The Rise of Axie Infinity | Jeff 'Jiho' Zirlin (SotN 7/13)

Axie Infinity has exploded into the mainstream in 2021. Is it just a game? Is it an economy? What does Play-to-Earn mean? Join David and Ryan as they explore the world of Axie Infinity! ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap ------ Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:09Ryan Sean Adams?

  Hey guys, welcome to another Bankless State of the Nation. This is the episode where we talk about something big that is happening in the crypto community, in the Bankless Nation. Today, that big thing is Axie Infinity, the crypto game. You may know something about the growth has been absolutely phenomenal. This community is like a small nation at this point. We're going to dive right into it. David, how are you doing today, man?

• 0:32David Hoffman?

  Absolutely fantastic. I've always just thoroughly enjoyed the intersection of Ethereum and gaming, as many in the Bankless Nation are as well. I'm sure they're gamers. I'm a gamer. I like games with scarce assets. I like collecting games with scarce assets. And so I'm just, I want this world to be built out and it really looks like Axie Infinity, which has been around for a while, but has really just absolutely exploded in the last few, few months or so, is really working on that intersection of scarce assets and games. And people like games and people, humans like scarcity. So it seems to be a logical intersection.

• 1:08Ryan Sean Adams?

  David, you know what? And we've never actually like had games with truly scarce assets. They've been centrally controlled, centralized, controlled scarce assets, but they've not been true scarce assets. And that is part of the innovation here. And you're right that like Axie first came on our radar a few years ago, right? I mean, we've written stories in Bankless about Axie for a while. So while this might seem like an overnight success story, it's like a three-year overnight success story. These guys have been grinding. And when I say grinding, they've been building like hell. They've been, you know, creating an impressive, very immersive game. They've been scaling. Maybe most importantly, they have been crushing it in terms of building out their community. And it's incredible community. It's like extremely international.

• 1:53Ryan Sean Adams?

  So a lot to talk about here. And as David was saying, this is not just, as you were saying, David. The third person here. This is not, what's exciting about this is it's not just Axie. This is a harbinger of things to come. Like, I think we are going to see the, the gaming industry completely revolutionized over the next 10 to 15 years by games like Axie. So take Axie, right? And then like extrapolate what it can do, but also extrapolate that to the gaming industry writ large. And you have a pretty massive story here. That's why it's important that we're covering it on Bankless.

• 2:30David Hoffman?

  Absolutely. Like, I can only imagine how much more addicted to video games I would have been when I was young. If there was, if there was financial incentives.

• 2:39Ryan Sean Adams?

  You would have been super rich.

• 2:40David Hoffman?

  Super, yeah. Me and a bunch of other people, right? But like, just imagine when we have economic incentives, which are already working, like World of Warcraft is a massive economic platform. Imagine if we add just real world economics where you can take your real world value or your, your now real world value in the game and take it outbound. Anyways, we need to get into the conversation with Jeff.

• 3:02Ryan Sean Adams?

  Alright guys, but before we do, what's new? A few things that are new. We just launched the Bankless Job Board. David, I'm gonna show this on my screen really cool because I'm super excited about the Bankless Jobs Board. So we've talked about, you know, your Bankless journey. Of course, you can use DeFi, you can, you can buy crypto assets. You can also work in the crypto industry. We've got already close to 20 jobs on the job board just launched yesterday. I've got seven in review. I've got to review these jobs and, and approve them. But software engineer at Arbitrum, senior designer at Pulled Together, these are jobs for crypto natives. So check that out. We'll include a link in the show notes for you there. As far as other announcements, David, we've got some really exciting podcast content, show content coming up. Staking panel tomorrow. What time are we doing that?

• 3:47David Hoffman?

  We are doing that a little late. It's gonna be a late staking panel because as we all know, proof of stake works equally across the globe. Therefore, stakers are spread equally across the globe. And so that is happening at 11:00 PM Eastern Time, 8:00 PM Pacific Time. And we have the teams from Rocketpool, from Lido, and also from Coinbase Staking. So we have the complete spectrum of centralized to decentralized staking services. And so we are going to have a staking panel with the three premier staking services out there to help you understand what it means to stake your Ether.

• 4:19Ryan Sean Adams?

  We've got also the Arthur 0X podcast that just dropped yesterday. That's the story from somebody who got into DeFi in 2018, went from six figures to nine figures and now has a $500 million fund, the largest DeFi-focused fund in Asia. An absolutely incredible story. And the insights from the Arthur 0X conversation were just jam-packed, full of really interesting content during this crab market. That's when you can start to absorb content because you're not looking at price the whole time. So go check that out. Also, David, we are recording a podcast, I think, in the next couple of days, and that is being published on Monday. What's that one going to be about? I know we're both excited about it.

• 5:01David Hoffman?

  Yeah, this is going to be with Tarun Chitra, and this is one of the podcasts where the guest actually is informing us as to what we need to talk about. And so Tarun, he's a giga-brain. He's one of the MEV thinkers and innovators in this space, but also just really pays attention to mechanism design. He's a frequent co-host on the Zero Knowledge podcast, and he is teaching us all about the history and current state of electronic markets. And so we are going to get schooled on electronic markets with Tarun Chitra coming on Monday.

• 5:36Ryan Sean Adams?

  My favorite episodes are the episodes where we get schooled, David. Those are some of the best ones. I expect to get schooled during this episode, by the way. All right, before we begin, want to ask the question I ask you every single time at the start of State of the Nation, that is, what is the state of the nation today, sir?

• 5:52David Hoffman?

  The state of the nation is gaming, but gaming is different now. Gaming, interestingly enough, gamers, there's a lot of games out there that have farming mechanics where you go and you play the same parts of the same game over and over and over again to grind and collect stuff in the game to like level up. That's the same thing with Axie Infinity, but now it's actually farming tokens and stuff and just experience and leveling up your assets on Ethereum. So the state of the nation today, Ryan, is gaming. We are learning how to game with all of our digital assets.

• 6:24Ryan Sean Adams?

  This is the play-to-earn business model. Super exciting. All right, we are going to introduce Jiho from Axie in just a minute, but before we do, we want to thank the sponsors who made this episode possible.

• 6:36David Hoffman?

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• 7:19David Hoffman?

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• 8:04David Hoffman?

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• 9:22Ryan Sean Adams?

  Hey guys, we are back. We are here with Jeff Jiho Zerlin. We are going to call him Jiho for the rest of this episode. That's what he goes by in the Axie community. He's the co-founder and the growth lead of Sky Mavis. That is the studio, the group that created Axie Infinity. And Jiho and the Axie team have really grown this into one of the largest communities in the world. I think we're going to start with some growth metrics. But like, this is rivalering Fortnite inside, at least in terms of Discord server. That's how big this game has gotten over the last three years. It's grown into an internet native economy with an internet native community. It also calls itself a nation, Bankless Nation, you might be familiar with that.

• 10:06Ryan Sean Adams?

  Lots of cool themes coming up. Jiho, it's great to have you. Welcome to Bankless.

• 10:11Speaker 02

  Thanks for the invite. Super happy to be here.

• 10:13Ryan Sean Adams?

  Dude, we are super excited to have you here. I think some people have been sleeping on Axie like for a while. And some people may have heard of it like a couple of years ago, and then just haven't paid as much attention to it. Of course, there's tons of users, tons of gamers where the opposite is true. You guys have brought many into crypto. But let's talk with this kind of growth story because your recent explosion has been crazy. And I think this is why Axie has been on everyone's radar. Why has Axie Infinity exploded in growth over the last few months? I want to talk about a few things. User growth, revenue growth, 25 million daily volume, 50k NFTs sold per day,

• 10:56Ryan Sean Adams?

  250k daily active players, 200,000 Discord members. That's on track to pass Fortnite as the largest Discord server in the world. This is absolutely insane. Why are you guys growing this fast over the last few months?

• 11:12Speaker 02

  It's a culmination of factors. I think the Axie community, the, you know, Sky Mavis, we built throughout the bear market. It was a, it was brutal, right? Nobody cared about NFTs, nobody cared about Ethereum, nobody cared about blockchain. We just kept building and talking to users, figuring out issues, right? And it took, it took kind of a while to put all the pieces together, right? Building a blockchain game is probably 10x harder than building a kind of conventional mainstream game, right? You need to get the gameplay right, it needs to be fun. Then you also have to get the game economy, right? Like this whole idea of economic freedom for gamers, it only works if, right? There are true property rights. You think very thoughtfully about how to enable these secondary markets for the players, right?

