Axie Infinity

What is Axie Infinity (AXS)?

If the Sandbox is blockchain’s answer to Roblox and Minecraft, and Gods Unchained is crypto’s Hearthstone and Magic: The Gathering, then Axie Infinity is very much a play-to-earn option for fans of Pokémon and Tamagotchi.

A game that is one part trading and another part battling, Axie Infinity sees players collect, breed, battle, and trade axolotl-inspired creatures, called Axies, that exist on the blockchain thanks to Ethereum’s ERC-721 standard non-fungible tokens (NFTs).

Each Axie is an NFT and has various attributes based on how players breed and raise it. Players collect multiple Axies and then enter them into team battles that grant experience points (exp) which are used to improve or even evolve the Axies.

The AXS tokens, called Axie Infinity Shards, provide governance over this innovative game. AXS holders participate in key governance votes and can decide how community treasury funds are spent.

When Was Axie Infinity Launched?

The development of Axie Infinity began in 2017, and the game was released in March 2018. Various parts of the game were developed and released as major updates, with the first battle system going live in October 2018 and an alpha build having been released in December 2019.

The Ronin wallet was launched in February 2021, allowing players to take advantage of faster transactions and drastically reduced gas fees using the Ronin sidechain.

Who are the Founders of Axie Infinity?

Axie Infinity was created by the Vietnamese game development studio Sky Mavis, co-founded by Trung Nguyen and Aleksander Larsen.

Nguyen, the studio’s CEO, is a computer software engineering graduate who worked at Anduin Transactions before founding Sky Mavis.

Meanwhile, the Sky Mavis COO, Larsen, is a former competitive gamer and the Secretary of the Board of Directors at the Blockchain Game Alliance.

How Does Axie Infinity Work?

Axie Infinity runs on Ethereum via a sidechain called Ronin that reduces fees and helps speed up transactions. Within the game, users take part in turn-based battles, pitting their team of Axies against computer-controlled AI teams or live opponents.

In-game items, such as land plots and Axies themselves, are represented by NFTs. The use of NFTs to represent these digital assets allows players to take full ownership of both Axies and land.

In addition to being battled and improved, Axies can also be bred and used or sold, giving players additional ways to earn money while playing. Most of these transactions take place using Ethereum, and some Axies have been sold for as much as 300 ETH.

In fact, Axie #2655, known as “Sir Gregory,” was purchased by Lunacian #585021 for 369 ETH in July 2021, worth over $800,000 at the time.

Getting into the game, however, has a relatively significant entry barrier. In order to play, users first need to purchase three Axies in order to create a starting team. The more popular the game is, the higher the demand, and therefore the higher the price of Axies in the marketplace.

However, these Axies do tend to provide a return on investment since they generate rewards through gameplay and can also be resold.

The game operates on a variety of platforms and PC, Mac, Android, and iOS users can all meet in the game world of Lunacia.

What are Axies?

Axies are digital creatures akin to pets that, via Ethereum’s ERC-721 standard non-fungible token technology, are fully owned by players.

Each Axie has four different attributes that define its strength in battles; a distinct class that has certain strengths and weaknesses against other classes; and six body parts.

The attributes—health, morale, skill, and speed—define the Axie’s basic performance in battle. They dictate how much damage it can take, which Axie goes first in the turn-based order, how much damage it can deal, and so on.

The Axie’s class can also affect various stats, but the classes primarily dictate which other classes it is stronger or weaker against. This is a simple variation of rock-paper-scissors, although Axie Infinity has a total of nine classes.

The normal classes are Aquatic, Beast, Bird, Bug, Plant, and Reptile, while the “secret” classes are Dawn, Dusk, and Mech.

Finally, the different body parts include the eyes, ears, back, horns, mouth, and tail. Every body part, except the ears and eyes, has an ability associated with it, which further individualizes the Axie’s performance in battle.

Axies are used in various game modes, such as PVP Arena, Adventure Mode, and quests. Participating in each of these earns the player Smooth Love Potions (SLP).

SLP, an ERC-20 fungible token, is primarily used for breeding Axies.

What is Axie Breeding?

Each body part of an Axie has a dominant (D), a recessive (R1), and a minor recessive (R2) gene associated with it. This defines a simple breeding system, where two Axies can be bred together, and the likelihood of certain outcomes is defined by these genes.

