The dangerous race to 'discover' the next Axie Infinity

Second time lightning?

Triggered by some conversations at the Coin-Op 2021 event in London - you can watch a version of my presentation here - I’ve had a thoughtful couple of days.

One particular area of pondering has been the explosion in guilds; that is organisations who hold assets and lend them out to players, who can then earn value within blockchain games.

Yield Guild is the best known example, but there are a striking number already operating at scale with Merit Circle and Blackpool being key examples of well-funded projects that already have gained the status of launching their own token.

And plenty of smaller guilds are also following a similar trajectory, with Avocado DAO’s recent $18 million funding round just one example of the appetite amongst investors.

This is significant because it’s such organisations that are behind the incredible growth of Axie Infinity to its current level of 2.5 million DAUS.

With the cheapest set of three Axies costing $500 upfront, it’s no surprise to point out that the game would - at best - be ranking its DAUs in the tens of thousands without the economic bridging they provide.

And while Axie Infinity will likely provide the bulk of earning potential for months to come, it’s also clear there’s a massive appetite in this sector for alternative play-to-earn experiences.

That’s one of the reasons the likes of Yield Guild and Blackpool are aggressively buying up assets in other blockchain games.

Delphi Digital highlighted this in a recent report as displayed in the following graphic.

However, with the exception of Splinterlands and Alien Worlds, no current blockchain games seem to offer sufficient scale or the hope of economic depth to support the level of engagement these guilds are looking for.

Similarly neither Splinterlands or Aliens Worlds yet provides the functionality for guilds to safely lend NFTs to scholars, or for scholars to earn Axie-level wages.

It’s an interesting situation because any project that can do so will receive thousands of players and billion of dollars of investment inflow, potentially making an otherwise unsustainable economy viable, at least in the short-term.

Certainly, it’s clear that no such game economy will now have the benefit of Axie Infinity’s long gestation process; something that increases the likelihood of ponzi-style market dynamics - from the community if not the developers.

In other words, the race to find and exploit the ‘next Axie Infinity-scale game’ is a very dangerous opportunity for the sector.

Too many incentivised actors now have too much invested in finding something that might not exist for years for me not to be worried about what happens when non-optimal games are crowbarred into position and crowned.

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N.B. As well as Axie Infinity, I’ve also been having some thoughts about this newsletter.

My current plan is to add a daily paid subscription service which will be a news-led format, while keeping the current free ‘weekly’ longer read.

One advantage for all readers will be that the longer article will now actually be weekly.

Meanwhile in the daily email, I hope to explore what’s happening in terms of announcements, launches, funding, token dynamics and such like. It won’t be investment advice as such, but as a paid service, I will assume a higher level of reader sophistication in such areas.

If anyone has any thoughts, please let me know in the comments.