• 11:56Speaker 02

  So there's the in-game economy and then there's the scaling, there's the infrastructure, right? We, you know, we love Ethereum, we use Ethereum, and we still use Ethereum, right? So basically, we had to scale, right? So we built this E sidechain, it's called Ronin. And, and a migration to Ronin, after, right, like two or three years of building up this really strong base of the community, we migrated to Ronin and this just allowed like for transaction therapy to increase and, you know, all, all these, it unlocked the player market, the secondary market unlocked so much latent demand for Axies. A lot of people, right, who've been watching, saying, oh, like, this seems really interesting. The gas fees were a little bit of a, of a turn off when we made that transition to the sidechain.

• 12:42Speaker 02

  It was like, okay, now I can finally jump in. So I think a lot of people thought that at the same time.

• 12:48Ryan Sean Adams?

  This is like, so cool because we did a, we did a series, a podcast series, G Ho, not too long ago, on bear market builders. But it was all focused on like the DeFi criticals who didn't give up during the bear market, right? This was like Synthetix and Ave and like Nexus Mutual, a few others. And we recorded that, did that in 2020 and this was like on the back of DeFi Summer, where all of their ideas were basically validated, right? And it felt really good. Now I feel like is the time for Axie Infinity? And what you guys are doing with crypto games and the ability to own your own assets on the blockchain on Ethereum. Now, all of that work that you guys put in over the last three

• 13:32Ryan Sean Adams?

  years during the bear market is being validated. I'm showing some numbers here like this is uh, this is sales volume, guys. Monthly sales volume here. Um, 25 million. Is that daily? Daily.

• 13:49Ryan Sean Adams?

  Absolutely insane. Here is the number of axes being bred. An axi, by the way, for people who aren't familiar, maybe, maybe we should just mention that. What is an axi? There's these cute little like kind of, how would you describe these like monsters?

• 14:04Speaker 02

  Yeah, I think of them as fantasy pets that you can battle and collect. And to earn some crypto or learn, learn about Ethereum, earn some Ethereum.

• 14:13Ryan Sean Adams?

  So eighty, eighty, sixty, uh, wait, let's see, um, 50K of these things being bred on a daily basis. So this community is absolutely, um, exploded. And I think it's all thanks to the work that you guys were doing during the bear market because so many, uh, crypto game studios and so many others just gave up. I want to talk specifically about Layer 2 because that seemed to be a catalyst for your growth. But before we do, why didn't you guys give up like the rest of them during the bear run? It was so easy at that time.

• 14:47Speaker 02

  There, there's, there's a lot of factors. At first, I think we always knew that we were on to something really special, the community, right? Even when it was super small, they were making musicals, they were getting tattoos, uh, you know, they were building tools. So we saw all the kind of ingredients. So it's just about how to amplify this and get to the next level. And we saw that, okay, like if we can, uh, you know, if we can scale, if we can, uh, you know, have some sort of ERC twenty token integrated into the game or ERC twenty tokens integrated into the game. And yeah, so it was like, I think we always saw the next step, right? And we were talking to the users and they inspired us. We our community inspired us every single step of the way.

• 15:30Speaker 02

  And yeah, there was always right, like there were always little signs that we were on to something. And yeah, we, I think, you know, the team that we have is super special. A lot of us are like our lifelong gamers. Um, so it's like, you know, we, we compete and we, we like to win. And I think that's part of our culture. Um, so yeah, uh, it was never giving up was never, it was never an option. Um, I think, uh, yeah, it was also if a lot of us right come from like product development backgrounds and understood that it's actually right. The way to win is to be early to the right market and just keep building, right? Like the bear market, actually, we like that because other people aren't trying to catch up to us. Right, there's, they're, they're having a lot of issues like fundraising, like with morale.

• 16:13Speaker 02

  Um, so the bear markets, that's a hundred percent where, uh, you know, the opportunity is right. And you cannot form a community like Axios during a, a bull market, right? You just, you just attract only these mercenaries, right? It's like all, all these, uh, you know, people who are more about the hype and the tech. And then, right, obviously there's a combination of both in every community. But it's really important to have as, as kind of the pillars, as the foundation, these people that are really in it because of the, right? Like the economic, the economic revolution that's happening. Um, and, uh, yeah, I, I think like we have, we have enough of those types of people in our community.

• 16:55Speaker 02

  Um, but yeah, we, you know, we, we, we thought that it was, it was just about building towards product market fit. And yeah, it's.

• 17:05Ryan Sean Adams?

  Well, one, one thing that I was thinking as Dave and I were going through the, the agenda for this yesterday was, was basically like, if, if you're in, and this is a message to, uh, Bankless listeners, if you see an amazing community that's somewhat underground, it's a dare market, but like, doesn't have mainstream attention, but it's just a, an amazing, incredible community that's somewhat underground, that's a signal for you to go get involved. Like maybe not financial advice, go buy the asset, right? Because good things happen out of good communities. That is a key insight, I think, that is. That rule has never been broken in crypto. It's really hasn't.

• 17:44David Hoffman?

  Jeff, I have a question for you, and there are so many topics that we want to get into. We want to get into the mechanics of digital assets inside of the game. We want to get into Axie's relationship with Ethereum versus L2s and what it means to have revenue. But first, I want to ask a question. Why now? Why is Axie blowing up now? Because DeFi summer was a year ago, and then the NFT mania was like six, you know, five months ago. And, you know, there's both NFTs and tokens inside of Axie Infinity. But this seems to have claimed its own success for its own reasons, under its own merits, without some sort of just like fundamental catalyst behind the ecosystem or whatever's going on in the rest of crypto. So why is Axie Infinity blowing up right now?

• 18:30Speaker 02

  Yeah, it's a good question, and I think it's not, it's not simple. There are a variety of intertwined catalysts, right? We were deployed to Ronin in late April, and since then, we've been growing around 30% a week. It has spiked, right? So all metrics, basically, at least 30%. Discord users, volume, DAU, traffic to the site, all going up around 30 to 35% per week. Right, it's within the last week that things went 50 to 70%. And it's like, everyone in crypto kind of started taking a look at us. Also, right, it's kind of like, we're in this, as you mentioned, we're in a crab market, right?

• 19:12Speaker 02

  So it's like, we were doing really well for most of the year, but everyone in crypto is doing really well. But I think like this fact that we've kind of, in some ways, decoupled from a lot of the rest of the market, like, our economy is doing quite well. Even though we're in this kind of flat to down market right now, I think it's really, people are bored, right? And they're looking for something interesting happening in crypto. And right now, right, like, we happen to be where the growth is, where the excitement is. So yeah, I think that's a lot of it as well.

• 19:42David Hoffman?

  So Jeff, I want to, we want to go into all those questions that I was talking about, but I want to just illustrate what the gameplay of Axie Infinity actually is. So maybe, maybe can you describe what it's like to play Axie Infinity? What's the goals? Like, what's the game mechanics? What do you do? What's the, what's the, what's the, what's the end goal of Axie Infinity?

• 20:04Speaker 02

  Yeah, so right now, the, so we don't look at Axie as just one game. We've seen it as an entire universe of games. The product that's on the market right now, and that's gotten us to its current, current level of traction, is this kind of pretty basic card battler. So basically, you're, you fight two teams of three axes against each other. There's both PvP, so you can fight against other players. There's PvE, you can fight against monsters called Chimera. And yeah, the goal is to basically use your energy. So you start each round with three energy, or a certain amount of energy. And the goal is to basically use those energies to play cards that are going to give you the best chance of winning, right? So it's kind of like you have to know what your opponent's axes are capable of playing.

• 20:49Speaker 02

  You need to know like your team really well, and kind of think of counters. And yeah, it can get quite complex, especially with the mind games. And you can even skip turns and basically like save your energy for a larger, kind of more devastating combo later. So it's quite basic, but I think it is, it's, you know, pretty proven. It's like a very interesting, I think, kind of card battler mechanic. And some, some people might think that it's similar to games like Slave of Spire, you know, Hearthstone, it's kind of like a combination of a lot of the card games we grew up playing, you know, over the last 10 or so years.

• 21:28David Hoffman?

  And so what's, what's the progression like? As you get better and better at the game, do you like level up? Do you find more scarce items? Tell us about the progression.

