how-does-axie-infinity-work-and-make-money

How Does Axie Infinity Work And Make Money? The Axie Infinity Play-To-Earn Business Model In A Nutshell

Axie Infinity is an NFT-based online video game developed by Sky Mavis, a Vietnamese game studio founded by Trung Nguyen in 2018. Nguyen combined his interest in blockchain accountability and the CryptoKitties craze to launch the game in August 2018. Sky Mavis generates the bulk of its revenue via the 4.25% fee it charges on all in-game purchases. This includes land purchases, monster NFT trading, and monster breeding. Axie Infinity requires that all new players purchase three monsters to get started. Since the cost can run into hundreds of dollars, Sky Mavis will lend players the monsters and collect a 30% interest fee once the player starts earning currency.

Axie Infinity origin story

Axie Infinity is an NFT-based online video game developed by Sky Mavis, a Vietnamese game studio founded by Trung Nguyen in 2018.

Before founding Sky Mavis, Nguyen had worked for the Silicon Valley-based Anduin Transactions, a platform that made investment deals faster, more efficient, and more transparent.

Nguyen had a particular interest in the accountability facilitated by the Anduin platform, which he linked with the burgeoning interest in blockchain in Vietnam. While others focused on Bitcoin and other cryptocurrencies, Nguyen recognized that blockchain technology could be used to build video games. He was particularly in the game CryptoKitties, where users could buy, sell, and breed unique virtual cats validated by the Ethereum blockchain.

Over the next few months, Nguyen developed his own blockchain-based game, combining the true ownership element of CryptoKitties with the competitive gameplay of the Pokémon series. The game, which he called Axie Infinity, featured fantasy creatures based on the axolotl, a Mexican salamander with the ability to regenerate limbs, gills, and parts of the eyes and brains. It was released in August 2018 and was an instant success.

In October 2021, total sales volume in the three years since launching amounted to $2.3 billion. The company also recently secured a further $152 million in Series B funding to build a distribution platform to help developers create blockchain-based games.

How does Axie Infinity work?

In Axie Infinity, every monster is a non-fungible token (NFT). 

Players earn tokens by engaging in turn-based battles with other players or computer-controlled teams. These tokens are then used to “breed” new monsters by creating more NFTs. 

Since the game is based on the Ethereum blockchain, each monster is recorded as a unique object and be tracked. This tells other game players that the creation of the monster took real and verifiable time and effort to create, which increases value.

The NFT-based monsters can also be traded in the game’s marketplace for real money.

Axie Infinity revenue generation

Sky Mavis earns money from the game in two primary ways. 

In-game purchases

Firstly, revenue comes from in-game purchases such as land and NFT monsters. The company takes 4.25% of the total price of each purchase. In February 2021, nine plots of land in Axie Infinity sold for approximately $1.5 million.

The company also earns money from breeding fees, which are collected when a player decides to create a new monster. Fees are payable in either SLP (Smooth Love Potion) or the game governance token AXS.

Note that Sky Mavis must share the breeding fee with the developers and owners of AXS.

User earnings

New players to the game must first invest in three monsters, with the cheapest monsters costing around $200 each. 

For players who cannot afford this upfront expense, the company will lend them the monsters. When they progress to the point of making and selling their own monsters, Sky Mavis will collect 30% interest. 

Connected Business Concepts

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free-to-play
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proof-of-work
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non-fungible-tokens
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Ethereum was launched in 2015 with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled, and Distributed Applications (dApps) get built without downtime or third-party disturbance. It also helps developers build and publish applications as it is also a programming language running on a blockchain.
the-graph-token
The Graph is an ERC20 Utility Token (built on top of Ethereum) to enable consumers to freely query the blockchain through a fully decentralized database kept by indexers, incentivized by the payment of tokens (called GRT). The network is also ministered by curators and delegators that help maintain a high-quality index.
bat-token
BAT or Basic Attention Token is a utility token aiming to provide privacy-based web tools for advertisers and users to monetize attention on the web in a decentralized way via Blockchain-based technologies. Therefore, the BAT ecosystem moves around a browser (Brave), a privacy-based search engine (Brave Search), and a utility token (BAT). Users can opt-in to advertising, thus making money based on their attention to ads as they browse the web.
ripple-blockchain
In 2012, co-founders Christian Larsen and Jed McCaleb created Ripple, a technology acting as both a pre-mined cryptocurrency called XRP and a digital payment platform enabling monetary transactions. Where Ripple is the tech company, XRP is the decentralized ledger.
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In 2014, Jed McCaleb – which also played a key role in the development of Ripple – created a cryptocurrency to provide fast, reliable, and affordable money transactions. The same cryptocurrency has considerably grown seven years later. It is now one of the most stellar cryptocurrencies to provide a real-time platform that links banks, payment systems, and people. Meet, Stellar!
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Read Also:  Gaming IndustryEpic Games Business ModelFree-To-PlayProof-of-stakeProof-of-workBitcoinDogecoinEthereumSolanaBlockchainBATMoneroRippleLitecoinStellarDogecoinBitcoin CashFilecoin.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"