Sky Mavis has raised $152 million at a nearly $3 billion valuation to help grow its Axie Infinity “play-to-earn” game that monetized via nonfungible tokens (NFTs). And this funding bankrolled by the likes of Andreessen Horowitz and Mark Cuban is aimed at stirring a developer and player revolt against the establishment of gaming.

The game uses NFTs to uniquely identify cute characters. Players spend real money to acquire those characters and engage in battles with other players. They can level up the characters and sell them to other players, and that generates income for the players.

The capability to earn money in games is called “play-to-earn,” and it has taken off in a variety of ways. Blockchain sales measurement firm DappRadar has been tracking the space and it said that Axie Infinity has hit No. 1 in NFT collectibles, even though it isn’t in any of the popular iOS or Google Android app stores. It is distributed on PCs and Macs, and can be played on mobile devices.

More than 615,000 traders have bought or sold Axie Infinity NFTs in 4.88 million transactions, according to DappRadar. This means that an average transaction for an Axie Infinity NFT is worth about $420. The company and secondary sales of the NFT characters have now reached $33 million a day. All of this is pretty amazing for a company that had $100,000 in sales in January.


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Cofounder Jeffrey “Jiho” Zirlin (who is speaking at our GamesBeat Summit Next event on November 9-10) said in an interview with GamesBeat that the number of daily active users in Axie Infinity has now grown to two million — meaning that is how many people play the game each day. All told, the players and the company have generated more than $2 billion in transactions.

“Because we started so long ago, in 2018 with the game launch, we have this product and we have this community,” Zirlin said. “It’s not something that’s speculative or theoretical. That’s really something in the market.”

Back in April, Axie Infinity had 3,000 daily active users.

The NFT explosion

Axie Infinity

Above: Axie Infinity has two million daily users.

Image Credit: Axie Infinity

What happened? The explosion of excitement around NFTs is what happened. Driven by Bitcoin hype or NFT art sales, everything related to NFTs has seen a surge this year.

The market for NFTs surged to new highs in the second quarter of 2021, with $2.5 billion in sales in the first half of the year, up from just $13.7 million in the first half of 2020. NFTs have exploded in other applications such as art, sports collectibles, and music. NBA Top Shot (a digital take on collectible basketball cards) is one example.

Published by Dapper Labs, NBA Top Shot has surpassed $780 million in sales in just a year. And an NFT digital collage by the artist Beeple sold at Christie’s for $69.3 million. Investors are pouring money into NFTs, and some of those investors are game fans. SoftBank, one of the world’s biggest investors, recently invested $680 million into Sorare, a Paris-based maker of an NFT-based fantasy soccer game built by 30 employees. Dapper Labs also raised $250 million two weeks ago. The weekly revenues for NFTs peaked in May and then crashed. NFTs sales hit a new peak in August, crashed again in Sepetmber, and have been rising again in October, based on sales numbers of

But these systems have drawbacks too in numerous scams where people steal art and sell it as their own NFTs.


The graphics may not look that impressive. But Axie Infinity’s primary function is as a game, not an NFT collection. Why did it take off? Zirlin thinks it has to do with the pet angle, as people love collecting and trading pets, making to things like Pokemon.

“Our stance is that, first of all, Axie Infinity is an incredibly fun game. And there are people who are come from the Magic the Gathering pro circuit who say that Axie is the game that they’ve always wanted to play,” Zirlin said. “We believe that a simple, fun, accessible game that centers around collecting pets is the most accessible and most scalable type of game of all.”

Sky Mavis was founded in 2017 to make Axie Infinity, a game where you create cute characters akin to Pokemon or Tamagotchi pet breeding. Those characters are “minted” as NFTs, which use the power of the peer-to-peer verification of the blockchain (the transparent and secure digital ledger) to authenticate the uniqueness of digital items. These are one-of-a-kind NFTs attached to one-of-a-kind characters.

The players breed these characters called Axies and level them up and fight with them. And they give the players ownership of the characters, in contrast to other games where the game publisher owns the characters. The players can also sell these characters on a marketplace to other players or even investors.