• 21:37Speaker 02

  Yeah, definitely. So when you, uh, so when you win a battle, you actually earn these tokens called Smooth Love potions. Those are actually what's, what are required to breed or create more axes, right? So, uh, we don't sell axes, um, right? So all acts, like almost all the axes that exist out there, except for very few that were created during special kind of primary sale events. All those axes are created by players, uh, so, and in order to actually create an axi, right? You need to use those, those to, those tokens. So the creation of an axi is kind of like a proof of work system where each axi is the result of real time, uh, spent in game. And I, I think that's one of the key mechanics.

• 22:21Speaker 02

  Um, and yeah, I think like, for example, the Smooth Love Potion, and this is, I think, like the first time that human effort has ever been kind of like tokenized, um, into an asset.

• 22:32David Hoffman?

  That's really, really cool. And that's definitely a topic that we want to dive into more when we get to the assets section of this conversation. But first you said something, um, that the, the Axity Infinity or the gameplay that Ryan is showing right now on screen. That's just one possible game of future Axie Infinity games. So these characters, these little cute little Axie Infinity monsters can go in, in the future, play, be a part of other games that, that is built out of your guys' studio?

• 22:59Speaker 02

  Definitely. I mean, first of all, we are also deploying a huge upgrade to this, uh, current battle system called, you know, kind of like encrypted, we call everything B2. Right? So, uh, yeah, we have a Battles B2, uh, coming out, hopefully later this year or early next year. Um, but then, yeah, we're also working on land, right? So land might be something similar to Clash of Plans, Rise of Kingdoms, where you're actually, you, you own, uh, land plot. You can build it, build it up, build structures on it, harvest resources, right? Imagine if you're playing Clash of Plans or Farmville, right? And those resources are actual tokens. Uh, I think that's a dream that a lot of people have actually had since like D5 summer. Uh, I tried to kind of, you know, uh, sound the alarm saying, this is actually what we've been building.

• 23:43Speaker 02

  It just takes three years. Like none of you guys are from the DeFi community. Actually gonna build it like we're gonna build it like it's just give us, you know, give us some more time. Uh, so yeah, like the, the, the land system, I think is going to really resonate with a lot of people. Um, that's also on the way and then long term, right? Sky may this, we, uh, you know, you can might, might think of us as the Axie core developers right now. Uh, we're never going to be able to build enough content, I think, satisfy. Uh, the number of players that we hope to have within the ecosystem.

• 24:12David Hoffman?

  That's a good problem to have.

• 24:13Speaker 02

  Yeah, hundreds and right, hundreds of millions of players. I don't know, you know, it's guys limit. Uh, you know, uh, we, we believe that in order for us to be able to scale and, um, scale the content within the ecosystem, we really need to allow, right? Community members, other game developers to come into the Axie universe, use the IP.

• 24:33Speaker 02

  And, uh, yeah, and so, yeah, one way to think of it. One way to think of Axie is, you know, kind of a protocol for internet monster games, um, using this awesome art. There's so many game developers out there, uh, who are really smart. They know how to make games really well. What do they lack? They lack understand, they lack, uh, art. They lack a passionate community and they lack inability to get funded or under, or basically how to put together kind of like in-game economy. Uh, so there's a lot of things that are that come kind of inherent with Axie model. You just need to come in, right? Like with, with the urge to build, um, and make something awesome. So a long term, we're going to have an SDK and I think that's going to really, uh, unlock so much latent talent.

• 25:19Ryan Sean Adams?

  This is so cool. So if you're like, uh, like back in the day, like a mod developer, right? You could just like plug right into not only this SDK from a technical perspective, but you're really plugging into this economy, this whole economic incentive mechanism that Axie has really built up. But let's talk about this, uh, for, for a minute, Dho, because I want to get to kind of the assets. And an interesting way to maybe frame this is for some of the, the, the, uh, items that we're talking about, like the smooth love potions and the axes themselves, like what are these things exactly? Are some of them NFTs? Are some of them ERC twenties? Could you just suss out in like, um, like bankless, bankless native lingo, DeFi native, uh, lingo?

• 26:03Ryan Sean Adams?

  What these things are and what, what are the scarce elements of the game? What are the tokenized elements of the game?

• 26:09Speaker 02

  Yeah, definitely. So the actual NFTs within the game, these are.

• 26:15Speaker 02

  axes as well as the land plots, the land items, right? So these are the unique tokens.

• 26:23Speaker 02

  The resources within the game are the ERC 20s. And we also, so we have, we have two tokens right now within our game. There's the smooth love potion and then there's the access governance token. These are both ERC 20 tokens. Fun fact, we actually also, back in the day, as kind of a fun experiment, we dropped dye. We dropped a token. This is like, you know, way before like.

• 26:48Ryan Sean Adams?

  I kind of remember this.

• 26:49Speaker 02

  Yeah, this is way before Maker Protocol blew up, way before Ave. Right, this, I think we had the old Ave tokens. So it's like super, super long time ago. Yeah, the lend. So yeah, we, you know, we, we did some cool experiments where, yeah, these DeFi protocols. This is also like the key to sustaining this economy long term is right, like

• 27:11Speaker 02

  exogenous actors, right? Like they're like saying, okay, this is an interesting distribution channel for my token to get it into the hands of people who are a strong community. That's, that's, that's a crucial point. I think maybe we can talk more about it later. But yeah, so that's just what, so when, what do you think of it is like the game characters, right? As well as the, the homes for the pets, they're, they're non-fungible tokens. And then the kind of the in-game resources are ERC 20.

• 27:37Ryan Sean Adams?

  And they're all connected to the, the DeFi, like to Ethereum and sort of the, the composability of DeFi. So if you have a smooth love potion, right? There's like a Uniswap market for that. Is there a Uniswap V3 market for?

• 27:51Speaker 02

  There's actually, I, I've heard really good things about the V3 pool. Everyone, like you need to join this pool, like it's super, it's, there's a lot of volume. They're trying to like, they're trying to school me on, you know, V3 is, it's, it's a tough beast to tackle, even for like a DeFi, right? I've been so busy, so they're, they have, I have like people messaging me each week like, yeah, like, like even people are getting onboarded into Axie because they just find out that the, the SLP V3 pool is like awesome. So yeah, that's, that's, that's an amazing thing, right? It's like in the future. Not in the future, gamers, an increasingly large number of gamers will start to demand that your in-game resources have liquidity on Uniswap.

• 28:35Speaker 02

  Or a similar AMM, right? That's the big, I think that's the, that's the, one of the core discoveries that we made in 2020 that has gotten us to this point where we realized that in the future, right? Like gamer games or like the, the growth in marketing people and their team on teams, they're not going to be like looking at like, oh, like what's our Facebook ad spend looking like? What's our Instagram ad spend looking like this month? Right? It's, that's like, that's really, I think that, that era is over for at least like, uh, yeah, a lot of indie game, game dubs, right? They're going to be looking at like, okay, like, you know, how can we incentivize more liquidity for our in-game resources? How can we build up more liquidity, um, right? Assessing that rather than these like, you know, marketing budgets and things like that.

• 29:20Ryan Sean Adams?

  Yeah, it's, it's somewhat like, I think in the future it'll be like, if your token's not listed on Uniswap, does it even exist? You know what I mean? Like if your asset's not there, where is it? I, I do believe that a Uniswap or the successor to Uniswap will become the biggest marketplace for human exchange the world has ever seen. And like digital, digital items are going to really, um, push the envelope there. So, okay, so we've got the composability of DeFi and that includes obviously all the ERC20 tokens like AXS or love potions. Then also, um, AXS could be sold in kind of the composability to NFT market. So you could sell your AXI on, uh, OpenSea or something like that. Can we talk a little bit about the, the token economics?

• 30:04Ryan Sean Adams?

  I know you mentioned token economics for love potions. Uh, maybe a quick refresher on, on, on that. It sounds like you actually have to play the game in order to earn it. So it's like time spent in the game earns the love potions. It's like a proof of work. Yeah. Farming love potions. And then also the token economics of, um, AXS. So does someone earn that or how does, how does that work in general? Could you talk about those two?

• 30:31Speaker 02

  Sure, so SLP, smooth-up potions, right? This is kind of, it's uncapped, it has kind of like a reflexive supply, right? So you can earn it by playing the game, you know, doing PvP battles or fighting monsters, and then you burn it by breeding. So we look at the, basically look at the minting rate from playing, and we look at the burn rate, and we can make economic adjustments. We can sometimes increase the amount SLP needed to breed if we see that not enough is being burned and too much is great. So in some ways, really, there's some, there's a lot of math that goes involved inside, and hopefully over time that can be done by like an algorithm or done by government, it's just like the maker stability.

