The Expanding Axie Infinity Metaverse

An analysis of Sky Mavis' "Axie Core" policy shift and how it impacts Axie Infinity's growing number of gaming experiences.

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Executive Summary

Sky Mavis announced Axie Core, a shift in policy by going back to its roots and return emphasis back to the axie NFTs rather than any one particular game. Axies are digital pets that unlock multiple gaming experiences as its main utility. But during the latest bull run, a lot of newcomers focused more on the game than the NFT. The development team made it a point to emphasize that Axie Infinity is more than just  another video game.

In 2022, the team did just that as they shipped multiple features that focus on gameplay experiences that add value to the Axie NFT. This article looks at the policy change Sky Mavis took and how each gaming experience relates to the economy as a whole. It is no secret that Axie Infinity was the game that put the blockchain gaming industry on the map. This is because it was arguably the first successful gaming project that allowed gamers to earn from interacting with their ecosystem. At the peak of its success, the price of its governance token, Axie Infinity Shards ($AXS) hit an all-time high of $164.9, and the game had roughly 2.7 million users. The numbers have taken a turn for the worse since then as the economic model proved to be unsustainable. The economy crashed as demand for assets couldn’t keep up with the overwhelming increase in supply, which ultimately led to the start of the project’s misfortunes.

The crypto bear market didn't help Axie Infinity to recover, but Sky Mavis, the company behind Axie Infinity, has been busy building during this red market crisis. One thing unique about how Sky Mavis is developing its metaverse is that they are not building it alone. This article looks at how Sky Mavis has built multiple gaming experiences on top of their existing intellectual property. It also provides an analysis of the mechanics being implemented for these gaming experiences, and how these games impact the overall Axie ecosystem. 

Contents

• Policy Shift: Axie Core

• Infinite Game Experiences

• Axie Infinity: Origins

• Axie Infinity Builder’s Program

• Axie Infinity: Raylights

• Axie Infinity: Homeland

• Axie Infinity Live-Ops

• Future Possibilities

• Lessons Learned

Policy Shift: Axie Core

Axies are digital creatures that give you access to the games within the Axie Infinity ecosystem. One key policy shift that the team has decided to adopt is to put the focus back on these axies instead of the game. This doesn’t mean that Sky Mavis will stop developing games under the Axie Infinity IP. Instead, emphasis is placed on NFTs and their ability to connect with the user.Within the Axie Infinity ecosystem, axies are considered the key to unlocking multiple gaming experiences.

Sky Mavis decided to put their NFTs at the center of the entire ecosystem. They recently introduced a cosmetic mechanic called Axie Accessories, which aims to personalise and distinguish each axie from another with the use of accessories that axies can equip. These NFTs have long been marketed as the “key to unlocking infinite experiences”. Cosmological mechanics help build intrinsic value for assets by creating a bond between NFTs and their owners. 

An easier way to illustrate the policy shift is by using the purchase of a pet, let’s say a dog, as an example. When someone purchases a dog from a pet store, that person is purchasing the dog at the dog’s market value. Once the person builds a relationship with the dog, that pet increases in value from the person’s perspective because of the intrinsic value it has for the owner. Sky Mavis is trying to replicate that same bond but with digital pets. This is where the whole economy can, and probably will, revolve around.

Infinite Game Experiences 

This section focuses on the different experiences that two of the main Axie assets, axies and land NFTs, unlock for the gamer. Axie Infinity: Origins and the Axie Builder’s Program are two experiences that require axie NFTs, while Axie Infinity: Raylights and Axie Infinity: Homeland are two games that use land NFTs. This section also discusses the Live-Ops events that the team does outside of the main gaming experiences. There will be a description of each gaming experience, as well as the economic impact it has on the entirety of the Axie ecosystem. 

Axie Infinity: Origins

Axie Infinity: Origins is the first major gaming experience in the Axie Infinity ecosystem. This is the updated version of the card game that sparked the blockchain gaming revolution. A more comprehensive deep dive can be found in a previous article. Each axie has six body parts that correspond to a move set in the game. Players form a team of three axies and compete against each other for a place on the leaderboards. Additionally, the team is marketing the game for Esports, which can greatly benefit the game.

The economic impact of Axie Infinity: Origins lies in the updates and mechanism changes that the Sky Mavis will make as this directly affects the strategies players formulate when entering a match. Though there is mention of part upgrades in the future, there is currently no way to change an axie’s body part. This means that players are stuck with the moves that their axie has.

Whenever players’ axies are affected by an update, one of two things can happen. The first is that players will have to reconstruct their teams. The reconstruction may come in the form of purchasing brand-new axies, or breeding axies until the correct body part combinations are achieved. The second is that players will get frustrated and might see the update as a way for developers to get more revenue. This is a very dangerous outcome as it likely results in players leaving the ecosystem.

