Research summary:
This research report is focused on “Axie Infinity”, a game that employs blockchain technology and is currently spearheading the “Play-to-Earn” Revolution. It is equally involved in the NFT space. We will focus on how the project works, what value it adds, and review its pros and cons. It is currently listed on Binance, Huobi Global, and Coinbase.
The CMP is $69.24 as of 26th August 2021.
What is Pokémon?
The Pokémon (short for Pocket Monsters) franchise revolves around a trainer who goes on to catch wild Pokémon (Just like wild animals), tame them, and battles them with another trainer’s Pokémon. There are several types of Pokémon and each has an advantage over the other type, so for example a fire-type Pokémon would be weak against a water-type Pokémon. On the other hand, a water type would be weak to an electric type Pokémon. So, there is strategy involved when it comes to battles.
The Pokémon franchise is the highest grossing media franchise in the entire world ($92 Billion), even beating giants like Star Wars and Mickey Mouse.
Pokémon collectibles are also worth a lot of money. Some of the 1st edition Pokémon cards have been sold for $220,574. With the surge of NFT collectibles, people are buying up anything that comes close to Pokémon.
What is Axis Infinity?
Axie Infinity is a Pokémon-inspired universe where anyone can earn SLP tokens (More on SLP tokens on the tokenomics section) through playing the game and contributing to the ecosystem. It operates on an Ethereum side-chain “Ronin” which was created by the founders of Axis Infinity to host the game. Players can battle, collect, raise, and build a land-based kingdom for their Axies (Which are non-fungible tokens).
The two creatures below are Axies
The ecosystem started off with 3112 Axies. Each Axie has its own unique body parts, statistics and class (or type)
Battle: The battles are designed as a 3 vs 3 and just like Pokémon, there are Axis also have a class-based system and each class has an advantage over the other in battle.
So once your defeat another team, you will receive some SLP tokens (As mentioned above, the more you engage or play the more you earn. Aka “Play to earn”).
Breading: Axies can be bred and is the source of new Axies coming into the system. Breeding an Axie costs AXS (The governance token) and some Smooth Love Potions (SLP tokens) depending on how many times the Axies have been bred. The AXS portion is variable and subject to adjustment based on a myriad of economic factors. In order to avoid hyper-inflation, an Axie can also bred 7 times with an incremental SLP cost. You can make some extra money by selling the offspring in the market or use that to keep the breeding cycle going (Another source to Earn).
land-based kingdom: Just like Decentraland and Sandbox, you can buy land in the world of the Axies “Lunacia”. There are 90,601 plots of land (Map of the Lunacia on the left) which will be customizable and will be NFTs in nature. Lunacia will unlike the above-mentioned peers have NPCs (Non-player character) and there will be a story to the world.
Resources will spawn across Lunacia and be used to upgrade both land and Axies. Computer based enemies will be present all across Lunacia, making resource gathering a difficult task. Players will be able to take on them on a real-time battle either alone or in groups. Once defeated, the enemy will drop an assortment of resources, items, and blueprints used to upgrade territory and individual Axies. The world has not rolled out yet. A bundle of land was sold for a whopping 888.25 Eth.
Tokenomics
There are 2 tokens at play for the Axie infinity ecosystem. AXM token and the SLP token.
Both the tokens are an integral part of Axie Infinity’s “Play to earn” system. Every time you battle, you will earn SLP tokens (New tokens are minted) and the AXS token (50% of the total supply is allocated for rewards and staking), You can also use the SLP and the AXS tokens to breed your Axie and can sell the resulting offspring. You can earn SLP as passive income via the scholarship program (If you don’t have the money to buy your 1st 3 Axies, you use an existing team from another player
and earn enough SLP to start off. While the original owner will get a cut)
SLP is inflationary but has a deflationary mechanism in place. Everytime the SLP token is used for breeding, those tokens are burnt. While the AXS used for breeding is sent to the community treasury.
AXS is an ERC-20 governance token for the Axie Universe. AXS holders will be able to claim rewards if they stake their tokens, play the game, and participate in key governance votes. Players will also be able to earn $AXS when they play various games within the Axie Infinity Universe and through user-generated content initiatives.
AXS is Ranked #33 (based on Mcap) in the cryptocurrency market, total starting supply is 270 million tokens out of which 60.9 million tokens (23%) are in circulation. While SLP is ranked #177 (based on Mcap) in the cryptocurrency market. It is inflationary and has a circulating supply of 1.65 billion tokens.
Competition Analysis
Axie Infinity is operating within two giant industries – the gaming industry and the NFT industry. The global gaming industry is worth more than $300 billion and the NFT industry is a fast-growing industry.
In the cryptocurrency space, Decentraland and Sandbox are the closest competition.
| Project | Mcap (In USD) |
|---|---|
| AXS token | 4,24,11,47,280 |
| Decentraland | 1,60,16,57,331 |
| Sandbox | 62,88,45,443 |
| SLP token | 23,59,02,986 |
Although the governance is token for Axie Infinity dominates the space, its SLP token is still small IN size.
Team, Media, and Community Strength
Axie Infinity is being developed by Sky Mavis which is a technology-focused game studio founded in early 2018. The team consists of 40 full-time employees and has its headquarters in Ho Chi Minh City, Vietnam. The founding team consists of experts in the gaming and blockchain space. They are prominent in the media.
Their community size is extremely large to generate $933 million worth of trading within its own marketplace. They have 423k Twitter followers and almost 800k discord members.
Conclusion
Pros:
Axie Infinity is a Pokémon (A 92 billion Dollar Franchise) inspired game, which is community driven and has 1 million daily active users. It is operating in the gaming and the NFT which is beyond 100 billion dollars. Axie Infinity dominates the industry and has a passionate and experienced team behind it. Their Virtual world will be launching in the first half of 2022.
Cons:
Axie Infinity has two tokens in play, SLP and AXS. AXS is the governance token and has some utility within the game. SLP also has many utilities within the game. Both have different Tokenomics this makes the overall tokenomics and the economy is complicated. There is a lot of criticism online regarding this.
MintingM rating for Axie Infinity is 4/5
| Criteria | Score |
|---|---|
| Industry | 4.38 |
| Opportunity Size | 5.00 |
| Competitive advantage | 3.33 |
| Tokenomics | 2.38 |
| Team | 5.00 |
| Overall Score | 4.00 |