Axie Infinity, the Crypto Game That’s Grown Over 200x This Year Alone

I should have been. I should have been. Yeah, I was more into it from a collecting perspective. I mean I did play, but for me, like, I just liked

collecting all the cards. But the reason I bring it up is because one of the interesting things about Magic the Gathering was there was this whole ecosystem built around this card collecting card playing game, and the company that ran it was called Wizards of the Coast, and every once in a while they would encounter major problems where you know, the price of cards would suddenly get out of whack, or the game wasn't as much fun to play because they've released a bunch of cards that had

like special powers and things like that, and then they had to figure out ways to fix the entire system um and it was really interesting to sort of see them do it and managed to. I guess they sort of managed to avoid the fate that has overtaken so many fads over the years, like think about beanie babies, right,

those are the classic example. But like magic, the gathering has been going for years and they managed to keep the system going totally and people are still really into it and somehow, you know, even in people are still playing it, And I think you make you make a really good point, which is that they've kept successful despite the fact that there is clearly a lot of speculation in car like one could imagine a scenario in which people are just in the cards for like the monetary aspect,

and then the gameplay sort of falls off because maybe they get too expensive or whatever. But somehow they seem to have strunk fine balance where yes, people pay a lot for cards, and in fact, I think like recently they're like some record cards even like just in the last like several weeks or months, but the game itself is still played enthusiastically by a lot of people. Yeah, exactly,

that's a really good way of putting it. So, um, the reason I bring it up is not because we were going to be talking about Magic the Gathering specifically we should at some point, Yeah, I was gonna say I would love to do that episode, but because we're going to talk about a sort of brand new game that gives me a lot of flashbacks to Magic. But it's very much a new game in the sense that it is it sort of brings together everything in the world of crypto, like cryptocurrencies and f t s, non

fungible tokens, blockchain. It brings them altogether in the metaverse. Yeah, exactly into one ecosystem and it's just exploded in popularity in not recent years, right, And you know, I'll let you do the proper intro. But one thing, just going back to Magic real quickly before we move on. It's like, you know, one of the things with Magic is like you own your cards, right, you own your debt, and

with typical games online, you don't. You know, you think about something, I don't know a game that people play, I don't. I don't want to sound boomers, so I like World of Warcraft. I don't know if anyone still plays it. Whatever, it's like you don't really own your character in the traditional sense, like you log into your character,

but it's not yours. And so with this idea of like crypto gaming and really it's crypto in general, and and of teas in general, et cetera, is this bridging of the notion of ownership that this is a thing, whether it's a character, whether it's token or whatever, it's yours and you and move it from one environment to the next. And so kind of like magic, you own

your card. In this world of crypto gaming, there's this sense of ownership that hasn't existed in online or video gaming previously, right, And of course you can make money from that ownership as well. So if you earn, you know, cryptocurrency in this gaming system, you can take it to a crypto exchange and convert it into something else. So maybe maybe we should just get on with it, because we do have tons to talk about. We're gonna be talking about Axie Infinity. Um, you might have heard of

it already. We have Alexander Leonard. He's the CEO and co founder of Skymavis and axiuh and he's been kind enough to come on the show. So Alex, Welcome to a thought. Thanks. Basically, I'm I'm excited to be here. I love the intro, by the way, as as a Magic the Gathering player for over twenty years myself, definitely to what's happening here. I definitely love that equalsystem and how it evolves so well. So maybe just as an intro you can kind of describe axe Um for anyone

who isn't familiar with it. I mean, we sort of touched on it, but it is kind of unique in the sense that it brings together all these different aspects of the crypto world, but it also brings together some things we've seen before. But you know, social networks and this idea of like creating an ecosystem that very much looks like a kind of contained economy. Yeah, sure that.

I mean, there is so much to unpack here. I think a lot of what you guys mentioned, I mean, the buzzwords are what drives attention to to the product. But at a very high level, what we're making here is is just a fun game using your ax digital pet characters that then can be used in many, many

different games. Now, some of those games are the ones that we as a team create so the one that's most popular right now, it's it's the Battle game, where you have your team of three Axi game characters and you play against other players who also have a team of of act game characters. And then there are many other kind of sub games or different things that you can use them for, such as Breeding of Actions, which

is another game. And then more games are coming such as in All the Land or Kingdom based game, which is more on that metadverse side. What we see is that or the way that we've structured is that all these games are connected. So the main characters that you have, they travel across all of these different games, and that again gives them more value, higher collectibility, and also more utility.

And it's been you know, almost four years since we started now, so it's it's interesting to see that the world has kind of caught up to our vision. And now of course we're probably a product cycle ahead of pretty much all of our competitors, so very unique, and that's also why we have all of these players who are coming in, you know, right now, over two million daily active players, even though they can't they can't get the application on any app stores like they have two sideloaded,

they have to go get there. Well, that's biocrypto stuff. It's very high, a very high barrier to entry still, but what we see is that the benefit that we're enabling for these users in terms of true ownership and in terms of you know what they can actually use the game characters for, it's so unique that it has never really existed in the same way before, because we're combining all of the facets of new technology with some you know, a nice game design from the past, and

then again making a quite a large ecosystem. So let's talk a little bit more about the economics. There's seem there's multiple assets, right, so the axes that one owns, the three characters that you buy for battles, etcetera. Those I guess are like n f T s and I think people like by potion and that adds its own token. Why do you talk to us a little bit about this?