Axie Esports’ impact on the economy is very similar. Tournaments do not necessarily have the same rules. Its variability is what makes each tournament unique, exciting, and distinct from one another. Joining these tournaments may cause players to purchase new axies just to be competitive for that event. Overall, Axie Infinity: Origins has a large impact on the demand side of the axie NFTs depending on the updates they release, or the restrictions players have in using axies to compete.

Axie Infinity Builder’s Program

This section talks about the Axie Infinity Builder’s Program, a project led by Sky Mavis. This program allowed its community to build their own gaming experiences on top of the existing Axie Infinity IP under the supervision of Sky Mavis. A total of twelve projects have been accepted into the program and received guidance and support from Sky Mavis. Some of these games have already been launched, while others are still in development.

Among those already launched is a game called Axie Defenders Of Lunacian Land (Axie DoLL). It has a rougle-lite survival gameplay that is very similar to Vampire Survivors. The mechanics are quite different from the main Axie Infinity experiences, meaning that a different set of axies thrive in this game. Also, Axie DoLL is also a community-developed game, meaning that this, and the eleven other builders' program games, are being developed by community members while Sky Mavis develops their main gaming experiences.

The builder’s program allows for additional use cases for the axie NFTs by allowing different sets of parts and card combinations to thrive in alternative gaming experiences. Though this might not directly affect the floor price of normal axies, the popularity of these alternative gaming experiences could increase the price of axies with specific body parts that would excel in their game. This essentially means that demand for specific axies would increase depending on the game’s popularity with the community.

Axie DoLL is one of the more developed projects, as they are currently looking to integrate an Esports mechanic into their gameplay through head-to-head survival matches. As discussed in the previous segment, Esports will stimulate the demand for the axies as more players look to compete.

Lastly, with this being a community-driven project, more gaming experiences will come out and are likely to follow a similar strategy. The more gaming experiences available to the community, the more utility axie NFTs will have, and the more demand for specific axies will increase.

Axie Infinity: Raylights

Axie Infinity: Raylights is a minigame that revolves around a different Axie Infinity asset, their land NFT. It’s a casual farming game that requires users to unlock recipes by combining different ingredients together. It was first teased during AxieCon in September 2022, and was mainly used to give additional utility to land NFT owners, who have held the asset for years. However, its economic impact lies more in the long term possibilities than immediate market influence.

Axie Infinity: Raylights is the first game that uses Axie IP that was developed by an external gaming studio. With the builder’s program focusing more on community-driven initiatives, Axie Infinity: Raylights opens the door to the possibility of more industry professionals building alongside Sky Mavis. As previously discussed, more gaming experiences created mean more demand for Axie Infinity assets.

From a community perspective, the game requires a lot of collaboration with other community members. Community interaction benefits a project in the long run. This is because it is a way to strengthen the bonds of players to both the community and the game, as well as build player loyalty in the process. 

Axie Infinity: Homeland

While Axie Infinity: Raylights is a mini-game that is based on the land NFT, Axie Infinity: Homeland is the main flagship game that is developed by Sky Mavis that gives utility to the same land NFTs. A phase 1 alpha of the mainland gameplay was released last December 2022 and it had a very basic resource gathering and management game loop. 

Though the initial gameplay seems basic, the following stages of its development could significantly affect the entire Axie economy. As per their roadmap, a full version of the game is expected to be available on or before 2026. Some of the key milestones that Axie Infinity: Homeland has planned are its $AXS game loop integration, Land Item Buffs, and Non-Landowner gameplay. 

Source: Axie Infinity Substack

There will be a direct impact on the Axie economy after each developmental phase of Axie Infinity: Homeland. For the second phase, the $AXS game loop has the potential to increase the circulating supply of the game’s governance token. This will putdecision-making in the hands of more members of the community. Allowing NFT axies into the gameplay gives additional utility to a land owner’s axie similar to that of the builder’s program games, This is becauseit is another gaming experience where the axie NFTs can be used.

Land item buffs are an interesting mechanic that came in the third phase of development. This will stimulate marketplace action due to the fact that some NFT land items already exist from previous event releases. This essentially creates a new market by activating a previously dormant one. The land token is another mechanic that is an interesting addition to phase 3. Whether or not the land token will become on-chain has yet to be determined. But if it is on-chain, then we can expect the economy to react to a new token introduction that will depend on the mechanics surrounding the new token.

