Intro

Today, we are breaking down Sky Mavis, the company behind the NFT-based game, Axie Infinity. Built by a team with a long history in gaming, Axie Infinity was launched in 2018 with the idea that a blockchain-based “play-to-earn” model could create more aligned incentives between game creators and game players long-term.

Axie is one of the most incredible examples of speed-to-scale I’ve seen, with the game reporting $100,000 of revenue in January, over $190,000,000 of revenue in July, and over $360,000,000 in August.

In this breakdown, we cover the basics of Axie and how gameplay is similar to classics such as Pokemon. We dive into the economic model, how Sky Mavis generates revenue, how players earn money, and how this is all enabled by the blockchain. We discuss the importance of gameplay vs. the economic ecosystem and examine the sustainability of Axie from various angles.

To help break down Sky Mavis, Patrick O’Shaughnessy is joined by Aleksander Larsen, co-founder of Sky Mavis, and Stephen McKeon, Partner at Collab+Currency, an early investor in Sky Mavis.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

[00:03:00] - [First question] - How many people are playing Axie and how quickly it’s grown

[00:04:03] - What play-to-earn means and how money flows through a digital ecosystem

[00:05:03] - A basic overview of the user experience of playing Axie Infinity 

[00:07:23] - What an Axie is, its features, how they’re generated, and how many exist

[00:09:32] - Monster NFTs and the fungible SLP in-game currency

[00:15:00] - Converting the SLP to fiat currency and how low-friction the process is

[00:16:40] - Are people actually playing the game or just speculating on the game’s assets

[00:23:14] - The AXS governance token, how to earn it, and what it enables for token holders

[00:27:08] - What the opportunity set looks like for Axie from an investor standpoint

[00:29:39] - Finding a balance between offering digital work and creating a player incentive 

[00:33:29] - Mystic Axie and what they are generally worth today

[00:34:42] - How much the community will have to expand and build on top of the game

[00:38:48] - Overview of the plots of land in the Axie metaverse and what they might unlock 

[00:41:57] - What a sidechain is and how the Ronin wallet works 

[00:46:41] - Why what’s good for Ronin is also good for Ethereum

[00:48:53] - Defining a bridge and how it differs from an exchange

[00:50:24] - Lessons learned about good tokenomics and token design 

[00:55:04] - The biggest potential risks to the future of Axie Infinity and its growing popularity 

[00:57:13] - What an ideal future looks like for the metaverse and Axie infinity

[01:01:09] - How the world is changing and why that unlocks value for play-to-earn games

[01:04:03] - Asset ownership inversion and how big this could become in the future

[01:05:24] - The most surprising things that have happened since joining Axie Infinity

[01:06:55] - How he thinks about assessing new opportunities in crypto and the metaverse

[01:09:19] - Where you can go to learn more about Axie and dabble in the game