And it's all going up like crazy, like I think this year, like if you were if you were playing actually last year, everything's up like two hundredfold or some incredible amount due to the rush of in game But why do you talk to us a little bit more about the sort of like the ownable assets that exist in game and how they interact. Sure, I mean, so when we look at when we look at as the first step that you know, people see as the Axecute

game character. Each of those characters are unique, so they are defined as n f T s and they can be used across different games, and you need three to play the game, as I said, And when you're playing the game, you can earn another token or win a token which is called the Smooth Love Portion or SLP, and that SLP token is then required to play the other game, which is the Breeding game, and it gives that value so to say that when whenever you want to create a new Axi, you need to have this

SLP token. If you don't have it, then all new Axes can ever be created. So each actially that's in existence right now is actually the result of some other human being that has played the Axi game generated the SLP token and then used that to create a new Axe through breathing. So that's how that part of the

economy works. And then we've also got the a excess token, which is kind of the governance token for for the Action Infinity game universe and that's you know, highly limited, two hundred and seventy million of those in existence, and it started out at a price of ten cents last year and now it's it's over one per token. So I mean, the the appreciation it has has been quite heavy, and that's because it's kind of tied to to some of the revenue streams that are that are going into

the ACTI Infinity game. Can you talk a little bit about the revenue streams, because you know, this is like both one of the strengths and I guess the criticisms of the entire thing. So one of the reasons actually is getting a lot of attention is because people are making quite a bit of money from playing the game. And this is how I first came across it. My

Bloomberg colleague Christine Servando. She wrote a really great piece about how lots of people in the Philippines are basically quitting their jobs and just playing ax You full time and making enough money to live on. But at the same time, there's been some criticism of the business model from people who say, well, this is just sort of unsustainable. There's this really high entry cost, you know, people have

to pay. Well, you can maybe update me on this, but I think it's like a minimum of six eight hundred dollars in order to get the axes that you need in order to start playing. And so it feels like you're sort of making money from the stream of new players who are coming into this. So maybe you can just break down where the revenues are actually coming

from for us. Yeah. Sure, So when you look at how the SLP token, you know it's coming into existence, that's related to whenever people are playing the game, and that's well, the farming of of SLP when you were when you were a player, you can farm you know, small love potions or smooth love potions for between twelve to fifteen dollars per day. That's the that's the current value, and that has been fluctuating quite heavily over the pastor

and I would say three to four months. So at one point maybe a player could earn even thirty to forty dollars per day, and that was of course very attractive for a lot of people. Now it's more normalized to what it was before, you know, a massive run up in users. When we are thinking about the long term sustainability of acting, where we consider ourselves right now is that Okay, we have two million daily active players.

All of those players they will need they need three access right, so that's at least six million axes that are required for for those two million players, and in existence, we have about eight million axes or a little bit

less than that, that have been bread so far. And if we then look at, you know, what is the total addressable market for something like ACTI, Well, the way we've defined it is that we don't we actually don't compete against traditional games in the same way we might actually compete against work against those players, those people in the world who are unemployed or who are earning you know, less than let's say fifteen dollars per day, so that might be and I mean, the game is fun, it's enjoyable,

we have a large community, but at the same time, we can tap into a brand new user base has never even you know, considered a game in the same way like a job in the metaverse, so that you know, for us, leads those to believe that maybe we can reach even one billion or two billion people. And that means that there's still a lot of acxes that need

to be produced for the foreseeable future. It's totally fine that SLP is being waited so that other players can breed for that and so which then again is the criticism that people will come with. But for us, that's that's totally fine because we need these acts in existence. Now, the question cons what happens when when we reach the total addressable market, when we have you know, let's say

one billion or two billion players. Well, that's exactly when Acts Infinity has to kind of evolve a little bit from being displaced where there's a gold rusher of people who want to breed access into more of a network I would say social network where people are actually hanging around in the game, they're having fun, they're going on different adventures, they're playing many, many different games that we

and also the community can create. So I think that is already a very proven model in terms of you know, let's say roadblocks for example, how many players do they have and nobody is you know, earning anything. So I think everything is about getting that early user base involved into your game so that they can fall in love with the game, falling over the art, and you know, stay inside this ecosystem, and then eventually we can evolve

from there. But I think actually the Roadblocks comparison is interesting because you said the operative thing, which is that people love playing Roadblocks despite the fact that there's, uh, you know, there's no money involved. Maybe some people are making money, but by and large that is not the motivation. And throughout years, people have loved all kinds of games that don't involve money. People love chess or people like,

you know, first person shooter games. Maybe there are some tournaments or whatever you can win money, but money is not essential to the enjoyability of those games. And so I think, like, still, what maybe bothers people about Axe or what is like, is the game fun now? Do people have fun now playing the game or is it this sort of like digital trudgery where it's like, okay,