The key concept here was play-to-earn (P2E), which has given many players — starting with poor players in the rural Philippines first and now spreading to many other emerging markets — the ability to earn money, even a living, playing in the virtual world of the game. I call this the Leisure Economy, where we all get paid to play games.

Zirlin believes that play-to-earn has transformative economic power for communities, particularly in developing natures that were hit hard by COVID-19 and where jobs are in short supply. It could even be a model for more developed nations as the coming of AI will likely wipe out a lot of jobs, he said. In recognition of the opportunity, Yield Guild Games started a guild with thousands of players to help players earn money more easily and then invest some of the proceeds in investments in blockchain games, including Axie Infinity.

In the case of Axie Infinity, players pay an upfront fee to purchase their Axie characters. They need three of them to fight matches, and so the cost of starting the game is above $400. That’s very expensive for people in developing nations. But Yield Guild Games pioneered “scholarships” for players, where it paid the upfront fees through pooled guild money.

Those players can then use the funds to buy Smooth Love Potion (SLP) tokens to generate more Axies, and they will keep a large percentage of the tokens earned that way, and the rest goes to the guild. The guilds can also acquire land (sometimes in other games too), and its players can build out their plots and then the whole guild benefits from the resources generated on that land.

This brought the new players into the game and the guild.

“We’ve created hundreds of thousands of jobs in the Philippines,” Zirlin said.

Now many such guilds are doing that, helping to grow the number of Axie Infinity players at a tremendous rate. Yield Guild Games helped the Axie Infinity community get noticed by funding Emfarsis to make the documentary, Play-to-earn, about the roots of the game in the Philippines. In this way, more than one company is benefiting from the Axie Infinity ecosystem.

Besides the Philippines, where the game originally took off, Axie Infinity is now growing in emerging markets such as Venezuela, Brazil, Indonesia, Malaysia, Thailand, Nigeria, Ghana, and Turkey.

“I think these markets are just a little bit behind the Philippines,” he said. “We’re really seeing this missionary model emerge. I think that we’re poised for huge growth. I believe that most of the world survives on less than $10 a day. The math shows that there’s a huge potential market out there.”

While it is disruptive, Sky Mavis is trying to play by all the rules in the world. In the Philippines, the company said to players that if the local government requires them to pay taxes on earnings in a game, then they should do that.

Zirlin is excited because of the income generation among underserved people around the world. About 25% of the players are “unbanked,” meaning they have no bank accounts. And 50% have not previously used cryptocurrencies, while 75% are new to NFTs.

“It’s beautiful that we have been able to introduce crypto to people that have traditionally not been using it,” Zirlin said. “We’re getting this technology in the hands of the people that really need it. And that is super rare.”

Decentralized community ownership

Above: Sky Mavis/Axie Infinity cofounders.

Image Credit: Sky Mavis

The team was started by a band of missionaries (mostly based in Vietnam) who believed that NFTs would enable new types of games. Just as mobile gaming unlocked new design spaces and player archetypes, so too would NFT games. These games won’t look like the games of the past and will require an entirely new perspective and skillset to build, they believed. But when they launched Axie Infinity three years ago, almost nobody cared or understood what an NFT was. (I actually knew!).

Sky Mavis’ leaders include CEO Trung Thanh Nguyen, chief operating officer Aleksander Leonard Larsen, art director and game designer Tu Doan, chief technology officer Andy Ho, and growth lead Zirlin. But these people don’t completely control the company. Sky Mavis and Axie Infinity is really more like a coalition of the company, investors, and players.

They believed property rights incentivized players to act more like founders and employees rather than users. These rights include being able to sell your game assets to anyone in the world, earning liquid tokens for playing/contributing, and being able to own a piece of the game you’re playing. If you spend money in a game like Axie Infinity, it was more like making an investment, as you might make money on that investment later on by selling what you bought.

They also believed that play-to-earn unlocks new types of work around digital metaverse economies, just as Uber, Airbnb, and DoorDash created new types of jobs and professions.

