lets players earn from their activities. The game is built on the Ronin Network, an Ethereum-linked platform.
Axie Infinity owner Sky Mavis was once valued at $3 billion following a $152 million investment round led by Andreessen Horowitz. Believing that Web3 is the future, Andreessen Horowitz has backed multiple Web3 projects, to the point that its executives have appeared to clash with billionaires Jack Dorsey and Elon Musk.
How does the 'Axie Infinity' game work?
Players engage in activities such as collecting, breeding, and battling creatures called Axies. To engage in battles, players assemble teams consisting of several Axies to face off with opponents. The winning team is rewarded with the project's Smooth Love Portion (SLP) token, which can be converted to cash. You can also trade your Axies to earn SLP.
After the COVID-19 pandemic cost them their jobs, some people turned to Axie Infinity to earn a living. The game has a particularly large community of players in the Philippines. The project’s other cryptocurrency is the AXS token, which mostly functions as a governance tool.
What happened in the 'Axie Infinity' hack?
In March 2022, the Axie Infinity system suffered a major hack that resulted in the loss of worth more than $600 million in funds. The project’s tokens tanked following the incident.
Sky Mavis went on to raise $150 million from Binance and other investors to restore part of the money it lost. North Korean start-sponsored groups are believed to be behind the Axie Infinity hack.
How does 'Axie Infinity' make money?
The project’s ways of making money are the same as before the hack. The bulk of its revenue comes from trading fees.
Transactions on the Axie Infinity marketplace attract a 4.25 percent fee. The marketplace is where people come to buy and sell their Axies. If you want to start playing the game, you’ll need to have at least three Axies to begin with. You can come to the marketplace to purchase your starting team, and that trade would generate revenue for Axie Infinity.
Another major revenue source for the project is breeding fees. You can breed your Axies to expand your team. And with more Axies, you can earn more money from battling or trading your creatures. Breeding Axies has a cost to it, which is paid to Axie Infinity in the forms of SLP and AXS tokens. The breeding fee fluctuates in step with the value of the tokens. The fee will also vary depending on how many creatures you want to get from breeding.
How does the 'Axie Infinity' scholarship work?
Whereas there's an opportunity to earn from playing Axie Infinity, getting started can be difficult. You need to have a team of at least three Axies to start, yet the cheapest Axie can cost several hundred dollars. To lower the barrier to entry for new players, there's an Axie Infinity scholarship program. It involves those with extra Axies assigning their excess creatures to a second party to play on their behalf. The contract player is called a scholar. If they win a battle, the sponsor takes a cut of their reward.