yes you can make money. But if there was no money by clicking over and over, or by earning this potion, or by breeding your axes, or by borrowing an axe to then breed it and then have your own by borrowing, you know, etcetera, if all of the monetary appeal just sort of went away, is the game That's a very common question that we see from people who maybe you know, aren't as deep in the ecosystem as we are, and

that's that's me. So that's what I admit. I'm not deep, So that's why I'm yeah, yeah, So I mean the very simple counter argument to that is, well, what happens if you remove all the bells and whistles for let's say, all mobile games, like there is no battle paths, there is no you know, nothing extra, nothing gamified that that you know, attracts players it. So I think, you know, you can't actually remove every aspect from actually because that's

not how it was designed. It was decide in the way that all of the game characters are n f T s that they should be able to generate tokens, and that's a big part of, you know, the entire appeal of the game. So of course, like it's the same thing as saying, you know, if you remove the ability to play, like play the magic game, would it

be fun to just collect magic cards? I think this is a different way of looking at it, but kind of answering the question more specifically, if people are enjoying actually infinity right now, Yes, a lot of people are. It's actually about when we see look at the motivation

for players. Right we have Twitter polls where we can see that you know, less than of the entire player base are only in it for the money, So where we see that maybe thirty percent is in it for the community, So that would be all the social aspect

around it. That would be they find friends, they learn about new technology, and then they actually love the game at its current state, which to us is of course amazing, And what it tells us is that when people come into the game, they might be, you know, extrinsically motivated. So let's say, hey, I can make you know r o I, and I can make maybe are my r o I back and let's say two months. Now, that's

an incredibly powerful driver of growth. So when we then see that they come into the game, they fall in love with, you know, the ecosystem, they fall in love with everything that's around it, and then eventually some of them collectors. And now this is where the kind of intrinsic motivation part come in because when we see that players, for example, in Acts Infinity, are spending over four thousand dollars for an axe which has no way to gain any money, that they can only buy it, they can

hold onto it, and then they can collect it. It's actually more tied intrinsic motivation that they are they see that what's happening in this community, that they want to belong to it. They want to show off their status because they're buying something that's exceedingly rare. And for us, that's also kind of the direction that we want to take actually in that you know, people find that this

is more real. Often times, these these digital assets which are probably scares compared to when you look at something like in real life in terms of luxury objects like blue if its own bags or or let's say, rolux watchers, because nobody knows how many of the them are in existence, and the same actually goes for traditional digital assets in normal games, like you have no idea how many of these are in existence or if the game company just they can simply dilute you. So I think that's you know,

one of the major differences. And also when we look at you know, how much money is flowing into this equal system and how many people are you know, interested in the game itself, you know, the economy aspect of its. Right now, over two point forty five billion dollars worth of AXI n FT assets have been traded on our n F t marketplace. So you know, simply saying that, hey, you know, the game isn't fun, I think it's very unfair. And then also it doesn't it actually disrespects everything that

we are trying to build. And also the players in our game who are spending you know, ten hours not only on the game, like playing the game, but also playing the marketplace, playing the social game. So I think you know that these are it's very complex part of it. Then you guys touched on it also early on when you look at the when you look at the ecosystem in Magic the Gathering, right, they had Friday Night Magic,

they had all of these magic grand free tournaments. Like people are collecting their starting up their own you know, Magic the gathering shops. The same thing is happening in Axi. You have people are making their own you know, scholarships or teams or even businesses. Right. I've seen a contract work contract between fayers, right, I think that's very unique. So I do want to get into how you're sort of managing the whole economy of Axe. But just one

more question on this point. I mean, one of the criticisms is the high cost of entry and this idea that maybe existing players are making money from the influx of new players, So what would happen to the game if you were to lower the entry costs? And I think I read somewhere that you were planning or thinking about doing like a free to play version of Taxi. So I'm just curious, like, what would happen to the

existing product if prices for entry got lowered? And then also why the free to play idea if the financial incentives are part of the equation of Axi as it was originally conceived. Yeah, sure, so Act Infinity was always actually designed to be calm, free to play, because that's how you know, see that we connect into the get

the AXI product into as many hands as possible. Right, we know that people just want to some of them just might want to play the game, try it out before they actually take the plunge and you know, buy there for his game character. So what we can rather do is we can get their ability to earn tokens if they you know, if they if they play the

free type of game. And a big reason for why we don't have it is we actually have to solve a lot of different problems before you know, we were ready to distribute or even try to distribute the game on more traditional app stores. And that means that, let's say, if we want to have as many millions of users or even billions of users, that we're looking for the underlying you know, infrastructure needs to be there, and the same also goals for you know, how we are looking

at the distribution channel. So when we are distributing, actually, let's say, if we want to distribute actually on the iOS or the the Apple Store or Google Play, like, there is currently no way for people to just simply click and then buy and get there and if he very easily right, so we needed to make our own

