Axie Infinity is older, wiser, and relishing its underdog status again

There are lots of tech companies that promised a brave new world only to fall short. Palm was once the future of handheld devices, while America Online seemed destined to control the internet.

Axie Infinity, the blockchain gaming hit of 2021 that is now emblematic of play-to-earn games, became the poster child for GameFi. That’s part of the reason Aleksander Larsen, co-founder and COO of Sky Mavis – the developer of Axie Infinity – hates the term.

Sky Mavis co-founder and COO Aleksander Larsen / Photo credit: Aleksander Larsen

“When I’m looking at the word ‘GameFi,’ I think it’s very loaded in a negative sense because everything in that word seems to be about the financial end result,” he tells Tech in Asia.

The “end result” so far has been a massive downturn in the GameFi sector over the past seven months, with NFTs and in-game tokens both losing much of their value.

Learnings from the boom and bust

In 2021, the price for Axie NFTs skyrocketed in tandem with the crypto bull market, with entry-level prices in July of that year starting at around US$350. The most expensive Axie – #2655, also known as “Sir Gregory” – sold for US$819,000. Smooth Love Potion (SLP), the in-game token for Axie Infinity, was also selling for US$0.34. At its peak in August 2021, the game’s marketplace saw sales of over US$848 million.

But just one year later, monthly sales were down to just US$5.7 million. As of March 7, Axie Infinity collects a 5.25% fee per transaction on the marketplace. Before that, the fee was 4.25%.

Today, you can buy Axies for as little as US$3, although good Axies – those with winning stats – still go for around US$350 to US$400. You can pick up an SLP for about US$0.003.

Axie Infinity’s stumbles aren’t just a reflection on the global crypto winter. The Ronin network, one which the games ran, was hacked in March for US$625 million in ether and USDC in the largest cryptocurrency heist of all time. All users were eventually reimbursed by Sky Mavis, which raised additional funds with the help of Binance to address the issue.

So far, 5% of the stolen tokens have been recovered. Larsen contends that Sky Mavis is financially healthy despite the hack and has a 10-year runway if it includes tokens as financial assets.

“We’re not necessarily burning as much and in fiat reserves, we’re very healthy,” he says. Larsen adds that Axie Infinity generated around US$1.3 billion in revenue last year.

According to data from the Ronin chain, the Axie DAO treasury has over 57,000 ether – worth almost US$74 million at current prices – and more than US$253 million in AXS, the game’s governance token.

The 25.5 million in USDC that was stolen has been fully reimbursed by Sky Mavis. Funds recovered from the hack will also be returned to the treasury.

These trials underscore how early the blockchain gaming scene is. There are risks that need to be communicated to players. People need to know what to expect when they come into games like these, says Larsen.

The golden middle path

The next iterations of Axie Infinity

Back to being an underdog again