• 31:12Speaker 02

  And then, yeah, so that's kind of basically how that works. And it's crazy, it's a phenomenon in the Philippines. There are, it's like a trend where businesses are now starting to be like, hey, like, we're cool, we accept SLP. You can come buy, I think, like cakes, there are apartments where you can pay your rent. This is like the kind of, you know, this is, this is a trend, and it's something to watch in the Philippines. It's super interesting. Access on the other hand, this is the governance token, it has a cap supply, right? Like, we emit it through playing the game, but in more kind of very specific ways, right? So you can earn it by getting at the top of the leaderboard. You can earn it by kind of contributing to the community, right?

• 31:55Speaker 02

  So like, you know, we're increasingly starting to rely on more like, you know, decentralized DAO kind of contributors, right? People who are helping out on the community side of things. We do contests as well, right? Like, we pay it, we pay, we just had an amazing video, short video contest that came out, and we paid out the rewards and access for that, right? So we have different distribution mechanisms to get it into the hands of the community members.

• 32:21David Hoffman?

  What's actually being governed over with the AXS tokens? What does that token, what's the power behind that token?

• 32:28Speaker 02

  Yeah, sure. So so right now, there, you know, governance has not been implemented yet. But what is happening is that so four point two five percent of all the N F T volume within our ecosystem, right? It's like three hundred million dollars this month. Four point two five percent of that is going into a community treasury. Uh, we also have breeding fees. Um, so part of the breeding fee is paid in S L P, the other part is paid in and and access. Uh, so yeah, basically these fees, right? It's like it would be very, it would be so centralized, right? To centralized for us to, you know, as the game developers to take, you know, uh, the entire marketplace fee, these breeding fees, right? In the end, it's like we would be kind of, uh, this extracted middleman.

• 33:10Speaker 02

  Um, so, you know, when we worked with Delphi, uh, digital on this, actually, uh, where we basically created governance tokens where long term we can basically, you know, uh, put over control of that that treasury, uh, to the to the doubt, to the doubt members. Um, yeah, I think I think there's also a lot of other things that could be decided by governance. Um, for example, like, you know, maybe like policies and punishments on automation, right? It's like, uh, like, um, a lot of people ask, like, how can, you know, uh, all blockchain games should have should allow a bots, right? Like, that's like, that's like some, uh, some people think that. Is it maybe like, I understand why they would think that if they haven't built a blockchain game, talk to users, right?

• 33:54Speaker 02

  Like, our users, they really hate, they really hate bots because they feel like it's very like automating them out of the job. It's competing with them, it's unfair, right? So, you know, if if we were to write like, yeah, I so I think like something like that could also be, uh, decided by governance, um, as well, uh, long term. Um, also maybe perhaps, right? Uh, you know, uh, content within the universe, um, you know, there there might need to be like certain likes. Restrictions and rules around like, you know, fair use of content, but it shouldn't long term. It doesn't make sense for us. This guy means to do that. So this is just some of the things I think that.

• 34:32David Hoffman?

  I think this really fits into the overall theme of crypto and DeFi of itself, where the token allows the users or participants of an ecosystem to become also the owners of the ecosystem, right? It really changes what it means to be a play to earn game where, you know, you play to earn what? Money or ownership in the actual platform like that's, that's the cool new thing. And back in DeFi summer, we talked about these governance tokens like, oh yeah, if you're a user of Compound, you get comp token issued to you. Now you own, now you own part of Compound. That's like if Uber was issuing Uber equity to every time a driver gave a drive or a rider took a ride. Like, oh, same, same model. Now it's about games.

• 35:12David Hoffman?

  And so now we have these gaming platforms where the users can grind their way into ownership of, of around the overall platform. And that seems to be the, the quote unquote new paradigm that Axie Infinity is really tapping into.

• 35:26Speaker 02

  We know that gaming communities are some of the most passionate in the world, right? So imagine when you actually give them ownership of the game, right? How, how much more are they going to do to help it? So I think, I think that's really what we've seen. I also, right, like we talk, we think a lot about decentralization and there are different layers at which you decentralize things and, and timing, right? For our users, the things that they want control of are the peer to peer exchange of game assets and eventually ownership of the entire game. Those are the things that they care about the most right now. In terms of right, the data, the data storage, they're okay with a side chain for now.

• 36:08Speaker 02

  And then being with the ability to settle back to Ethereum.

• 36:13Ryan Sean Adams?

  Gio, I feel like you guys have played this really well, right? There's some uncertainty, there's always market narratives in crypto, right? So like all of these Ethereum killers popping up and does a game like Axie deploy on those? Does it stick with Ethereum? All of these layer twos promised in the future, right? At one time it was plasma, do you remember those days? And then, you know, it turned into kind of rollups and we're on the cusp of seeing some rollups in production, but they're not there yet and you needed something sooner. I just feel like Axie has played the platform betting game in a very good way because you've benefited from all of the DeFi composability of Ethereum, right? And like the settlement guarantees of Ethereum were necessary,

• 36:57Ryan Sean Adams?

  but you've also deployed your own layer two where those settlement guarantees are not necessary. So it's like a really smart way to play the game because you haven't lost that composability. I'm curious to learn a bit more about, I think you call it Ronin, which is your sidechain solution. How should we think of this, right? So we generally on Bankless, we divide it into kind of two things. We've got sidechains that aren't economically secured and don't have the security guarantees of the Ethereum mainnet. And then we have rollups that provide most of the security guarantees of the Ethereum mainnet and the economic guarantees.

• 37:36Ryan Sean Adams?

  So Polygon is probably more of a sidechain or something like Arbitrum or Optimism or Rollup is more of a layer two. So what is Ronin and is it more like a Polygon or is it more like kind of a layer two?

• 37:52Speaker 02

  Yes, it's definitely a sidechain. I don't want to like mischaracterize ourselves as a layer two. That is something that, you know, is hopefully within the long-term roadmap, right?

• 38:05Speaker 02

  Right now, right, it's like, you know, we made a very pragmatic and practical choice for our users based on, you know, we're product people, right? So we listen to the users, we talk to them, it's like, what do you care about? But yeah, I think long-term, right, like, you know, the security as more funds are also deposited in Ronin, we just actually hit 200, over $200 million, right? As that number starts to balloon, there's going to be more questions and we'll need to, you know.

• 38:34Speaker 02

  Maybe upgrade and look and look at different solutions, right? So does that mean that, okay, like we have validators, we're posting Merkel, Merkel proofs to to the main net or Merkel trees of some form, possibly, right? I just, I, we need to, we need to look at it, right? It's obviously if everyone starts doing that, if everyone has a sidechain that, or everyone has a layer two and everyone starts posting, it's like you start those, that starts to balloon in fees, right? So it's like, Ben, it's like, I, I've heard that, okay, maybe there's going to be a, a not another roll up that the rollups post the rollups to, that then posts something that's then rolled up onto Ethereum, right? So it's still up in the air.

• 39:19Ryan Sean Adams?

  You guys are early here, though. So like, what do you think, though? The, the massive growth that we've seen from Axie this year, was the sidechain Ronin part of that growth? Was it required even for that growth, do you think?

• 39:31Speaker 02

  Yeah, I think Ronin was, was super important in that growth. But yeah, I think like the EVM compatibility just made things so much easier for our community, right? It's like, you know, our marketplace is all in ETH, right? Like we're doing, we're doing like insane amounts of ETH volume each day on our marketplace. And yeah, like, you know, I, I think I just saw today that the Ronin bridge, the, kind of like the running deposit contract is, was the number one gas burner on Ethereum today, more than Uni V2.

• 40:11Speaker 02

  And so I think like on a normal day, we're like up, you know, and consistently in the top three with, with, with Uniswap and Tether for the last month, right? So yeah, I, I'm super excited about EIP 1559, too, because then we're, people are going to be like, yeah, like, they're going to be rooting for us, right? Even more, because they're like, yeah, like, our Axie is burning ETH today, right? I think, I think that's like something I'm so excited for.

• 40:35David Hoffman?