Phase 4 is arguably the most exciting part as the game will be close to completion by then. But in terms of economy design, Sky Mavis said that this is when they target the release of non-landowner gameplay. This means that even those who do not own land will be able to experience the game. Axie Infinity: Homeland will also be available on app stores, allowing a much wider audience to play it. This can be an onramp for future land owners to purchase land after experiencing the gameplay, stimulating demand for a very limited amount of land NFTs. 

All in all, the full launch of Axie Infinity: Homeland will awaken a dormant market of NFTs that were sold prior to any concrete launch of its land gameplay. This is beneficial to the economy as it can stimulate market activity within the ecosystem. Since approximately 25% of all digital land in Lunacia has been sold thus far, the prices of the land NFTs will react based on on how Sky Mavis chooses to price its future land sales.

Axie Infinity Live-Ops

The last aspect to be covered in this article is not exactly a gameplay experience, but how Sky Mavis creates events outside the core gameplay experiences that considerably impact its economy. Axie Infinity has done a lot of these events since it first started. As an example, they have breeding events that either reward a certain milestone number axie, or have axies born with limited-edition skins. They’ve also held events that highlight specific axie classes or ask the community to release axies into the wild. The team rewards players with stardust, an in-game crafting currency for Axie Infinity: Origins, limited edition emoticon stickers and avatars, and more recently, axie cosmetic accessories.

Source: Axie.Tech

Above is a screenshot of $SLP issuance and burn from June to October 2022. $SLP is a utility token in the Axie ecosystem. At first glance, an immediate spike in $SLP burn can be seen around mid-July 2022. This was brought about by a sudden breeding event that introduced summer cosmetic Axies into the ecosystem. 

This is what liveops brings to any economy, a way for the team to somewhat influence the behaviour of market agents towards a specific action through incentivisation. In this example, a lot of players wanted to get a summer axie through breeding, which caused $SLP demand to increase due to an increase in breeding demand. 

Developers should still be cautious in designing these events as they have a direct impact on the economy. The event did minimal to affect the prices of $SLP since there was still a lot left in circulation. Additionally, the prices of summer axies after the event almost equalled that of floor axies due to the sheer number of summer axies bred. Nevertheless, it created a brand-new market within the axie NFT space for certain collectable shiny or very unique summer axes to have a more enhanced value.

Future Possibilities

Axie Infinity has proven that it continues to grow with the number of gaming experiences that are connected to the use of their axie or land NFT assets. Another step to promote interoperability between these experiences is by adding resource or utility tokens that can be connected to a crafting mechanic either inside or outside the game. These tokens can yield valuable cosmetic items or rare prizes. This incentivises other games to be played by the user base.

Another close possibility is the use of a different gaming experience to further balance the overinflated $SLP token in the ecosystem. Currently, Axie DoLL has done this through its initial game mechanics. Shields can be purchased with $SLP, and tournaments have an entry fee of $SLP. A portion of the fee will contribute toward prize rewards, while the rest will be burned.

Different game experiences can also be an on-ramp for future community members to enter the ecosystem. Every gamer has a niche gameplay genre that they like to play. With diverse gaming experiences focused across different game genres, more people will get exposed to Axie Infinity, as an ecosystem. Theywill have the chance to explore the entire platform.

Lessons Learned

Blockchain gaming developers can learn a lot from Sky Mavis and Axie Infinity. One lesson that can be learned from this is that building a game with your community can be more than just listening to community feedback. It is about empowering your community to be part of the building process of your game. Another blockchain gaming title that has used this strategy is Sunflower Land. Both have leveraged the power of their community to build alongside developers. Not only is this a faster way of creating new gaming experiences and content, but it is also practical from a recruitment standpoint. This is because you develop talent that can eventually join the team as well.

From an economic perspective, having multiple gaming experiences is beneficial to the ecosystem. Not only does it add utility to the NFTs that grant access to them, but it is also a way to attract new players, through different gaming genres, to get exposed to the ecosystem with the hopes of converting them into active members of the community. Interoperability between these gaming experiences makes it easier for the gamers to play multiple games, essentially helping new titles gain footing and a player base. The tokens introduced in these games also impact the economy depending on their mechanics, utility and overall design.

Lastly, one of the major tools at a developer’s disposal is live-ops. A game developer can influence the behaviours of its player base by giving the right incentives in the form of events. The events should incentivise a certain behaviour that the devs want to see within the ecosystem. The incentive should be well crafted so that it won’t overinflate a certain market, and be attractive enough that the player base would want to interact with the event.

Axie Infinity, being one of the blockchain games that are further along in its lifetime, offers a lot of lessons that other developers can take note of and utilize in their own games that they’re developing.

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Lorenzo Martin | Junior Associate
E: Lorenzo.Martin@EconomicsDesign.com | W: EconomicsDesign.com