Today Axie Infinity announced it raised $152 million at a $3 billion valuation (according to The Information) in a Series B round of funding led by Andreessen Horowitz. Axie Infinity is operated by blockchain gaming company Sky Mavis, which received backing from Animoca in 2019.
Additional investors include Paradigm, Accel, Samsung Next, and FTX amongst others.
“The team is building a category-defining play-to-earn NFT gaming and infrastructure company and we’re thrilled to be partnering with them as they continue to break new, ambitious frontiers!” said Andrei Brasoveanu, Partner, Accel.
Blockchain reduces the frictions around buying and selling in-game assets. Garments and other features added to the game’s characters often cost players time in terms of gameplay or are bought for real money. But they’re usually awkward to re-sell, if it can be done at all. Play-to-earn initiatives mint the in-game assets as tradeable non-fungible tokens (NFTs).
Games such as Axie Infinity also use cryptocurrency tokens to reward players based on their performance. These can be used to further improve a character’s performance by purchasing additional in-game NFTs or be exchanged for currency, generating revenue based on performance for players.
These kinds of gaming structures are prominent, and Axie Infinity has been one of the most successful projects so far, as reflected by its valuation. According to CryptoSlam over the last 30 days, the game accounted for over $500 million in NFT token sales, with all time sales totaling $2.2 billion. Apart from NFTs, Axie’s cryptocurrency is valued at $9 billion.
In addition, during the third quarter of 2021 alone, Axie generated over $760 million from in-game revenue apart from the trading of the NFTs. Communities in the Philippines, Brazil, Thailand, and other developing regions are working to make a living out of playing Axie Infinity. There are organized groups such as Yield Guild, which also has funding from Animoca and Andreessen Horowitz, to promote and mentor playing play-to-earn blockchain games for a living.
The first two quarters of the year accounted for less than $20 million combined in in-game revenue. The exponential growth in this particular area is promising. However, it might also indicate that the game is going through a bubble. According to data from the Token Terminal, revenue in September dropped by $342 million, almost 40%, from August, when Axie Infinity’s monthly revenue was second only to Ethereum among blockchain-based apps.
Axie Infinity charges a 4.25% transaction fee for every in-game transaction and there are fees for breeding new Axie characters. Most of that goes back to players as earnings.
The announcement of the funding coincided with the launch of Axie Infinity’s decentralized exchange, which will facilitate the direct buying and selling of Axie’s tokens among its players, reducing frictions. In the last week, the price of Axie’s cryptocurrency increased in value by 121%.