distribution channel for that. The goal is to distribute the new game on Google Play or the Apple Store and eventually kind of on board them from there to become blockchain type of players where they can actually own their digital assets and you know, by extension, there also their identity. Before we go on a little bit further, Tracy, you

both kind of mention and did. But it has gotten incredible success in the Philippines where there are a lot of people playing Axe, and as you mentioned, are these so called scholarships because the price of the three n f T s that one is required to buy has gotten high, and so could you explain this sort of like this sub phenomenon that's going on. What are the show called scholarships and how is it enabling people who might otherwise not have much cash to upfront to get

onto the game, to get into the game. Yes, so the interesting thing about the scholarship is that it was actually made by our players first. Like that feature, I mean, we always had an idea that we wanted to make, you know, let players lend out their axes to other players because we had such an early, you know, active player base who were breeding accees before they were very expensive. So some players might have several thousands of axes and they wanted to use them, but not a lot of

people they couldn't afford these act characters. So that feature was actually coming internally as well. But then the way that our accounts accounts at up his work is that it allows people to actually separate being of the assets by the playing of the game. So that means that if you own a team of access on your account, you can actually let another player log into that play the game, and then the rewards will go to the main account, which then again can be split between the

player and the owner of the character. Players actually saw that and they did it themselves, and then we just decided to let them run with it. So, you know, from the sky Navis perspective, we don't promote any of that, you know, lending of it yet because we haven't had that feature internally, but you know, people are are still spreading it, of course, and it's very interesting to see how that has developed. Wait, so this actually reminds me of one sort of technical thing that I wanted to

ask you. But you have rules that no one can have more than one account at a time. Can can you explain why those rules are in place? Yeah? Sure, to sink. I think that's one of the most important things of an ecosystem such as acts. So the way that when we look at Acting Infinity, we think of it as a network, and the way that a network you know, grows is of course, you know, huge new human beings. They come into the network and they tell

their friends and they might add value to it. And that value could be let's say, create content or you know, they might stream, they might even play the game. One of these things. They add value to the to the game. Side of action infinity and in return we can actually give them some tokens, and that token, for example, is

tied into into the breeding aspect of the game. But when you look at, for example, the person who is playing several counts at the same time, or the worst cases, they might be using robots like they're trying to book the ecosystem, that again, it doesn't add any more value to the network. So then if they are then experting it by getting more tokens than they should, that's actually a net loss for everyone else who is playing acting. So that's where we have that have that rule into place.

So one of the most important things that one of the most difficult things that are creating something like access is that you know, proof of human being. How do we make sure that they're actually humans on the other side and they're not not robots trying to to exploit this system. And a part about is the part of our that that's possible is you know, actually the fact that it's it's quite expensive to get started, so that the stake that these abusers have in the game is

actually quite high. If they are abusing and we catch them, you know, we we restrict their access to the game, and so that costs about six dollars. That's also about a pretty heavy deterrent to not breakthrough rules. So this gets into like sort of a really interesting philosophical question about block chains, because you know, you think back to like the sort of like the core chains. There's nobody at big coin. You know, there's nobody who in bitcoin

who even knows who you are. You can have infinite number of wallets if you want, and different private keys on different hardware wallets and so forth. The Ethereum chain is roughly the same. But then as these new applications developed, and I actually do want to get into how you use Ethereum because you've also sort of built your own

side chain. I think that's interesting. But as new applications developed, some of these sort of like core principle ideas that we might associate with block chain anonymity, pseudo anonymity, no rules, trustlessness, etcetera. Certain of those get sacrificed such that there is, in your case, humans making rules, humans who could kick other humans off. Some of the sort of trustlessness core basic ideas of blockchain does not necessarily apply once it gets

down to the game application level. Well, for us this is a very natural actually how the game evolved. So if we look back into we came into the space having very I would say we were naive, but also very hopeful in the way that you know, the the the economy and like everything in the ecosystem in the book,

chain ecosystem would evolve. So when we created actually pretty much everything was on chain, and by that I mean you needed to send the transaction whenever you wanted to bat and then again you know that combined into an old chained result which anyone can prove, anyone can see, and you know, we were following that decentralized details. Over time.

What we realized is that you know, building a product based on these very constraints, like very heavy constraints, it's almost impossible, especially if you want to reach you know, the masses, if you want to teach them about this new technology. So that basically means that we had to take you know, we had to sacrifice parts the centralization, and the beginning was actually the game side. So right

now out of the game logic is off chain. So that means that we already as a game studio, can make many many changes, right we can also you know let's say if we want to buff like certain skills make them stronger weaker, we can do that, of course, and we're very transparent about and I think you know, that is one of the core you know, the core things that we think is important when you're building using

this technology. So what are the most important things for the players or for the end user in our experience, what the users won't right now is they want to like have the build re need to freely trade the

assets that they have. They want to be able to monetize their time inside the game, and they want to be able to see how many of these things are in existence, right And I don't mean you know, the level of trustlessness that you might have in bitcoin, for example, because the values there are are very very heavy, so you might need very very decentralized chain where you know,