  Oh, that is absolutely what my reaction would be. Even the persons, the people that aren't involved with Axie will be rooting for its growth, along with every other game on Ethereum, just to burn more and more ether. Jiho, there are so many more things in this conversation that I want to get to, but I want to kind of recap this summary, this section, real quick. When we view the relationship between Ethereum and Axie more from a satellites view, how would you say, why is Ethereum so important to Axie? It's got these DeFi apps that provides, you know, financial services to these assets. It provides onboarding for users. Holistically, how would you say is Ethereum's role in Axie's success and development?

• 41:19Speaker 02

  And we wouldn't be where we are without Ethereum, right? Like, we, it was like our main home. Now it's kind of like our summer home. It was our main home for two years. Now it's kind of very like our home country, right? That we would still go back and visit and have really strong remittance links with, right? You might think of it like that. There's massive amounts of value transfer going back and forth. So, yeah, it was amazing. It's like Ethereum allowed this all to happen in the Ethereum community. Yeah, I think like it just also allows really quick innovation, right? So it's like, okay, now it's like all this AMM stuff happened on Ethereum. Like, okay, like, do we need our own decks for our game?

• 42:04Speaker 02

  Does that make sense, right? So I think like all these experiments that happen in EVM native systems, right? Like, they can be transferred and transported. We might create something on Ronin, right? That can then, okay, like, help out another EVM compatible sidechain or layer two, or even something on mainnet, right? So all this basically, right? It's like everyone is speaking the same language. And that's so key. It's like, for the first time, right? It's like, there's one unified financial system that's all speaking the same language. And, yeah, I think like the value that gets unlocked from something like that, it's unfathomable, and I think it's going to create amazing things in the future.

• 42:49Speaker 02

  So, yeah, you know, I hope that, you know, Axie kind of also inspires, right? Like, other game developers to build these types of games. And, yeah.

• 43:01Ryan Sean Adams?

  Guys, I just keep smiling during this episode because everything Gho is saying is just so cool and is so exciting and we have so much more to cover with Gho. We're going to talk about the internal and external economy of Axie a bit more. We're going to get into the users, really unique global demographic of users. We're going to talk high level about where Gho sees the future of gaming and digital assets. If you are liking this show so far, make sure you subscribe to Bankless YouTube. We put these videos out on the regular, so if you are enjoying this conversation, then make sure to like and subscribe. And before we get to the second part of this conversation, we want to thank the sponsors that made this episode possible.

• 43:45David Hoffman?

  Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and we'll say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute

• 44:26David Hoffman?

  to the Uniswap DAO, apply for a grant to Uniswap. Just look at the size of the Uniswap Treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a UniGrant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless.

• 44:58David Hoffman?

  The Aave protocol is a decentralized liquidity protocol on Ethereum, which allows users to supply and borrow certain crypto assets. Aave version 2 has a ton of cool features that makes using the Aave protocol even more powerful. With Aave, you can leverage the full power of DeFi money legos, yield and composability all in one application. On Aave, there are a ton of assets that you can supply to the protocol in order to gain yield, and all of those same assets can also be borrowed from the protocol if you have supplied collateral. Here, you can see me borrowing 200 USDC against my portfolio of a number of different DeFi tokens in ETH. I'll choose a variable interest rate because it's a lower rate than the stable interest rate option.

• 45:42David Hoffman?

  But I could choose the stable interest rate option if I wanted to lock in that interest rate in permanently. V2 also features the ability for users to swap collateral without having to withdraw their assets, trade them on Uniswap and then deposit them back into Aave. With Aave, users can do this in one seamless transaction, saving you time and gas costs. Check out the power of Aave at ave.com. That's A-A-V-E dot com.

• 46:07Ryan Sean Adams?

  Guys, we are back talking Axie Infinity, the economy, the digital nation that has been spawned out of this game. Super cool. We're here with Jiho. Jiho, this has been incredible so far. I think one area we haven't covered sufficiently is talking about the users of Axie. Who is playing Axie Infinity?

• 46:30Speaker 02

  We have so many different player archetypes, right? We have, you know, the collectors who are really into the scarcity and the aesthetics and the art. And, you know, I think they're super important to the ecosystem. We also have, right, like the people who are kind of, you know, really into the competitive scene of Axie. Right there, they want to be at the top of the PvP leaderboard. They want to win all the tournaments. Right, they're also able to, you know, get some nice access winnings from doing this. Then you have the kind of play to earn grinders, right? They might be playing four to six hours a day, farming. Uh, love potions, they might have, you know, they might not have been able to even afford an axi.

• 47:12Speaker 02

  They might have borrowed them from a friend, a family member, one of these other uh, public programs.

• 47:19Speaker 02

  You know, we have the liquidity providers, right? There, you know, there's interested in like, uh, you know, trading the axi market. Uh, doing these kind of short-term strategies.

• 47:29Speaker 02

  Yeah.

• 47:29Ryan Sean Adams?

  And wait, wait, wait a second, Gio. You, you said somebody can actually like borrow an axi? And, and play with it? So they don't actually have to buy? You can like borrow?

• 47:38Speaker 02

  Exactly. So as the expected earnings of a, or the theoretical future earnings of a team of axi rises, so too does the price of a team of axes on the marketplace. So, you know, this, this is obviously, it causes a dilemma where, uh, right, like over time. And historically, the price of axes has gone up and it's like, okay, like, you know, how do you make the game accessible? How do you get people into the ecosystem? Um, so this, so this uh, system has

• 48:12Speaker 02

  developed. It's called the scholarship system where people who have, you know, a lot of axes, but not enough time to, to use them.

• 48:22Speaker 02

  Are able to lend their axes out to these scholars who are people who, right? They have a lot of time. They want to play axi, but they don't have, uh, you know, the hundreds of dollars, um, that it, that it takes to get started. And with the game, right? And then so oftentimes, right? These scholars will apply to a program with a resume or CV or even like a video. They're getting really creative. Some programs are only taking streamers. It's like an amazing growth hack. So they're applying, then they're in many cases even signing like, you know, contracts to basically say, okay, I'm the scholar. I'll get this percentage of the tokens earned on this account while I play.

• 49:02Speaker 02

  The rest will be, uh, taken by the, uh, origin, right? The, the owner of the account. So.

• 49:08Ryan Sean Adams?

  This sounds like a, it sounds like a GHO, a built-in franchise type system.

• 49:14Speaker 02

  Exactly. I think that's been one of the keys to the growth is Axie is a system where anyone who right there, they're interested in blockchain, they're bit entrepreneurial, they're great at community building, they can come in, a lot of them have come in and right, they've kind of built these guilds, right, around themselves and but yeah, there's, you know, kind of a real earning ability with with these guilds. So yeah, there's something, there's, there's also even a, there's a, there's a, there's one of these scholarship organizations called Yield Guild, YGG, and then they're even like, I think they raised a series A. So they're, they're like going out

• 49:54Speaker 02

  there and raising capital and you know, there's, there's so much interest on this idea of the metaverse, the metaverse immigrant worker, right, who, right, because you're able to earn, you know, fifty, sixty, maybe seventy dollars in these plate, in these plate earn economies, at least in Axie Infinity, you know, people are kind of migrating into these and into Axie right now. And yeah, Yield Guild is helping.

• 50:23David Hoffman?

  Jeff, was this whole scholarship phenomenon and lending out your Axies, was that infrastructure that the Axie team built out, or was that community driven, community derived?

• 50:35Speaker 02

  I like to joke that the community got the idea when they were playing Animal Crossing during the pandemic. Because you had Tom Nook, who is, you know, getting people, getting people to do all this work for him. And they're like, yeah, like me, I need to become Tom Nook with my Axie, get someone to work for me.

• 50:53Speaker 02

  But yeah, it's primarily from within the community. We made it, we made our account system architecture flexible enough to enable this. And we're, but we weren't sure whether people would start doing. So yeah, it's kind of like a little bit of both. We're also potentially, this might be a leak, we're looking at, you know, if we can make an official version of it, what that would look like. But it comes with a variety of issues. So we're still in.

• 51:22David Hoffman?

