Blending Gaming and DeFi: Lessons from Axie Infinity

Transcript

hello great hi everyone i'm alexander and it's a pleasure to be back here at ecc last year i was here as well i was speaking to in front of four people so a few more more here this time so uh great to see so many people interested in axi super fast about me i'm one of the co-founders back in 2017 we played crypto kitties together me and the other guys and i changed my life moved to vietnam to build this company and game so at its core our main company is called sky mavis we see ourselves you know building the

infrastructure and the games to bring the virtual worlds to the masses and that's also how we look at axi so when we look at axi we can basically say that it's transcended what a traditional game is at this point because people are not only playing but they are living inside the game for those of you guys or who haven't seen any of the latest metrics here's like a super quick overview uh since we founded the company in in early 2018 it's generated a total of 95 million dollars in revenue and in july so far 76 million or well now it's a little bit out of date it's

about 85. so what this tells us is of course you know the once a game really hits traction there's a lot of revenue to be made and of course not only for us but also for the players who are trading on our marketplace we look a little bit more deeply into what is actually for those of you guys who are completely new and the very simple way of looking at it is that it is a pet game you have your main axi game characters and they can be used across many different games some of the of which we as a main company are creating and some of which that we want the community to create down the line so we have a breeding game which was for a very long time you know

inaccessible because we were on ethereum and probably the battle game is the one that that's most known lately where you know players are battling for living so the same but we're also developing more games like a kingdoms or land game based gameplay which is coming at a high level axe infinity is really hard to get started with right now we like to say or when i'm comparing it to where we are axia infinity is basically an island the only way to get to that island is to swim or to get someone to you know follow you along the way a friend a family member but once you have the main axi characters you know that's when you can get started by playing the game like you could in any other type of game

so the battle game can be played on ios android pc or mac and once you're playing the game you can farm resources like you can do in any other you know normal game that's not built on blockchain technology what's interesting here is you know some of the assets that can be used in the other games so when you battle you can earn tokens and you need to spend some of these tokens inside the other games this is very basic but what's interesting here is that you know we as a company we do not sell some of these tokens the only way that can be found is by playing the game so it's basically you know a proof of playing or proof of work in another sense for all the crypto

people here now this is in stark comparison to what you would find in the traditional gaming industry where the goal is always to extract as much value as you can from the player base like it's generally free to play and you have a really long tail where you know go super granular into the data and then you want to i want to find out how do you cater to the whales in axi we actually don't do that so much of course we we make money too but a lot of the money is coming from the players selling to the players and that they are you know co-generating the value with us and that's you know what makes it so attractive and basically enables

this ability to earn because if we go back to how you know the the slp token for example is created the only way to do that is by playing and that's also the only way that you can generate a new axi at this time so it's a new model i mean we've called it play to urn it's not like incredibly it is very revolutionary to an extent it's been tried but not at this scale where we now have over half a million players who are playing every single day so from a game developer perspective this is obviously a little bit scary because what we see is that players are in

extrinsically motivated to start playing axe infinity so what they want they get attracted to the revenue like perspective oh i can come in i can earn some tokens is really attractive and even in the philippines is actually five times the minimum wage right now what they can earn every day so for us you know as game developers we're always considering that and you know what is how can we make sure that this is actually something that people love that they care about more than just the money perspective and when we ask the players a blockchain game is generally three things like it's the community part it's really big it's really important that you have a solid community that you've been you know building for some time and then you have you know the game of course it has to be fun if the game

as it at its core is not fun enough to play nobody would play it for an extended period of time and then you have the economy piece which in our case is about 50 of the player base they spent most of the time on that but what we think is you know and what we see is that a lot of since it's less than fifty percent it's basically a driver for growth for us so these players they come in and if it was only you know roi based it wouldn't necessarily explain like why are people spending eight hundred thousand dollars on a single axi like this one of course i mean it's beautiful it's got some amazing lips handsome lips but the idea here is that you know people they find a connection with axi they

want to own the most expensive nft assets because they feel that it gives them status and you know they are belonging in the community community there is no clear path to roi here and that's not you know alone uh like it's not this one thing it's not some kind of where where there's one sale that's happening and then it's dead no this is actually ongoing volume every day for for axi infinity lately and all of this is is basically coming from you know a period of building for three plus years and the innovation trigger as i mentioned is you know when we are migrating our axes from ethereum to ronin which is an

ethereum side chain basically built using the ethereum virtual machine so it's not only volume it's actually players as well so when you look at you know the growth that we had had over the past couple of months well it's been simply staggering and one of the issues here right now is that we've been growing too fast too basically like the servers are breaking down of course it's a luxury problem to have but what a lot of our new players don't understand is that we've been building for so long so they might think that okay the servers are breaking they have the same expectations that they might have with a normal game but for axi since we're building you know

