Axie Infinity Sidechain Token RON Slides 35% in Debut Week
Sky Mavis, the creator of the Axie Infinity blockchain game, released a new token for its sidechain called RON.
Sky Mavis, the company behind the play-to-earn game Axie Infinity, launched the RON governance token for its Ronin sidechain on Jan. 27.
RON traded around $4 at launch and has since fallen 35% to $2.47 as liquidity providers on the Ronin chain’s Katana DEX continue to cash in their newly unlocked rewards.
RON’s slide. Source: CoinMarketCap
According to the litepaper, the RON token has a total supply of one billion, of which 30% are allocated to Sky Mavis, 30% to community initiatives including liquidity mining, 25% for RON staking rewards and the remaining 15% to an ecosystem fund.
Users were able to farm RON tokens by providing liquidity to the AXS-WETH and SLP-WETH pairs on Katana since it launched last November. Total Value Locked (TVL) on the decentralized exchange surpassed $1B within days of its launch.
However, the tokens earned by liquidity providers were only available to claim when RON was launched last week, with 10% of the RON supply allocated to the initial liquidity mining program that lasts 90 days.
Amid fears of a protracted crypto bear market, perhaps it’s no surprise that users are choosing to sell their accumulated rewards.
What is Ronin?
Axie Infinity was originally launched on Ethereum, but high gas fees and slow transaction times impeded growth. In response, Sky Mavis launched Ronin, its bespoke sidechain that’s optimized for gaming, in Feb. 2021.
Offering free transactions and confirmation times measured in seconds instead of minutes, Ronin undoubtedly played a large role in Axie’s meteoric rise in 2021.
Sidechains are independent blockchains that are compatible with and run in parallel to Ethereum. They have their own consensus mechanisms and connect to Ethereum via two-way bridges through which supported crypto assets can be transferred. Ronin utilizes a Proof-of-Authority consensus algorithm, in which validators stake their reputations instead of their tokens. A full list of Ronin validators can be found here.
According to Nansen, the number of daily active addresses on Ronin peaked at 1.1M in November, coinciding with the launch of the Katana DEX.
Similarly, network activity was over five times that of Ethereum in November but has since cooled off.