Axie Surpasses 1M Players and $1B in sales

CRYPTODAY 030

1. If you’re not following me on Facebook, I need to talk about the aftermath of my OMB coverage from Friday. Basically: the OMB took their official website down, a few hours after I published. Although it’s possible that it was a total coincidence, I think that there’s a very high likelihood that someone forwarded the newsletter to them. Those errant porn links had been on their homepage for over 3 months, and no one had even noticed them until I wrote about it.

   

   So now their website is under construction, which ironically makes things even harder for all the crypto pinoys who are trying to get their Trezors released from customs. Come on guys, at least make the Online Processing link clickable! And while you’re at it, how about installing an SSL certificate so your visitors don’t get this warning every time they visit your portal?

   

   I’m not sure why they had to take down the whole website when all they had to do was uninstall that one Wordpress popup plugin that was rendering the porn links. The original issue that triggered all this, the Trezor suspension, is still ongoing.

2. Axie Infinity crossed the 1,000,000 daily active players milestone on Friday, a 300% increase in just the last month. On that same day, it crossed the $1B dollar mark in marketplace sales. It’s now #1 in terms of protocol revenue, exceeding (unbelievably) Ethereum itself. But what does that actually mean?

   

   “Protocol revenue” is a very broad term that is applied differently depending on what your blockchain app actually does. In the case of Ethereum, protocol revenue is the total amount that the miners earned for a given period. In the case of Axie Infinity, protocol revenue appears to refer to the amount of marketplace sales. You can see how you can’t exactly compare the two, since the latter couldn’t exist without the former. But it’s an interesting statistic nonetheless.

3. This has not translated into big gains in $AXS price, however. The token is -15% from its ATH, underscoring one of my earlier observations that its price is no longer an accurate indicator for the “real” health of the game economy. (Read my explanation why here.)

   

4. What’s going on with that $SLP price though? Why has it been dropping so much? Let’s begin with the facts, and then see if we can’t Sherlock an explanation. We know that between July 19 and July 26, the daily-active-user count grew by about 150,000 players (635,000 and 806,000, respectively). This represents a 20% gain in active players.

   

   That means that somewhere between August 2 and August 9 (fourteen days after), 150,000 NEW players liquidated those earnings to fiat. How do we know that? Because that’s the minimum amount of time before a player can claim their earnings, and if this was your first Axie payday, I assume that you would be claiming and liquidating all of it. That translates to as much as $60,000,000 worth of fresh SLP being dumped on the market, on top of whatever was already in circulation. As we saw this past week, the SLP dropped by guess what: 20%. So was this caused by those player liquidations? I’d say that’s a very reasonable deduction to make.

5. Let’s extrapolate. From the “1M players” announcement above, we also know that between July 26 and August 6, the population grew by another 200,000 new players. That means that in the next 14 days (between August 9 and August 20), we could see as much as $80,000,000 worth of new SLP flooding the market. Does that mean that the SLP price will slide another 20%? Of course we can’t be completely certain, but there’s enough historical data to at least justify that prediction. I’m hoping that the breeders will catch up and buy up all the cheap SLP supply, which will keep the price stable. If they don’t, or if all that new supply simply exceeds the demand, then the price will definitely dip below 9 pesos in the coming week.

6. The crypto markets in general have been quite healthy over the weekend, with Bitcoin at $43,000 and Ethereum closing in on $3,000. There was a lot of optimism around the Ethereum hard fork on Friday, and this appears to have pulled the rest of the market up with it. In the US, Congress is still debating a tax reform that may have a very significant impact on the cryptocurrency space there. This bill represents a real crossroads for the US-based crypto world (that’s everyone from Coinbase to Abra to Uniswap to BRD), and if things go badly in Congress, there’s a possibility that some of those companies would leave the United States for good. Ironically, this is the same exercise China went through just months ago, although in their case, it took them less than 60 days to expunge their entire crypto industry. In the US, even if this bill is passed in its most negative form, it’d take years to see the business impact. But what would it mean for the rest of the world? There’s a part of me that likes the idea of redistributing the crypto industry more globally, and forcing these big brands to set up shop in other jurisdictions. China and the US represented the two largest concentrations of crypto talent, and now that China has bowed out, I see some advantages to the US doing the same.

See you all on Wednesday, cryptofam! (PS. I haven’t gotten any updates on my experimental Trezor shipment but will make sure to mention it here as soon as it starts moving.)