on bleeding edge tech it's very easy to get scarred and not only that but people are also getting scammed because you know they don't understand what is a private key they don't understand what the public key is like i i have so many emails where literally the title is the seed phrase because so many people are being onboarded directly onto axi that have never used crypto before but actually is more than just numbers and that's also what we try to communicate to the players like we have cultivated a community of you know amazing artists of developers who make games on top of you know nfts so nfts are the perfect you know example of what can be used as a platform down

the line you just need to have that you know core content piece where a lot of people are excited to build inside your universe so this is from early 2018 where we started seeing you know players were building games inside axi just you know using the art creating flappy axi and axey sushi which is an accidental racing game and that also inspired us to take this to the next level they make you know esports tournaments and anything that you would imagine in a traditional kind of esports or popular type of game but you know best of all they even take axi infinity tattoos and to me you know that's a that's a good uh good sign of the community that you're building so i would generally say that if you guys see a community where there are plenty

of people taking tattoos like hopefully not paid that's a really good sign that i should probably take an interest in that community and this is pretty early as well even before you know we went like mainstream even though it isn't really mainstream so another interesting aspect that we've seen in axi is that since it's very expensive to get started right now players are lending their axes out to other players and this is something that formed very organically they call it a scholarship so axis scholars they they borrow axes from other players who are then known as managers and some of these managers they might even set up their own companies with real contracts and of course smart

contracts as it goes down that way but it's been very exciting to see this evolve but it also you know has its downsides because in every society there are humans who act badly there are criminals and we see the same thing you know happening in axi where some players are abusing other players so this is something that you know it's pretty um interesting and that we are paying close attention to so how do we handle criminal in a criminals in a system that should eventually become decentralized but that pales in comparison to what we see when we read messages like this so this is a real couple in the philippines

that are living playing axe infinity there was even a documentary created around these around the specific phenomenon which then again also drove a significant amount of growth for us of course the responsibility is now massive because whenever our servers are down players are literally not able to feed themselves so yeah we are now working around the clock to make sure that the servers are up and that people can actually play so our strategy here is quite simple we are taking a holistic approach to this like we need to get the end user uh to have a very simple experience and that's really what drives the growth like i know

everyone in in crypto wants a very you know interoperable ecosystem where everything like all the legos are working together in gaming it's a little bit different because what we need is not many like clunky janky things that make something you know cool at the end the users are so or the players are so accustomed to this very clean experience so that's what we're aiming for that's why we've also taken a step back and made our own infrastructure solution but the end goal is to turn normal players into blockchain players or users to do that we built our own sidechain which is called ronin at a very high level uh you know it's it's uh nothing uh you know brand spanking new

in terms of tech what's exciting here is basically the implementation that allows us to be very closely connected to ethereum while we can still you know hit scale to an extent so we are we chose to build using the ethereum virtual machine for many reasons like ethereum is our home we've been building here for many many years uh probably like a lot of you guys maybe didn't even know it's pretty random that we suddenly appeared but in reality we've been here for a long time very connected to the ethereum community and you know other benefits would be that it's the same seed phrase set up basically so if you have your seed phrase on ethereum you can also import that into ronin and then you have

the same you know public key we can also use existing infrastructure that like for example when we're making our nft marketplace we have that on the theorem easier to make on our own in sidechain same thing if we're making a decks for example and some might say that this is an ethereum competitor we see it very differently because any innovation that happens on ronin will benefit the ethereum ecosystem and the same thing is actually similar for ethereum so any kind of innovation that happens here will then benefit us in the end for us this is very important because it basically means that you know as we you know become more decentralized

we know that players want to have their you know most expensive assets stored on ethereum and not necessarily you know running because people love decentralized stuff and it's very important for us too this is a means to an end to get there and this is amazing meme i saw on the on twitter uh by phobsi um it's so fitting because when we do research we actually see that over 50 percent of the user base that we have in axi are totally new to crypto they've never had their private keys never had anything and they never even a lot of them have never even had their own bank account so to us this is amazing because it basically means that if we're

tapping into an untapped market we're turning crypto or non-crypto users into crypto users via a game and then eventually well they might become defy users but you know d5 is is not so attractive to normal players or normal people even though i hate to say it because i love dfi and i think it's amazing but uh for normal people it's a little bit hard to understand so what we're doing right now well i mean actually infinity can't cost you know 1200 to get started for all players so we've been building um a new game for the past you know 12 months 13 months which is then going to be an upgrade to the current battle game with has free to play more roguelike more dynamic