The dominant gene has a 37.5% chance of being passed down, while the recessive gene (9.375%) and the minor recessive gene (3.125%) are increasingly less likely. Here’s a tool to see what might result when any two given Axies are bred.

Breeding can be done seven times per Axie and costs 4 AXS plus some SLP, depending on how often the Axie has been bred. If it’s the first breeding cycle, you’ll only have to fork out 150 SLP, but the seventh and last cycle will cost a princely 3150 SLP.

There is also an element of rarity via the Mystic body parts. These Mystic parts are only found in some of the Axies sold during the project’s presale. 25% of the original 4088 “Origins” (original Axies) have Mystic parts, including 19 Axies with 3/6 Mystic body parts and just three “quad Mystics” with 4/6 Mystic parts.

The only quad Mystic currently listed for sale on the Axie Infinity marketplace is “Galadriel,” which would set you back a cool 666.42 ETH.

What Makes Axie Infinity Unique?

Axie Infinity is unique in that it arguably opened the eyes of many as to how play-to-earn gaming could prove to be a viable model for all stakeholders involved.

At a time when many countries across the world were going into lockdowns due to the COVID-19 pandemic, gamers in countries like the Philippines recovered from losing their jobs by making a living from Axie Infinity.

In fact, Axie Infinity was one of the first games to give rise to a scholarship microeconomy. Scholarships see players who own Axies, called Managers, lend them out to other players, called Scholars.

NFTs can make it possible for gamers to fully own their in-game assets. The trading of these NFTs also provides significant benefits for players and creators alike. In fact, it might have been the changing or “nerfing” of in-game assets that led to the creation of Ethereum itself!

Beyond Axies themselves, in-game plots of land are also tokenized and tradeable on peer-to-peer marketplaces. Lunacia, the fictional world of Axie Infinity, is made up of 90,601 plots of tokenized land across seven different biomes.

As one of the top games in the blockchain industry, Axie Infinity is also a standard-bearer for NFT technology as a whole.

While the technology is in its infancy, projects like Axie Infinity have arguably shown the general public how both players and creators can benefit from digital asset ownership. It could even be suggested that Axie has done this job far more effectively than “profile picture” projects like CryptoPunks and Bored Ape Yacht Club.

What is Scholarship?

As previously mentioned, new players have to own three Axies in order to start playing the game. This can be anywhere between costly and prohibitively expensive for many players, especially those in countries with weaker wage structures.

However, the practice of scholarship eliminates that problem for some. Players called “managers” lend out three Axies to scholars, and these scholars then use these Axies to play and “grind” for SLP token rewards, rare items, and loot. All of these rewards are then shared per agreement with the manager.

Running multiple accounts in Axie Infinity is prohibited. However, this scholarship gives the owners of more than three Axies the chance to deploy them and earn at least a percentage of the revenue they can generate.

The scholar, meanwhile, can play the game and earn from it while bypassing the entry barrier of buying three Axies. Since they benefit from any increase in the scholar's yield, many managers also mentor and provide the scholar with other resources.

How is the Axie Infinity Network Secured?

Axie Infinity is a game that takes advantage of blockchain technology. Specifically, Axie Infinity uses the Ethereum blockchain for its accounts and all fungible (AXS & SLP) and non-fungible (Axies and land) tokens.

However, in 2021, Axie Infinity embraced the Ronin sidechain. While sidechains and various forms of layer 2 technology can improve transaction speeds and reduce gas fees, they do open up additional attack vectors.

On March 23rd, 2022, hackers from North Korean state-sponsored hacker groups, APT38 and the Lazarus Group, compromised the Ronin Network, stealing around $620 million in ETH and USDC.

By hacking private keys to forge fake withdrawals and compromising validator nodes, the hackers drained the Ronin bridge that connects Axie Infinity to Ethereum of 173,600 ETH and 25.5 million USDC. The hackers were able to take control of Sky Mavis’ four Ronin validator nodes and a third-party validator node run by Axie DAO. This gave them a majority of 5 out of a total of 9 network validator nodes, allowing them to complete the attack.

What is the Use of AXS?

AXS tokens, or Axie Infinity Shards, are the native tokens of Axie Infinity. Their primary in-game use is for breeding. However, even this utility may be eclipsed by the governance function of the token outside of gameplay.