nothing can be censored. All that stuff. On our side, we we actually you know, disregard that and going on a little bit of a different direction, and that's you know, a big part of why we managed to get to where we are today. M Well, can we talk about the blockchain then, so actually runs on ethereum and of course, like one of the big criticisms of Ethereum is always that it doesn't like work so well at a very

very large scale. So i'd be curious to get your impression of like working with Ethereum and like how you're sort of coping with that scaling problem as ACTI continues to grow, because it, again, like acts is probably one of the fastest growing Ethereum related projects at the moment. So I imagine you have some experience with this. Yeah, so actually has for many many years been very very closely tied to the theorum. I mean, we deployed our

first initial versions on the theory. Our n f T s are where even you know, deployed on the theory before the n f T standard was set. That was like March, or if I recall April. So what we figured out is that if you are all of your main assets on ethereum and you are dependent on you know, sharing the block space with everyone else who is using the ethereum blockchain, that's a very head like tall order if you want to scale to to the level that we wanted, or if you want let's say millions several

millions of users. So over time, overwy we were exploring different scaling options, and in the end we decided to build our own side chain to Ethereum. Now that is much more energy efficient. It is much is a free four player to actually make transactions, but it's going to be very very cheap once we actually upgrade the chain a little bit. So it's an ongoing type of the situation. We see that we need to be more effective, we

need our own infrastructure. So in I would say to explain this in a in a very you know, simple way, is we believe that we are in the server era of block chains. And when I say that, I mean when we look at how the Internet scales early on, is that well, you couldn't really trust the clouds, or you couldn't trust to have your servers or your your

homepage on another you know server. You needed to have that you know, backbone in the basement so that you could actually make sure that your server or that your homepage was always up. The same thing is actually happening right now where we see that if we're going to go into we were going to trust Ethereum or you know that the very decentralized web, we would be competing

for you know, space with every other application. So we just decided to make ourselves make our own you know server in the basement air, which is basically rollant for now, where we can control some of the parameters and make sure that we're not sharing books space with too many of other you know, successful applications. I want to get into this a little bit more because I think it's really important for people think about the evolution of blockchain

in general. So it's called the ronan Ethereum side chain. It's not completely disconnected from Ethereum, and there are other side changes as well. There's the Binance chain, which has done very well, and that's also a side chain. I think there's one called Madic, which is also a side chain. Explain how a side chain still works and relies on to some extent the security and trustlessness of the core

Ethereum chain while offering sort of scalable and cheap transaction. Sure, So when we look at you know, both Binance, the smart chain, and Polygon or Mathic as we said, and also rollant Um, what we see is that these chains are built using the Theorem virtual machine, which is the

the code base that is running Ethereum. So that's deadly where you start out and then you change certain things in the in the configuration of it, and that might be you know four ethereum right, you're using proof of work when it comes to mining, so you know, you're dependent on all of these other machines that are helping out to validate transactions, and then you're giving a reward, which is you know, the mining reward for something like Roland right, we are using right now, we are in

a proof of authority type of situation where you know, people are not staking any of their tokens, but they're staking their reputation basically the different type of validators. So that's one way of doing it. And eventually we're going to be moving over to a proof of steak or delegated proof of steak where you need to have your own tokens that you are then staking, which is then your well then you know, get slashed in case you

are a malicious actor in the in the ecosystem. So let's say that you are just just to be clear, does your side chain interact with the main ethereum chain at all anymore or is it merely that it uses the same E v M language. Yeah, So so there are there's a there's a connection there. Whenever you want to let's say, if you want to move your assets from Rollan to Ethereum, you can definitely do that, but there is no level of security that's directly like we

are not cannant on Ethereum to that extenter. But of course, like if Ethereum got compromised, you know, our chain would also be very affected by that. But if our chain got compromised, all the assets that are on rolland would then you know, be affected on Ethereum as well, because there's a there's a bridge that is connecting the two.

So whenever you're depositing your assets to Roland, which I think is there's about you know, two point five to three billion dollars worth of assets secured on Roland, will you know that's the that's the risk for for everyone who is postitting their assets there. So actually this reminds me of something else I want to ask you, But um, I think you recently announced that you're launching your own decentralized exchange which is going to be built on Ronan.

Can you walk us through like the thinking they're like, why do your own one and then why launch it on your own side chain versus something else. Sure, So when we are looking at the products that we need, right, so we're always thinking about it from from the player perspective. So what do the players in actual infinity actually want

and how and how do they want it? So let's say when you're playing the game, you get your get your SLP talkings, right, the next natural step it Okay, I'm not going to breathe or new Actually okay, well if I can do that, then I can do that on Roland. But if you want to trade it into something else right now, you actually have to bridge that to ethereum or move that to finance or some other exchange.

Right that is a very bad used for experience. Like that's not really how it is in any other normal game. So if you're comparing you to let's say World of Forcraft, when you are finding let's say gold there or any other let's say, would you would be able to trade that immediately on a marketplace. So that's it. That's that's it.