and to kick that off is going to be a pretty exciting season with many different tournaments things that you guys are used to seeing from traditional gaming from the traditional gaming space so our strategy is is you know out of game perspective is simple when you see you know the potential for nfts to work as a platform for many different games well that's it it's actually the same thing that but our approach is the fortnight way where they are making the main game actually the same thing happened to an extent in world of warcraft the main game is the driver for users or players and then they hang out it's more than a game it's a social place and that's where the exciting things are happening

and nfts are perfect for that because you can basically if you have the users or the players you can add value to the nfts and then you know turn it into something more than just one game so the end state that we're going for is an axe infinity virtual world to get there though it's probably going to be a decade of work uh but it's pretty really exciting uh to be in the space and of course to talk to you guys about it today yep four minutes for questions yeah yeah i'm finished nice timing hi hey thanks for the presentation um so

you mentioned that that's like the game model is free to play um are the players able to monetize their efforts and how yeah so right now it's not free to play right now the only way to get started is that you as a player you need to buy axi characters which cost about thousand dollars for a team or you need to borrow axes from another player like we know that that's not sustainable for the future but the easiest way to get past that is you know to make a game mode which is free to play and rather than letting them earn as much tokens because you know inflation it's better you know that they can experience the game and then fall in love with the art fall in love with the community and then take their first step into buying

an axi character so hello so you say you take a cut a 4.5 cut on all the economic transactions but then once people get their uh nft out on ethereum or do you keep do you still keep as part of the nft like a cut at that point no so we have our own nft marketplace enrolled in uh that's you know where the the when the transaction happens there we take a 4.25 cuts but if we zoom back a little bit you know axes were originally on ethereum as nft is there but what we found is that over 97 of all the trades were happening on our

own internal marketplace even if they could trade on openc or any other type of platform and you know our thesis is that you know gamers they stick to what they know to an extent like if you have the if you are the publisher and if you have them you can basically take them from one journey to the next and it makes sense that they would be on the main marketplace rather than a marketplace that's that's you know very tries to capture the entire market so right now you you can't actually uh move your nfts from ethereum or from a roll into back to ethereum but that's coming soon as well thank you very much for your

presentation um i would like to know uh related to the infrastructure that you built with the rolling do you plan to let it to access to other companies that want to build games as well yeah so that's a question we get a lot so everyone wants to build on ronin or well not everyone but there's a lot of interest in building on rolling one of the reasons that we started to make our own changes is because we saw that we were being uh squeezed by d5 so uh in d5 season for example it was so expensive to transfer axes from from one like people couldn't even list on the marketplace let alone breed so the breeding game was inaccessible for the longest period of time so that's

why we took a step back and actually we're not that interested in having d5 stuff on chain that's not related to axi but maybe in the future as we hit more scale or you know things get a little bit more clear maybe some super breakthroughs from the phd you know graduates that probably are in this room maybe we can implement that like our purpose is not to be super scientific or to have breakthroughs on the scientific like on the on that side we would rather focus on the consumer how can we bridge the gap between you know the normal people to understand crypto and and not the the other way around so yeah in the future maybe we'll open it up for other game developers it's definitely something we see a lot of interested in but you know probably not right now because we have to

we need all hands on deck to make sure that the game is stable first okay perfect hi alexander i'm over here um great to see you and my question is about your strategy so it makes a lot of sense focus on the customer experience you're literally using cute animals to draw people in my my question is why do you think you've been able to succeed um whereas others maybe haven't if if the formula is so simple yeah the formula isn't really simple so in reality like we've been grinding for three years uh we almost went bankrupt one time

um when all our competitors went bankrupt and the reason we didn't because we have a lot of our base in vietnam so money goes a long way and that's you know when you're building through a bear market you can also understand more about you know what drives the kind of behavior that we want uh so if it was that easy to make i think everyone would have actually already so i mean the secret sauce is obviously in the team i think that that we've understood something that others haven't and you know we've been just executing and managed to build trust in the team's ability to execute so that also makes that makes people want to hold on to the axi assets which then again you know uh drives the the the uh the idea that this is something that other people

should hold on to so i think even on bank list they had a longer episode about mimetic desire i think that's something that we've basically tapped into an axi a lot of people want to have axes because it gives them a connection to what we made and that has to stem from something which in our belief is the core team and the ability that we have to you know set the tone uh how we want to make this ecosystem and then eventually kind of it dribbles down from there so we actually see axi more as a nation than a game and in the nation you need leaders uh that can evangelize and let other people know like how we should anything should be thank you guys