AXS can be staked on Axie’s staking dashboard, allowing users to vote on various governance proposals. The variety and depth of these proposals are to increase until Axie shifts into a full DAO structure.

Who Controls Axie Infinity?

Axie Infinity is controlled by Sky Mavis, a Vietnamese game development studio founded by Trung Nguyen and Aleksander Larsen. The studio raised $152 million at a $3 billion valuation in October 2021 and a further $150 million following the Ronin hack in early 2022.

The lead investor in this latest funding round was Binance, which would also support the Ronin Network with ETH withdrawals and deposits for Axie Infinity users. Alongside Binance in this $150 million funding round were Animoca Brands, a16z, Dialectic, Paradigm, and Accel.

That said, Axie Infinity is being evolved into a decentralized autonomous organization (DAO) via the AXS token.

Rolled out in 2021, the Axie staking dashboard allows holders to stake AXS tokens and participate in governance votes proposed by the Sky Mavis team. While smaller issues will be voted on by stakers through 2022, the team plans to move into a full-fledged DAO structure by 2023 as per its roadmap.

How Much AXS Is In Circulation?

Axie Infinity has a maximum total supply of 270 million AXS. Out of these, just over 83 million AXS are currently in circulation.

11% of the total supply was allocated to participants in the Binance Launchpad initial exchange offering, at $0.10 per AXS. 4% was sold in a private sale, 21% went to the team, and 7% to advisors.

Beyond this, 29% of the total supply has been allocated for staking rewards, 20% to the play-to-earn pool, and 8% to the ecosystem fund.

How Do You Buy AXS?

AXS has gotten a lot of attention thanks to providing a way for people in some countries to earn a living. As such, most major global exchanges have listed AXS. As a Binance Launchpad product, it is naturally available on Binance.

Smooth Love Potions also have significant liquidity on many exchanges, especially paired with fiat in countries like the Philippines. AXS can also be traded against fiat on most exchanges, but stablecoin pairs like AXS/USDT and AXS/BUSD may have more liquidity.

Given that AXS is also an ERC-20 token on Ethereum, you could also purchase it using a decentralized exchange like Uniswap.

Is It Possible to Buy AXS Instantly?

It is possible to buy AXS instantly, depending on what sort of platform you want to use. A decentralized exchange can be instant, or at least close to instant, if it employs some sort of layer 2 solution. If not, transactions may take a minute or two since that’s how long it takes the Ethereum blockchain to process transactions.

Transactions on a centralized exchange platform are instant. However, to actually use your AXS tokens in governance or for breeding, you’ll have to pull them off the exchange. Nonetheless, a lot of exchanges will offer some sort of on-exchange staking to disincentivize withdrawals.

How Do You Store AXS?

While storing your AXS on an exchange can allow you to reap the economic benefit of staking if the platform allows it, you can’t use your AXS in the game or take advantage of the governance rights that the token bestows. In fact, the exchange will likely be using your vote for its own ends.

This official guide will show you how to get started with Axie Infinity, including the setup of an Axie Infinity account and a Ronin wallet in which to store your AXS.

Axie Infinity Energy Consumption

As mentioned previously, Axie Infinity doesn’t have its own network. Instead, its assets exist on the Ethereum blockchain. On top of that, it uses the Ronin sidechain for faster transactions and lower fees, although network safety was compromised in one of crypto’s most high-profile hacks.

The Ronin hack was a good example of the pitfalls of centralization and low energy consumption. With just 9 validator nodes and several controlled by Sky Mavis, the hackers were able to compromise the entire network by simply penetrating one organization.

With more validators and more decentralization would come higher consumption across the network, but also a far greater level of safety for all involved.

Is AXS a Good Investment?

Even the most exciting project may have significant risks, and few blockchain projects can demonstrate this better than Axie Infinity. Axie has hit the highs of popularity to the point that even starting to play was prohibitively expensive, but also reached the lowest lows thanks to the price action of SLP and the Ronin hack.

Investing in AXS could be seen as a gamble on the future of Axie Infinity, on the team behind it, and on the game itself having mass appeal. The combination of an appealing game with significant earning potential and true ownership of game assets is a heady mix for many gamers.

The transition of the game’s governance into a DAO also bodes well for the future of the AXS token, granting it far greater value. However, this value will also depend on the success or failure of Axie Infinity, with the token’s performance likely tied very closely to the prospects of the game itself.