You know, it's just going to be an expanded marketplace which now suddenly has access to these fungible tokens like you know, SLP a excess and in the future maybe would inside access stone I think you've got guys understand my drift here. It's just about the underlying infrastructure is a decentralized exchange. So for normal people, like the only thing they would see is the marketplace. Are you going to offer um like some form of defy on the

new exchange as well? So one of the interesting things about act now is that you can take the tokens that are in existence, like a access or SLP or whatever, and do lots of de five things to them, like staking or lending them out or whatever you want to do. Is that like also an activity that you would aim to capture for your users, that that that touches on some of the you know, the future that we see

for Sky maybe is an ACCI. So when we are looking at our users right, what we see is that of the user base, they have never used any sort of crypto before. Of them have never even had a bank account before. So these players, they're very new to the financial system. And if they can start playing a game like ACXI where they actually end up owning their tokens and their assets and by extension digital identity, that means that eventually they might be able to do something

more with them. Because they have their wallet automatically created when they set up a game account, and they will get money there too, and that means that you know, they can maybe even spend that in the real world eventually,

and of course be able to lend on it. It just depends on features we want to add to Roman, and that's going to take a little bit of time to figure out, Like how effective will the chain be as we are scaling, So let's say we might take ten million users one million, how how many things can actually be on chain before even we are struggling at this scare. But I'm super excited about the potential to you know, onboard millions of people who have never used

financial tools at all into the connected world. I should say, so I had another question, but I want to ask this first because you have a problem that very few crypto applications have had to deal with, which is mass popularity.

So it'saying even if you do look at like the top applications that are built on top of Ethereum, like unit swap whose founder we talked to, or the lending protocol of or some of these others, they may have a lot of money locked in them, but they don't exactly have like mass popularity by any stretch on the scale that actually we're talking like millions of people. I'm pretty sure there's not like there are not many sort of crypto apps that have like millions of people like

you have. So you have this problem and one of the ways you solved it was creating the run in side chain. Do you ultimately see, like, let's say, you know, just looking at the broad expanse of things that happened on crypto and various n f T projects, do you ultimately that as things get popular, that it'll look like a you know, maybe some lending protocol becomes really huge, and like why are we paying huge fees to eat whales?

Why are we accepting such variable gas fees every time there's like a new token launch of some like derivative

of a puppy coin or something like that. And we'll then make the decision that why don't we have our own ethereum side chain where we can have stable prices, cheap prices, high scalable throughput, and not have to worry about some new n f T drop that's going to cause gas fees while we're trying to do like our staking on unit swap that has nothing to do with it, Like, is this Do you see what you've done as a likely um part of the roadmap for other popular apps,

even if they don't see it yet. Yeah, I mean definitely. I think the great thing about about building on on the e v M is that you know, we can top into the interior and ecosystem and we can basically fork off if we see that there there are things that we might find valuable. But at the same time, it also adds value to ethereum, because any innovation that happens on the Roland side chain will also benefit ethereum.

So I'm in gredually bullish on ethereum as you know, the center of or the the how can I call it the the the settlement layer for the new Internet, And I think in as ethereum scales, that's just going to be more and more apparent um. So for me, I think it actually benefits everyone. But but I'm not sure like that all of the all of the transaction should be on the theorem right now as they are.

Of course, I'm an avid and a t collector. I love, you know, trying to get some tokens, but you know, when when when there's going on, but you know, it's a very heavy gas work, so it's pretty hard to even for me, even for me to justify it. Of course, as as a crypto person who's been in the space for years now, I think it's getting a little bit ridiculous, and of course it can't really be like that, so but I think, you know, it's it's just the start. But I'm as I said, I am bullish on the

on the theoreum capturing a lot of values. So this gets back to another question that I was wondering about it, and I guess it has to do with openness and the degree of like, Okay, as you go down this sort of like I guess maybe as you go up the sort of application layers, you sacrifice certain elements of

sort of core blockchain trustlessness. Can could someone else on the run in side chain build an actually game could if Tracy and I came up with the game, could we develop one that people could use their extra characters and plan that's the plan in the future, But for now it's still a little bit earlier. So what we need is to make sure that it first works for our use case. That's I mean, that's where we made it right, it would be too early for us to

to share the access with with with the world. First of all, like we don't have let's say, the the APIs aren't you know, solid enough to to ensure that you know, not enough people are hammering them, so you know, that might mean that there would be you know, less stable, that the service are less stable than they should be. So we're actually waiting a little bit on that. So

we open it up. But in the future, you know, not the only Acti Infinity games, but but also other games, other games studios that that's what we plan to work with because you know, if you're a game studio want to wanting to make something like Acti Infinity or another type of game, and you see ACTE Okay, they're successful, they have a nice economy, and they even have the scalable infrastructure of the distribution channels. Now why would they not work with us? So so that's exactly why we

kind of made this entire ecosystem. So we needed to solve our problems first, and that means that we probably understand them anyone else in the world, and we can also solve them for other games studios in the future as well, so why don't we talk a little bit more about the sort of in game economy, because one of the interesting things in all of us, as we mentioned in the intro, was not only are you making all these technical decisions about, you know, how to manage