“It’s a great example of incentive alignment, or co-ownership, between the game developer and community,” Zirlin said. “And it’s a model that we think is going to transform the way that builders and users interact, going forward. And we think that it’s going to transform the way that the internet works, where it’s going. I think it will create a more open and more fair, a more empowering version of the internet, a little bit more in line with actually what the original creators of the internet envisioned.”

The decentralized nature of the company doesn’t end with the decentralized blockchain transactions. In addition, players can be rewarded with SLP (Smooth Love Potion) utility tokens through gameplay. SLP, currently worth 8.185 cents per token, is what players need to create new Axies. The pricing has been fairly rocky in recently weeks, and SLP is well off the peaks it saw in the summer.

Or they can purchase AXS governance tokens. The market values of these tokens have skyrocketed. The AXS token, for instance, has a price of $122.63 per token now. It would be worrisome if all the players were speculators and they bailed out if they saw the price decline.

“We don’t necessarily think too much about a target price for the tokens as this is kind of a free market,” Zirlin said. “There are many market forces at work. We do think a lot about what are the sources of demand for tokens within the economy, and how the tokens are created or destroyed and how that has to be balanced.”

Regardless of price fluctuations, retention of day one users — or those that come back after one day — has been 65% regardless of the token price, Zirlin said.

What’s amazing about Sky Mavis’ valuation at nearly $3 billion is that it only owns 20% of Axie Infinity. The rest is owned by a combination of the players and investors (or speculators) who have purchased the tokens. Those citizen owners will eventually get a say in the ownership decisions of the company and its protocol, though Sky Mavis is acting as the steward right now.

When it comes to handling payments, the protocol is earning fees and these are being stored in a community treasury. And in the future, the  owners of the Axie tokens will have have the chance to figure out what that treasury is used for. The treasury has 36,300 Eth (the Ethereum cryptocurrency) and 18.3 million Axie tokens in it, Zirlin said. The worth is $7.48 billion, according to measurement firm CoinGecko.

“That’s an indication of the power of games that are owned and driven forward by the communities that play them,” Zirlin said.

A revolt

Axie Infinity

Above: Axie Infinity has generated $2 billion in sales and resales.

Image Credit: Sky Mavis

In traditional gaming, the publishers and the distribution platforms (app stores) have all the power. If characters are created, the developer and publisher do that work, and they permanently own them. Players merely “rent” those characters, Zirlin said.

Zirlin believes that this is far more fair of a relationship between a game developer and its community. Sky Mavis doesn’t have to share 30% of its revenues with the likes of Apple or Google, as it isn’t on the app stores. It is still getting noticed on its own, even after cutting out the middleman, and it can afford to share more of the wealth generated by the game with the players themselves. Axie takes just 4.25% of each transaction.

In that way, Axie Infinity is part of a social movement. This level of ownership and accessibility within the Axie economy is upending society and creating an economically viable digital nation, Zirlin believes.

Axie has grown to be the largest NFT gaming ecosystem and has amassed players around the world with more than two million daily active users logging into the platform in August. Axie Infinity has already achieved $33 million in daily transactions, for a total volume of over $2 billion. Again, without being on the app stores, Zirlin points out that Axie Infinity is one of the top 60 games being streamed on Twitch.

This economy has challenges, as Sky Mavis has bumped up the price of the Axie minting several times, and sometimes the price has fallen, as in recent weeks. If the price really slides, then the amount people can earn will also slide.

“We put the infrastructure into the game to grease the wheels of the economy, and NFTs are permeating mainstream culture,” Zirlin said. “And money has gotten more abstract over time, from shells to gold to paper money, to fractional reserve banking, and now to full digital currencies. Historically, whoever has been in charge of this abstraction of money has been able to define the future of culture and entertainment. I think that’s happening right now.”

The funding

Art Art made money from Axie Infinity while he couldn't operate his business.

Above: Art Art made money from Axie Infinity while he couldn’t operate his business in the Philippines.

Image Credit: Emfarsis Consulting

Andressen Horowitz, one of the most active game VC investors with 32 deals in the first nine months of the year, led the round. Other participating investors included Accel and Paradigm. Other investors include Libertus and Dallas Mavericks owner Mark Cuban.

