Games & Play-to-Earn
Axie Infinity developer Sky Mavis launches next act
During crypto’s booming bull market in 2021, Sky Mavis rose to phenomenal success with its groundbreaking play-to-earn game Axie Infinity. Despite criticism of an exploitative in-game economy, Axie reached a peak of 2.3 million daily players in January 2022, powered by developing markets, such as its home of Vietnam, and it received funding from venture giants including Andreessen Horowitz.
The studio’s fortunes came crashing down in 2022. A $620 million hack of its proprietary Ethereum-linked sidechain Ronin, along with the general chill of falling crypto markets, decimated Axie’s player base, which currently sits at around 260,000 daily users, according to Active Player.
As developers continue to rush into Web3 gaming—many have shirked the “play-to-earn” descriptor—Sky Mavis remains the kingpin of the space. On Thursday, it announced its next act post-Axie: An upgrade to the Ronin blockchain, along with the launch of a gaming ecosystem that starts with four studios building on top of Ronin.
“We’ve been building in this industry for five years, so we’ve seen a lot of ebbs and flows,” said Aleks Larsen, COO and cofounder of Sky Mavis.
An updated Ronin
The first part of the launch is an upgrade to Ronin, a sidechain developed to speed up in-game transactions that ultimately became an Achilles’ heel for the nascent developer. On Thursday, Sky Mavis announced Ronin would shift to a delegated proof-of-stake (DPoS) model, meaning that anyone with a certain amount of RON, Ronin’s native token, can become a validator and produce blocks.
The difference between a normal proof-of-stake consensus mechanism, like Ethereum, and DPoS is that in the latter, users of the network can elect “delegates” to validate the next block of transactions. Previously, Ronin operated on a proof-of-authority consensus model, where validators were selected based on credibility, with prominent ones including Google Cloud, Animoca Brands, DappRadar, and Nansen. The upgrade, ostensibly, will open the Ronin ecosystem up to more users, although it will still remain relatively concentrated.
Given the massive hack last year, the first order of business for Sky Mavis was to restore confidence in its blockchain and overall business. Larsen told Fortune that despite the high-profile nature of the exploit, Axie’s woes paled in comparison to other crypto headlines from 2022, from the collapse of TerraUSD to FTX.
“Of course,” he added, “we don’t want to compare ourselves necessarily to the bad actors, but it becomes clearer that this was actually something that happened due to hypergrowth.”
He said Sky Mavis has been focused on augmenting its security in the aftermath of the hack—a fact that has built confidence with partners, from gaming studios to Google. “They trust us more because we’ve gone through some hardship, and we actually solved the problem so well compared to so many others,” he said.
Larsen also acknowledged some of the early flaws in Axie Infinity, attributing them to growing pains as the game’s user base exploded. “It started growing so fast,” he added, “that the people that were coming didn’t really have time to understand what the underlying vision for the core team was—with this game and this universe.”
Kent Byers, the chief product officer of Directive Games, one of the studios joining the ecosystem, said that he was reassured by seeing Sky Mavis bounce back from the incident and court partners like Google.
“That still speaks a lot to their fortitude of what they can handle and deal with that kind of pressure and scrutiny and move forward,” Byers told Fortune.
As part of the launch, Sky Mavis is also partnering with four gaming studios that plan to build on top of Ronin—with some using intellectual property from Axie. These include Bali Games, which made the Korean title Anipang that received more than 130 million downloads, and Bowled.io, a sports-based platform initially focused on cricket.
Fortune spoke with executives at Directive Games, a studio founded in 2014 with veterans from LucasArts, Square Enix, and Ubisoft. Directive is the only studio to be launching with a playable title, a shooter called The Machines Arena, which will be available to players in closed beta.
Courtesy of Directive Games
Byers said that while Directive hopes to move into Web3 gaming, its developers are still figuring out the best experience for users. Even though The Machines Arena is technically launching on Ronin on Thursday, its Web3 features will not yet be available as the studio tests out different approaches.
Much of the criticism directed at Axie stemmed from its in-game token system, which emphasized grinding rather than gameplay. Byers said that Directive’s games will likely feature NFTs rather than tokens, meaning players can own and keep different skins or weapons earned while playing.
Despite a flood of developers into Web3, blockchain titles have not yet found a toehold with gamers, with many expressing skepticism over the “play-to-earn” model and potential titles still in beta.
Byers said gamers intuitively understand the model of earning rewards while playing, and even in-game ecosystems through titles like Runescape and World of Warcraft, but that developers will have to adjust based on preferences.
“No one wants a token in Mario Kart,” he told Fortune.