the blockchain, whether or not to launch a decentralized platform that sort of thing, or a decentralized exchange, but you're also managing that ecosystem. You're managing an actual economy, so you're sort of like acting like a central bank. So could you maybe give us an instance of for an example of the kind of problems that you will encounter

in managing the axis system? So I imagine there is volatility in um some of the axes that actual n f T S and then you mentioned, of course the currencies or the tokens access and s LP they've been going up quite a lot recently. What kind of challenges does that pose and and how what's your vision for how this economy should ultimately be working and heading to

sure trace? Yeah, I mean, I think that's one of the one of the real interesting things here that you not only are we doing very heavy technological innovation, but there's also business model innovation here um econom make innovation in terms of you know, how do we see the world working in the future. So we see action Comminuity

as a digital nation. And of course we are functioning as the states in a sense that we are tax system a smaller amount rather than us you know, from a marketplace feed perspective, right, whenever a person is trading on our marketplace, we take a four fee, and that you know, enables a lot of economic activity between players because it becomes a little bit like let's say the US, whenever people are doing commerce against each other. You know,

the state might take a small tax on that. But in traditional games, the state would you know, take of of of every economic activity that's happening, like that's their goal. So if we were a traditional game, we would take all of the money. But that's kind of one part of a lookout, you know. The one of the more challenging things is actually balancing out the or you know, making sure that the sp price is not too reflective.

When new people call into the game, they might have you know, oh, super high expectations SUP is going to stay at forty cents forever, when in reality, three months before that it was at you know, two cents, so that is a problem from that, you know, level of expectation that these players have. So we are trying to, you know, make sure that the price is somewhat stable, and there are different ways that we can do that.

So when we see acts, as I mentioned, we we function as the state, and that when we are balancing out, Let's say how much SLP is required per breed of Actually, we might reduce that or we might increase that. And then there's another portion of the breeding fee which is required to pay like as a developer fee, which is also a part of how we make money, So we might increase that or decrease that so that you know,

it balances out a little bit more. You know, I was thinking about you know, Tracy started the discussion talking about Magic the Gathering, and I admit I really should learn more about the game and its history. But my impression is the company Wizards of the Coast has taken its responsibility as the steward of the magic economy very seriously. They've never like flood the market with lots of different cards because they might be expensive at any at any point.

It's sort of like made these decisions and try to get things out of way? Can you can it all be done? Is you say eventually algorithmically such that no one needs to trust you? Or do you always think there's going to be like some entity that like feels a sense of responsibility towards towards the game, towards the ecosystem. Actually, let's begin with Magic to Gathering. So I still follow that scene lately, like I mean, Wizards of the Coast are you know, now trying to extract as much money

as they count from the player base. So they so they are dumping out all of these different we got we gotta do Wizards of the Coast episode, it's like, yeah, alright, we gotta yeah, definitely asked them like how much money

are they earn? Because it must be insane. But in any case, the way that we see it is that you know, Act Infinity is should be governed by the a excess token holders, but sky Navis, which is you know, the company that that we have, needs to be very deeply involved with setting the direction and especially as we move towards the centralization, because you know, if a if a game or any kind of the call is supposed to be governed by you know, the token holders. That's

kind of a role to decentralization. But we need to be progressive in that sense. We need we need to move, we need to walk before we can run. So by saying that I need to we actually need to make sure that it's stable first. So that would be one of like the foundational things that we need to ship. How long will that take? I guess we'll see. We don't know because it has never been created before, so we might take five years, it might take ten years.

I think, you know, we have to be honest about these things that you know, sure, we're making something brand new here. There are some problems, but there are massive opportunities here as well. And I think the whole world will be watching exactly what's happening in actually Infinity because maybe not only can we you know, improve the game side of it, but maybe also improve you know, how the world works. So I'm incredibly excited about the future here.

Not to be labor the Wizards of the Coast analogy, but I mean one of the things that they did do in order to sort of rebalance out the magic the gathering experience or ecosystem, was they set up what was it called the pro League right when, like when there were so many powerful cards that were out in the game, like wasn't becoming that much fun to play because if someone you know had a Black Lotus or whatever, they could just like without a bunch of those and

win the game really easily. Is no one wanted to play anymore. They created a pro league that had different rules, and the whole idea was to actually make the game fun and interesting again. And my understanding is that Axie does have some people who sort of livestream gaming on

Twitch or Discord or whatever. But like, is that something that that you could see, like you guys really pushing for, like this idea of sort of like a professional league or maybe like more creative solutions to solving imbalances that may emerge in the Axi economy. Yeah. I mean, so my background is, you know, as a game person, I loved I was even trying to get into the pro tore at one point in Magically Gathering. But I have played competitive you know, both Worldcraft three Data and Dodata two.

So I mean I'm always pushing for that side of you know, the acts infinity, And I think you see Actuffinity working, is that you know, the people who have the best access, they can't always win all of the time. There has to be skilled involved as well, and that's

you know, the next the game aspect of it. That's also why we are you know, doubling down on the East Ports and various areas of the world so we might and we even have you know, a seasonable season inside the game itself, so if you're ranking among the top thousand players, you actually get a higher reward. So we want to reward good players, and I think that's a part of what gives certain aspects of access value. Alex.