  That is insanely cool. Two things come to mind. The Protocol Sync thesis comes to mind, which is the concept that you could have built Axie Infinity the game and used Ethereum as you've described it and just built the game, but instead you built something deeper. You built something that people could build on top of, which allows the community, it gives agency to the community, say, "Hey, you have permission to start tinkering with this game that you play." And no, it's not just the game. The game is one feature of a more vibrant ecosystem. Much more fitting to call this thing a nation. And so I love that. I'm also reminded of our conversation with Josh Rosenthal, who talks about how there is going to be an absolute new paradigm of what it means to be a laborer, a worker,

• 52:05David Hoffman?

  a part of a digital organization, part of a digital community, digital nation. And it's just completely changing the game with what it means to almost do anything, really. Be a gamer on the internet, be an entrepreneur on the internet, be just an economic actor on the internet. And so this is definitely one of those examples of there's this community out there that is really taking on, taking this opportunity by the horns, rather than doing whatever they were doing by playing like Team Fortress 2, or Overwatch, or whatever, in the Web 2 world. So I think that's really, really cool. I want to go into the demographics of the community a little bit more. It's largely Asian-based, Asia-based? Is that

• 52:50David Hoffman?

  correct? And then what parts of Asia does Axie Infinity particularly find resonance with?

• 52:55Speaker 02

  Yes, our game is, Axie is huge in the Philippines right now. I think around 60% of our users are from the Philippines. We have, I think, some of the largest streamers in Philippines, if not the largest, are also starting to stream Axie Infinity there. It's kind of like a really special thing that's happened there in the Philippines, due to a variety of factors. But yeah, so that's around 60%. We're also starting to gain traction in places like Indonesia, Vietnam, yeah, but also South America, right? So like Brazil is huge, Venezuela, Argentina is growing.

• 53:32Speaker 02

  So it's really, it's like, it's almost like COVID, or it's something that's like, it started, it started in one place and, and it was super small. But then, right now, it's, it's just, it's right, I saw photos of people and it looked like a school in Africa, learning how to play Axie together. Uh, that was like mind blowing, like, I need to, I need to hunt down, like, and see what's going on there, like, I, I bet. In the three months, we're gonna see, like, so many people in Ghana, Nigeria, uh, because they, they can speak English quite well, so they kind of can interface with the rest of the community. Um, that's one thing that we've seen is like, you know, being able to speak English, I think that, that if a country can speak English and has like low, uh, minimum wage. Um, that's like a perfect storm for Axie. Uh, you know, obviously localization will help, um, in the future.

• 54:16Speaker 02

  Uh, but yeah, we also have like lots of Ethereum's right in the community who are, you know, a lot of them are from, you know, the US, Canada, North America. Um, and, and Europe, right, northern, northern Europe, so, uh, we have, we have, we have a decent mix.

• 54:30David Hoffman?

  So, one of the most impressive things to me about Axie is that it's got almost a quarter million daily active players, which really indicates to me that Axie has succeeded in getting a significant amount of people over the crypto hump, as in like, uh, Axie requires some sort of Ethereum native infrastructure in order to play it, and people seem to be figuring that out. Uh, how have you guys, uh, give us your secrets, how have you guys gotten so many people using Ethereum infrastructure? How have you like eased that onboarding process?

• 55:02Speaker 02

  Yeah, so, the, we actually just hit 500,000, uh, daily active users today. Uh, the, the, the data is out that I, that we put out there, gets outdated, you know, every week, right? Um, so yeah, we just, we just hit half a mil, a huge milestone. And, yeah, I think it's, you know, it hasn't been, it's been actually leaning in to what makes a crypto game and NFT game special, right, like, uh, focusing on

• 55:32Speaker 02

  The economy in many ways and giving economic freedom to our players. I think like the more we focus on that and making this a game that would never be possible on traditional rails, you know, I think really doubling down on that and making sure that people understand the benefits, right? Making sure that they understand the benefits of peer-to-peer in-game markets for both the game assets as well as the in-game resources. Right? There has been amazing work done by our community, right? To like, one of the things that we build towards is for our crypto-native users to start onboarding their friends and family, right?

• 56:13Speaker 02

  So a lot of our users who are right, like they might be grandmas, aunts, uncles, they were actually on-boarded by hand by one of our community members, right? Who was like, this product is so life-changing and amazing and this community is so much fun to be part of. I want to do this. I want to share this experience with someone that I love. If you have your users thinking like that, it can actually be a quite difficult product to get on-boarded on. You know, like in Korea, this time I'm actually currently in Korea. I'm half Korean. Like, all old people, all grandparents, they know how to use Kakao Talk or they have Kakao Talk on their phone. None of them like actually set it up for themselves. All of their children see it as their like filial duty to set it up for them.

• 56:58Speaker 02

  Like in the future, that is actually how blockchain adoption is going to happen. It's like this myth of like, yeah, like a lot of everyday people, they're never going to get like, no matter how simple we make it. Now, obviously, we need to keep making it more beautiful, more simple, right? Like, I'm not trying to like say that, but like, there's still going to be some level of complexity when it comes to like, you know, because of a high-tech, you know, new fintech technology. So, yeah, I think a lot of it is about like, you know, onboarding, personally onboarding your friends and family. I'm getting them involved. And then, yeah, having something that once they do start, once they have it on their phone, they're going to get a lot. I think that's another.

• 57:41Speaker 02

  Their key with Axie is like, right, it's like the number, the amount of time that people are spending on mobile phones, looking at mobile phones is skyrocketing. Uh, and where I think we're, and especially in emerging markets, right, where, you know, these people, a lot of people, they don't have bank accounts, but they have a phone. Uh, so in the future, I, and we're, we're, I think like, we're gonna do some really awesome stuff like with this in the future where people, they might not have a bank account, they start playing Axie Infinity, they get some access to some SLP, some ETH. And then they get issued, right, they might get issued a card, uh, that they can then, uh, spend. So that's like, kind of like really being on boarded into the

• 58:19Speaker 02

  kind of, it's kind of a legacy system, but through this backdoor of, uh, yeah, of the EVM, so.

• 58:28Ryan Sean Adams?

  Th- th- this is so cool, right? So like, I, this is why Bankless Nation, if you're listening to this, um, this is why we've been so excited about games for so long is because it offers this unique backdoor that like, like, uh, regular DeFi and regular crypto doesn't offer, right? And here's the secret, when I'm like distilling from what you just said, Gio, is it's fun. People just wanna have fun. And you know, like, God bless Bitcoin, it takes itself way too seriously, right? Digital gold, uh, fixed cap supply, uh, Ethereum at some level too. I mean, these are like financial assets and we use like

• 59:09Ryan Sean Adams?

  financial terms and is it a capital asset or what? Like, the thing with Axie is it's just so damn fun, right? Like you just like, you want to have the important people in your life, your friends and family partake in this cultural game with you. And so you, you onboard it. The, the, the only time in recent experience, I, I remember something like this is when, uh, Pokemon Go hit the US, right? It was big for a while, like kind of this like location-based game and like everybody was onboarding everyone else. The same thing is happening with Axie, specifically in places like, like the Philippines, but it's also spreading to other countries. And what's so cool about this is this is going to be the gateway drug

• 59:54Ryan Sean Adams?

  to the rest of crypto and to DeFi. And it's, it's kind of like a, a backdoor, as you say, Jiho, like a, a secret hack of, of getting people to go bankless through gaming. And it hasn't quite been tapped in, in, in, in such a way that I've seen. And this is maybe the first time that we've seen it start to hit something that like five, half a million daily active users, that is absolutely massive for anything in crypto. So, man, I'm just bubbling over with excitement. That wasn't even a question. That was just a comment.

• 1:00:31Speaker 02

  That's awesome. Yeah, I think like the, one of the key things to wrap around is Axie, wrap your head around Axie, is that you can come into the ecosystem, right? With just the desire to learn and, and a lot of time on your hands. And, and right, you can make a nice TV, get it accepted into a scholarship program. You know, at this point, you've never bought it. You know, you never bought crypto. And then you start, you know, you get accepted, you start earning some, some love potions, maybe even some axes, then boom, right? You can, you can sell them on Uniswap, B3 for, for some ETH. And then, okay, you're on boarded, right? We've always in crypto, we've taken for granted, oh, like, of course, we should pay these miners, you know, we should pay them in crypto for solving math problems, right? Like, oh, of course, we should pay

• 1:01:16Speaker 02

  yield to people who already own these assets, right? But that's actually the thing that we lack is adoption, right, from everyday people, right? And I think that gaming gives some way to, right? Do that, you know, incentivization.

• 1:01:32Speaker 02

  To everyday people, right? Like so far, we've incentivized security through mining and proof of work. And now, you know, proof of state, right? And we've incentivized holding and, you know, just depositing an asset, right? But like, we need to incentivize, uh, yeah, you know, using an asset or using a product um, in a way that doesn't require uh, capital in the beginning. Um, so I think, I think that's like one, you know, one of the, the key breakthroughs uh, that Axie has managed. And I, I, I think that is gonna, more and more stuff like this is coming. It makes me super excited.

