On-Chain Markets Update by Juan Pellicer, IntoTheBlock
Since our last in-depth analysis of Axie Infinity almost two months ago the price of their AXS token has increased over 100% within a few weeks. The rally has multiplied the value of AXS by 223 times since January. The catalyst behind this latest bull-run may have been the Series B funding round of $152M led by a16z. Behind the scenes the Axie Infinity team have made a series of recent updates that have also caught the attention of investors. The moves are reinforcing a positive investment thesis on the future of the game and its AXS coin.
Staking rewards going live
At the time of writing Axie’s staking contract is offering more than 150% annual returns, quite a high incentive considering that it is 10 times bigger than the usual staking yields that major cryptocurrencies offer. These rewards come from the initial coin allocations, where 29% of the total supply was reserved for this purpose. The rewards account daily for 64516 AXS, or the equivalent of almost $8.5 million. Interestingly their coin unlock schedule has in their plan to triple the net amount of these staking rewards after three months, and to slightly reduce them until the 5.5 years plan is accomplished. The current yield is based on the total amount of AXS that is staked, so it could change over time. But if in three months more supply will be added as staking rewards, it would mean that the stakers would receive even a bigger yield than the actual one.
Airdropping Early Users
The unexpected airdrop was announced on the same date of the launch of staking rewards and it compensated a total of $60m between early users of the game. The launch on the same date was a thoughtful move to mitigate the potential selling pressure that an airdrop of a valuable coin would usually cause. At the end these users may prefer not to sell their coins because they are getting offered staking rewards initially in the 300%.
Due to this reason, transactions over $100,000 reached over $2 billion in aggregate volume on October 1st. This happened on the day that the airdrop and staking rewards were live. It shows how a large amount of volume was probably transacted as an airdrop to the users, plus part of that volume being transactions towards the staking contract, plus some airdropped users potentially sending their AXS to exchanges to be sold. Even though looking at the price action, the selling from airdrop recipients seems to have been minor since price continued increasing in the days afterwards:
Becoming a DAO
The DAO narrative keeps intact: AXS holders will be decision makers in the development of the game and the management of the treasury. A treasury that so far holds more than a billion dollars in tokens, as the team noted recently. The growth of the treasury is constant, thanks to the daily revenues coming from the Axie marketplace and ingame fees. The revenues since July 1st are averaging daily more than $8 million:
These revenue figures soon will become completely governed and owned by a DAO. This DAO could potentially vote on ways to distribute part of this revenue between the $AXS holders, decentralizing the ownership of the game to whoever decides to hold AXS. Ultimately, this further incentivizes the community to be actively participating and better aligned with the game’s future.
NFT technology and cryptocurrencies have been the enabler of permissionless gaming. This can be understood as a power shift where players fully own and control their ingame assets. The data shown is proving the success of Axie Infinity and the metaverse it is creating, which redefined play-to-earn and is shaking up the entire gaming industry. It built and currently maintains an innovative economic system that aligns incentives both for players and developers by combining their two coins (AXS, SLP) with thousands of unique playable NFTs. The recent news of an upcoming launch of a decentralized exchange to trade its tokens will reinforce this ecosystem. Its revolutionary approach will be studied back in the future when looking at how Web3 developed.