The company has 60 employees (mostly in Ho Chi Minh City in Vietnam) now and it will use the money to build out a global team, evaluate future projects, scale its infrastructure, build its own distribution platform to support game developers making blockchain-enabled games.

“Sky Mavis’ marquee game, Axie Infinity, has introduced a new way for anyone to turn their time into money through play-to-earn, a new mechanic that allows gamers to transform their skills and time into earnings and distribution rights for tokenized in-game items,” said Arianna Simpson, general partner at Andreessen Horowitz, in a statement. “The Axie team has unlocked a new way to build and play games that is already completely redefining this category. The game’s growth is a phenomenal testament to how deeply this model is resonating with people around the world. The Axie team has triggered an earthquake in gaming and the industry is now forever changed.”

To date, Sky Mavis has raised $161 million. Back in May, the company had a relative small round with $7.5 million raised. But things have changed dramatically in the past four months, Zirlin said. While Yield Guild Games drew a lot of attention by creating a guild of players — many of them in the Philippines — who play the game for a living in what is known as “play-to-earn,” now hundreds of such guilds have popped up.

Zirlin noted the company has already created Ronin blockchain protocol, which enables the company to bypass the slow parts of the Ethereum blockchain platform and use its own sidechain to speed up transactions, get rid of the expensive “gas” fees (associated with environment and computing costs for blockchain transactions), and use Sky Mavis’ own security.

The Ronin blockchain

Axie Infinity lets you convert game rewards to real money.

Above: Axie Infinity lets you convert game rewards to real money.

Image Credit: Yield Guild Games

The Ronin blockchain protocol is a “sidechain” that does what I described above, but the company could also use it to easily host games created by other developers. Since Sky Mavis did the work of building a bridge to Ethereum (so people could transact using the popular Eth cryptocurrency) and created other things like a storefront for transactions, it hopes to host other developers with new NFT games on the platform.

That could generate more revenue for Sky Mavis. It also built The Mavis Hub as a way to distribute games on PCs and Macs. The Ronin blockchain currently secures more than $1.5 billion in assets.

“With the launch of Ronin in April, that was like the last piece that gave us scalable infrastructure,” Zirlin said. “Once we added those together, we became a vertically integrated NFT gaming project where we had all the right pieces fitting together at the right time.”

With blockchain, the peer-to-peer network of computers can be used to verify a digital thing, like an NFT. If all of the computers are basically in agreement, then the authenticity is verified. If someone compromises one computer, that’s not a big deal if all the other ones are not compromised. The verification still works. Only if more than half the computers are compromised in a large-scale attack, then the verification can be compromised. That’s very hard to do with Ethereum since so many computers are part of its blockchain protocol.

Sky Mavis takes the security onto its own shoulders with the Ronin blockchain. But it uses partners to verify authenticity. And even if Sky Mavis is hacked, and its partner “validators” are not, then the security holds up.

If you make money in the game, you can cash out your SLP for Eth. And you can convert that to dollars if you wish, or grow your stockpile of cryptocurrency. If players worry about the security, storing their earnings in Eth could be considered more secure.

“Our plan is to decentralize more in the future,” Zirlin said. “It’s a step-by-step process, and so far it’s not something the players are asking for. They’re asking for things like more gameplay, a decentralized exchange, and fast transactions.”

So far, this system has worked well, and it doesn’t use nearly as much computing power and wastes fewer environmental resources, resulting in lower “gas fees” per transaction, Zirlin said. You’ll have to pay small fees if you convert Eth into the Ronin system.

Since this investment into Ronin has broader implications, the company could become something like an indie game publisher.

“For now, we have a lot of work to do as stewards of the Axie ecosystem,” Zirlin said. “There’s so much to build on it still. This is an amazingly inspirational story that feels good. It’s one of the rare stories that has shown a glimmer of hope in these really difficult times of the pandemic. It makes us feel really happy that we’re able to help people, but at the same time, it’s this huge responsibility that we take really seriously.”

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