It was great to have you on and hear about like how AXI is working currently and all the things that you have planned for it. I mean, I think this is definitely one of the more for most ambitious projects that I've heard in the crypto space. So really interesting to hear from you. Thank you so much. Yeah, thanks crazy, thanks, Joe, I mean, happy to be here. I think, incredibly exciting to side of days that had Yeah,

that was great, Thank you so much so, Joe. Um. I thought that conversation was like very very fascinating, mostly for the point that you kind of made about how this is one of the few blockchain projects that is actually like scaling at an enormous rate and actually having a lot of people who aren't playing it. Yeah, there's a lot of crypto stuff that has a ton of money, Like there's a ton of like money, but there are not a lot of crypto things that have a ton

of people and or apps. And I think, like if you actually looked at like the daily number of people like say using unit swap wildly successful defied platform, I don't think there's like still like bad many is certainly not dealing with millions of people by any stretch. So it also gets back to a point that I think we've discussed in some of our DeFi episode, which is

about the educational process in all of this. So like, I, you know, it's tricky enough for me to open a meta mask account from like Hong Kong using a Hong Kong credit card, um, but then like trying to figure out how to state coins or do actual defy things

like it just seems incredibly complex to me. But if you start having these games where everything is sort of built in, and that's why I think the decentralized exchange is quite interesting, and you start sort of teaching I mean literally millions of people about crypto and blockchain and n f t s and defy like that is very

interesting to me. It actually kind of blows my mind the hoops that people have to jump through, and then they do jump through them, like you know, I like to me, you know, I like like like we've only said, like you know, you set up a metal mask account, etcetera. It's pretty complicated. Buying coins is complicated staking and then it's like you know, and it's just like on like

the big block chain, so that's just like ethereum. And then you're like, oh, now I'm gonna like bridge my uh tokens over to madic or the Binance chain or something like that. But like people are doing it and figuring it out, and then it's like okay, sky mave is or actually I have to buy three axes and I need some SLP because that's what's necessary. And yeah,

it's like yeah, yeah, I saw a thing once. It's like a nine step process, and yet to have that nine step process and they have that success, you know, it's still I guess to this fundamental question though, that's like almost impossible to answer. It's like is it really fun or is this like, yeah, I'm going to do nine steps because I can make more money in a day than I can working minimum wage and the Philippines which is where they're very popular, so that's still like

kind of this unanswered thing. But then on the flip side, it's like this has been the criticism of crypto from day one. It's like, well, aren't you just in this for the speculation And it's like seems like the answer to a lot of these things. Yes, but crypto keeps growing. I don't know, it's very like it's chicken and Eggie. So here's what I think is changing, Like this idea that crypto is a viable alternative to normal jobs or traditional jobs, or the idea that like crypto is a

viable way of making money. And you weren't here for this episode, but Joseph Wang about a week or two ago was talking about this idea that like maybe one of the factors in persistent like shortages of labor supply in the US might be because people are sat there saying loads of people making money off of bitcoin or whatever or game stock, stock or whatever, and so that kind of becomes a viable alternative. I think that is

what's changing. Like if you would have told people ten or twenty years ago, uh, you don't have to work your day job. You can just sit and play like this Axi Infinity game and make a living wage, I think like no one would have be yeah, yeah, but and that's true. But to push back and to your point that you brought up, it's like, how much of these jobs are only viable because their premised on the existence of new people coming into the space. So it's

like you could make a living selling paint. It's not premised on the existence of more people are entering the paint industry. It's premised on the existence of people wanting to paint their own right. Like, at some point, I think that's a very valid criticism. At some point, crypto maybe be the kind of thing where it's like, okay, it's providing financial services that people have ven used in the real economy in some meaning, and that could be

a metaverse. So when I say real economy, I don't necessarily mean a physical economy, but I do wonder, like how much of crypto profits are still simply premised on the idea of more people getting into crypto totally. And again, like I think ACXI is sort of like a great example of all these big themes and questions all in like one concentrated games. So it's going to be really

interesting to see what happens as they continue to grow. Um, you know, they were talking about getting to billions of people, and it's even alex said, like, at some point, okay, it's like when we hit our two billion tam or when we then we we really got to make sure the game is like super fun to play. Yeah, exactly. Um, okay, well should we leave it there. Yeah, there's so much more to talk about that there. As you say, there's like no stopping point with any of this, but yeah,

let's leave it there. All right. Um. This has been another episode of the All Thoughts Podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Halloway. And I'm Joe Wisenthal. You can follow me on Twitter at the Stalwart. And you should follow our guest on Twitter, Alexander Leonard Larson. He's the co founder and CEO of sky Mavis, the company behind Actually Infinity. His handle is

at psych out six. Follow our producer Laura Carlson. She's at Laura M. Carlson, Follow the Bloomberg Head of podcast Francesca Levi at Francesco Today, and check out all of our podcasts at Bloomberg under the handle at podcasts. Thanks for listening.