• 1:02:11David Hoffman?

  Jeff, I have a, a question about your guys' Discord and your guys' community in there. Uh, I think most people in Ethereum and DeFi will be familiar with what it's like to be in a Discord server and partake in the community there. But I think the Axie Infinity Discord might be a little bit different because your guys' Discord is uh, over 200,000 people. Tell us about how the, the story of it getting that large. What was it like before it was that big? And now that it's this big, how has it gotten organized? How, like, what's, what's, what's it like to be in a 200,000 person Discord?

• 1:02:44Speaker 02

  I mean, it's, it's been amazing to see it go from the days of, you know, maybe 10 people, 20 people. Uh, you know, talking about the future and it, it actually makes me a little bit emotional to think about, okay, those things, those grand visions that people were talking about, right? Like, seems like, yeah, we, we might actually make it happen. Um, and I'm sure like everyone there, like they're, they're ecstatic and things have gone, you know, so much better than they ever expected. So, yeah, it was, you know, it was really slow building, right? Like during the bear market, people didn't care about NFTs. There were days where I would go to sleep and wake up and nobody had said anything in the Discord.

• 1:03:22Speaker 02

  Um, I, that feels bad. This feels like nobody's using your product, like, you know, uh, yeah, it, it feels bad, right? Um, but yeah, I think like, you know, the community really got stronger um, and, and bonded during the bear market. And, you know, thankfully we kept giving them, you know, little small updates. And new products to to work with until things kind of hit a tipping point. And now, yeah, it's it's insane, right? Like, we have to be so. We have to be so thoughtful about the way that we organize all of our channels. Uh, it's it's almost like, yeah, managing the Discord server channels is almost like, right? Like a product design, uh, thought process, right? Where you have to be like, okay, they're joining and they're touching this.

• 1:04:07Speaker 02

  Okay, like this needs to be at eye level.

• 1:04:11Speaker 02

  So it's it's really, it's it's really, uh, it's really intense. And we it's gotten to the point where, right? Like, certain channels are just overrun with with uh, with with people coming in. But yeah, it's it's a really special feeling. Um, and yeah, it's it's it's on track to become the largest Discord on Earth. Uh, we actually gained, I believe, one hundred and thirty thousand people this week in the Discord. Uh, so we went from two hundred forty to three hundred and seventy. Uh, for reference, the Fortnite Discord is the largest Discord in the world right now. It only has seven hundred fifty thousand people in it. So we're actually on track to become the largest Discord in the world. If we maintain that growth rate of the last week in three or four weeks.

• 1:04:56Speaker 02

  Um, so yeah, I hope it happens. We each, we actually, if anyone from Discord is watch is watching too, like, we always, I always have to D a DM all this Discord support staff on LinkedIn to get our server, uh, there's a max server size that you can have. You can only have like a hundred K and then like two hundred fifty K. I was and every time we hit that cap, I have to DM their entire support staff on LinkedIn. Um, so yeah, if anyone from Discord is there, when we hit the next server limit.

• 1:05:25David Hoffman?

  Just just bump it already, like, it's gonna happen.

• 1:05:28Speaker 02

  I I think actually Discord might be, might face scaling issues due to the Axie, uh, Axie channel one day.

• 1:05:35David Hoffman?

  Well, so that brings me to my next question. How two hundred thousand people, that's too many, that's too many people for any one person to be able to keep track of? Or even a group of people? So how how has the Axie community kind of like self organized into more bite sized manageable manageable sizes?

• 1:05:52Speaker 02

  Yeah, I mean, so I think so there's part of it. There's part of it is like moderation in the core Discord. All right. So we have like community members that step up, right? Almost, you know, in a kind of very Dow like fashion where they're self managing. They're helping the new players. They're doing support. And sometimes we often times will even hire from within the community, like people doing that kind of stuff or look to hire. But then, yeah, also we have, right, like other kind of sub satellite Discord. So some of these Discords are related to the different scholarship programs. So they'll have like, you know, all their scholars, their guild mates slash scholars in one channel and they're able to communicate quite well with them. And then, yeah, they're also like kind of more private exclusive clubs, right? I think like

• 1:06:36Speaker 02

  part of NFTs, part of the, part of the whole game that we play with NFTs about status and power, who has the rarest stuff. So a lot of the people who own the rare stuff or they like to hang out together and talk about other community. Even work to, you know, they'll meet, they might even start projects, become business partners. So, yeah, I think like that's there's a whole nother aspect of Axie that I think is super important, right? Is the social aspect, right? Some people, right? They just see it as a way to, you know, they're, they're not like necessarily looking to earn a return. They're, they might just, you know, want some of the rarest stuff, meet some of the other people who have that rare stuff and and hang out with kind of like minded individuals. I think like one of the amazing things

• 1:07:20Speaker 02

  is that like for so long, we were as a species, like basically confined to hang out with the people who are near us physically, right? But now it's like we can self subdivide based on like our ideals, right? It happens to be that, you know, a lot of the people who own Mystic Axies or, you know, something like that, something super, some super rare NFT. That they have a lot of like the same interests, right? So it's kind of a cool way to filter for people that you might want to be friends with in real life.

• 1:07:50Ryan Sean Adams?

  Gho, are the, the CryptoPunks people different from the, the Axie owning people culturally?

• 1:07:57Speaker 02

  Yeah, I mean, I don't want to start anything.

• 1:08:01Speaker 02

  Don't want to start anything like that. Crypto Punks community is really awesome. And I think they're they're amazing. There is definitely some overlap. And there are also some differences. As I think we're a little bit, right? You know, we're trying to experiment and do new things, whereas right like Crypto Punks is kind of very like, you know, the rules. It's like, okay, there's 10,000, right? Like you can use them as your profile picture. Like, yeah. So, so, yeah, I think there's a little bit of a cultural divide, but there's also a fair amount of overlap, right? It's like, I think like in crypto, we're always like, yeah, like, oh, it's fun to like, you know, uh, make, you know, it's kind of fun to like, start these little tribal wars.

• 1:08:42Speaker 02

  I think I also like, you know, I can like have a thing against like, you know, Bitcoin holders sometimes. But yeah, it's like, I think like, sometimes also like, you know, we should try and focus on our similarities. It's like, we're all much more similar to each other than we are to, right? Everyday people or muggles, like, as I like to call them.

• 1:09:01Ryan Sean Adams?

  Yeah, absolutely. Yeah, it's it's a little bit like, you know, when it when it's good, it's a little bit like sports rivalries, but when it's bad, it gets tribal and weird and not awesome. But we've seen this play out in other places in crypto. It's funny that it's also playing out in in the kind of the digital asset gaming realm. So let's uh, let's maybe talk about this as we as we come to a close, G O is. Axie has learned some key lessons, I think, through going through kind of the bear run and then building up to this point, right? Lessons about, you know, community and how digital assets can be so transformative and digital scarcity and the economics and even this emergent behavior that you hadn't anticipated.

• 1:09:44Ryan Sean Adams?

  Project forward for us, because this is like, actually, in the scheme of the gaming industry is one experiment here. But how is this crypto technology going to change the gaming industry? And what things do you think we'll start to see coming out of the gaming industry? Because they gotta be taking notice. If you guys flipping Fortnite as the biggest Discord server in the world, every game studio has got to be taking notice of what made you so successful. So what are the lessons that can be applied here? And what are we going to see in the gaming industry?

• 1:10:21Speaker 02

  Yeah, I think that Axie will be kind of a category defining NFT game player and game. It's like maybe the Angry Birds or something like that.

• 1:10:32Speaker 02

  The World of Warcraft for them was.

• 1:10:36Speaker 02

  So yeah, I think we're going like, I think whenever you give people a group of users freedom, more freedom, you start to see a lot of really interesting behaviors start to emerge. Right. I think this is like one of the fundamental innovations of crypto, right? With now, we're just applying it to gamers. We're giving gamers free markets. We're giving them true, you know, true control and ownership of their assets and as well as the games that they play. Uh, so we're going to see fanatic game communities start to arise, uh, with, you know, the backing the developers that really get this model real well. Uh, I think the most fanatic, uh, communities the world has ever seen are going to be NFT gaming communities, uh, because of the incentive alignment.

• 1:11:21Speaker 02

  Uh, and, um, no, I think it's just going to be incredible. Uh, I think that we're going to see a lot of like amazing experiments. Uh, but I think that we're also going to see the incumbents be kind of slow, uh, to react, right? There is a lot of open questions. Uh, they kind of raised your eyebrows. Obviously they're, you know, they're watching now. Um, they're still, they're still don't really know how to pull it off. A lot of it has to do with building for three years in a bear market, uh, to be honest, right? It's like, I don't even know how I would, right? Like, even if you knew how to build Axie and copied it, like, could you actually reproduce its success, right? I mean, that's, it's like same thing with Ethereum, right? Like all the ETH killers, they say that they can make better tech, but it's all about the community,

• 1:12:04Speaker 02

  the developer community. Uh, I think like with Axie, right? Like, yeah, we have, uh, you know, we just, we have something special that couldn't just be kind of like copy pasted. Um, so yeah, it's going to be interesting to see if it can't, right? Like how translatable these models are to different communities, to different games. Uh, the thesis though is that, you know, they will be, um, it just, it just, it will require a very thoughtful execution and community building.

• 1:12:32David Hoffman?

  And what are your thoughts, G. Ho, on emerging markets and emerging countries? Because it is the case that some people in the Philippines are making a living wage by playing Axie's every day. Do you think this revolution will happen in emerging markets? And do you think it will start there at some level?

• 1:12:52Speaker 02

  I think so. So this is what we're seeing. So here's the numbers. There are 3 billion gamers in the world. There are 2 billion underemployed people in the world. There are 2 billion pet mooners in the world. And so, right, I think, yeah, the best NFT games, best crypto games are going to be at the intersection of all those markets. And yeah, so I think theoretically, say that in maybe 20 years, there might be 2 billion people, there might be 2 billion people in these metaverse economies, in these

• 1:13:31Speaker 02

  digital economies. And the number of gamers might now be, at that time, might be 4.5 billion. Because there's all these people who are, they're not playing games because they're unemployed, they're underemployed, they don't have time to play games, right? They need to figure out how to survive, right? Those people are people that should be playing games, right? So it's like, we're actually increasing the pool of potential gamers by, I think, by quite a lot. So yeah, I think, like, if I had to do a prediction, I think, like, 1 billion by 2032, yeah, a billion players in these metaverse game economies, and kind of player and metaverse workers.

• 1:14:13David Hoffman?

  And, G. Ho, this reminds me of a section we touched on briefly, but didn't really go too much into. And I want to make sure that we cover it before we leave this podcast. The $25 million in daily volume going on in the Axie economy, plus the 50,000 NFTs that are sold per day. I'm guessing those numbers are already stale, judging by how every other number that we've produced is already like seven days old already. But you said something earlier that the Axie team isn't capturing these fees. These aren't fees captured by the Axie team. So when we look at $25 million in daily volume, is that all going to players? As in, players are earning all of that money, or at least the majority of it?

• 1:14:56Speaker 02

  Yeah, so those are peer to peer, right? So it's thirty three, thirty three million dollars today and peer to peer transactions. And the right, the ecosystem fee is four point two five percent of those transactions. And so like Sky Mavis, the inventors, I like to think of us as the inventors of Axie. None of my teammates say that yet. Maybe I'll convert them. Sky Muse, the inventors of Axie, right? Like, we have exposure to that fee by holding approximately eighteen percent of the access supply.

• 1:15:26David Hoffman?

  And so the fifty thousand, probably larger of NFTs being sold per day, thirty three million dollars per day. That's the income spread across all of the Axie players over the world on a daily basis. Thirty three million dollars per day. Like, no wonder you guys call yourself a nation. The GDP of that is absolutely insane. Do you have, do you have any numbers today as to like, to like, how, if you think of Axie as like an employer? How many employees or what's the labor force magnitude of Axie Infinity?

• 1:15:56Speaker 02

  Yeah, so you think of it as like probably, I would say eighty percent, maybe seventy, eighty percent. Like, let's go with the power, Fredo, power rule. Let's say eighty percent classified, be classified as metaverse workers, right? So that's like, I mean, four hundred twenty, four hundred, some odd thousand metaverse workers. And then, yeah, like, kind of a monthly volume of, it's like thirty times thirty is like, like, almost a billion dollars, right? And so, yeah, we start, we start, we're starting to, we're starting to get up there. And I think, like, I think the, the nations of the future are going to be opt in.

• 1:16:39Speaker 02

  They're going to be people who are united by a, by common beliefs and ideals. And they're not going to be, right, like, Based on physical boundaries, right? And I think that's a genetic creative concept like you have to be part of the nation that you were, you know, you rolled out on day one.

• 1:17:01David Hoffman?

  I think that that of all things that we've talked about on this podcast illustrates the power of the intersection of Ethereum and gaming the most. If you can build a game that users want to play and you can find a way to leverage digital assets and Ethereum's DeFi, then you can start to produce something that produces more value for the world than like the bottom, like 50% of all nations out there. So Gho, like, congratulations on building one of the most successful. And I don't like the word employers, but like revenue generating for its users, systems, economies, ecosystems of all time. That's absolutely crazy.

• 1:17:39Speaker 02

  I think one cool, if you go to Token Terminal, right, it shows kind of like, you know, the different revenue generating protocols. Axie this week generated $33 million in protocol revenue. Bitcoin only generated $5 million in fees.

• 1:18:01Speaker 02

  So, yeah. If you switch, if you switch like the views, like maybe metrics or something. For some reason, I just want to, I just want to show the, I just want to show the chart with Bitcoin on it. Yeah, you guys, you guys can figure around it.

• 1:18:17Speaker 02

  Yeah.

• 1:18:19David Hoffman?

  Where's, I think, one somewhere in here. Oh, no, it's not.

• 1:18:22Speaker 02

  There is, there is one view where you can also compare it against Bitcoin. And that one is my favorite. I think if you press metrics, go press, try pressing metrics in the top left.

• 1:18:32David Hoffman?

  Metrics in the top left. There you go.

• 1:18:38David Hoffman?

  Wow, wow.

• 1:18:40Ryan Sean Adams?

  Right behind Uniswap.

• 1:18:41Speaker 02

  Yeah, and go to Weekly. Um, that's like, I think like the

• 1:18:47Ryan Sean Adams?

  Wow.

• 1:18:48David Hoffman?

  It's almost Ethereum. That's insane.

• 1:18:52Ryan Sean Adams?

  It's been a good week. This is incredible. Uh, well, G. Ho, this has been an absolute blast. Um, yeah, so excited for for what you guys have built. What's so cool is this is like a crypto gaming native economy, right? Not a lot of fiat onramps here because you don't really need them. You guys instead have created a an economy on the other side. So we are super excited to see where this goes. We always like to end these G. Ho with some action items for folks. Um, if people want to get started with Axie or learn a bit more about it, where should they go?

• 1:19:28Speaker 02

  Yeah, I think you can follow Axie Infinity on Twitter. That's just at Axie Infinity. Try joining the Discord, discord.gg/axie. Uh, yeah, I think YouTube has so much awesome content, too. It's like you type in how to get started with Axie or Axie Infinity Starter Guide. Uh, I think that's key for us is that we're able to leverage these channels like Twitch, right? Twitch viewership exploding. Um, and YouTube, right? Like, we have all these content creators training out content for onboarding. So, yeah, I think YouTube also has a lot of amazing content out there. Also, if you just say, hey, Axie family, I'm looking to get started. Can someone help me? Like, 30 people are gonna show up.

• 1:20:08Ryan Sean Adams?

  You'll get swarmed. All right, guys. Those are some action items for you. Speaking of great content on YouTube, Bankless Channel, have you subscribed yet? If you are still listening, make sure you hit that like and subscribe button so we can get Bankless YouTube to more people too. G. Ho, it's been an absolute pleasure to have you. Thank you so much for joining us.

• 1:20:27Speaker 02

  It's been an honor, gentlemen. Thanks for having me. And, uh, yeah, we'll talk again soon.

• 1:20:31Ryan Sean Adams?

  All right, guys. Uh, let's end it with some risks and disclaimers. Of course, none of this was financial advice. ETH is risky. Crypto is risky. Smooth love potions, there's probably some volatility, too. You could lose what you put in, so be careful. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:20:51David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our Alpha Leaks, and exclusive content, and even the Bankless Token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where we summarize the week in crypto and other

• 1:21:36David Hoffman?

  fantastic content. Thanks everyone for watching and being on the