In my last contribution to #axiebuzz I mentioned that my next post would be about SLP price, specifically the negative vibes some folks were spreading as a result of its declining price. A lot has happened since then so I won’t focus on that - the main reason being that because two significant milestones were achieved, it’s difficult to analyse the performance of the price of SLP. Normally the moving parts of the Axie ecosystem offer explanations for the ups and downs of other moving parts. You can’t get a read on things when key products launch as it takes time for everything else to settle around them.
So, what has happened?
- Sky Mavis launched AXS staking (and folks that were a part of the community from October 29 2020 or earlier received a generous airdrop to kick things off).
- Sky Mavis launched Ronin DEX, known as Katana and announced liquidity mining incentives for the RON token, which - moving forward - will be the gas token for Ronin.
Staking
Staking launched at the end of September. The APRs for staking have been amazing. I never bought any AXS, but I did win 100 in a competition shortly after token launch when its price was only a few cents!!! I subsequently spent 8 AXS for two breeds in July when breeding cost 4 AXS. Ouch!! I received a very generous airdrop when staking launched. I would not say it was life-changing but it was a significant amount which I am most grateful for. A lot of folks in crypto have a project they’ve invested in that has yielded life-changing returns. On Hive I know a lot of people have done very well from Leo Finance or Splinterlands. Maybe stuff on BSC? Anyway, for me it’s been Axie Infinity (considering the market value of some of the assets I own in addition to this airdrop). I feel very fortunate to have been in the right place at the right time with this awesome project.
October 29, 2020 airdrop announcement. ‘If you are an Axie player, you are an AXS owner. If you are an Axie owner, you are an AXS owner. If you are an Axie land owner, you are an AXS owner. If you are an Axie Infinity trader, you are an AXS owner.’ AXS received September 30, 2021.
I ticked all the boxes for the airdrop snapshot - I owned Axies, had played Axie Infinity, owned land and used the Axie marketplace. Each of those criteria were factored into the airdrop. I am loving receiving sweet AXS rewards each day for staking.
Undoubtedly these rewards have had knock-on effects for the Axie ecosystem as a whole. Whilst AXS cost to breed has reduced to just 1 AXS, for a lot of folks it has made more sense for them to restake their AXS than use AXS to breed, especially considering the prices of the AXS token (+ + +) and Axies on the marketplace (- - -). The oversupply of SLP seemed to be an ongoing issue through October with seemingly less breeding happening, causing its price to remain pretty low compared to the glory days of June and July. When AXS price to breed reduced, this was balanced by an increase in SLP cost to breed. Initially this led to more demand for SLP and a bit of an increase in price but this honeymoon period only lasted a few days.
Katana and RON token
The launch of Katana (Ronin DEX) this week effectively closes the loop for the Axie flywheel. It’s no longer necessary to take SLP off Ronin to swap for ETH and pay nose-bleed-high gas prices on Ethereum mainnet, or for breeders to swap ETH for SLP and AXS. Play-to-earn scholars can now easily swap some of their SLP for AXS to get a piece of the sweet staking rewards, thus providing more financial reward long-term and greater sense of ownership in the community. Axie big-brains expect this to reboot the ecosystem and see us return to the hypergrowth period from just a couple of months ago.
RON
Also with the launch of Katana came the announcement of the RON token, the gas token for Ronin. Currently up to 100 transactions a day are free on Ronin but in the near future (wen?) a small amount of RON token will be necessary to cover the transaction cost. RON token is being offered as a reward to early liquidity providers on Katana - 10% of overall supply shared between liquidity providers for the wETH/AXS and wETH/SLP pools for the first 90 days. Originally I glazed over this news. Why would I want the RON token? I didn’t think I did but a few big brains on twitter called this out as a big deal so I thought about it some more and it started to sink in why I would want RON. 10% of supply in 90 days is a lot. Everyone who provides liquidity to those two key pools and stakes the LP tokens receives RON.
Some time after that LPs will be created on Katana for other folks to buy/sell the RON token. Early RON holders will also be able to provide liquidity to earn more RON. Then there is the other 90%. How will it be distributed? I think there’s a good chance that staking mechanisms for RON LPs for more RON rewards will launch around this time. Ronin seems to be the king of sidechains in terms of throughput, meaning RON’s market cap should be comparable with others like FLOW ($4 billion) and MATIC ($13 billion). Cha-Ching.
It seems like the smartest decision ever now for the Sky Mavis team to build their own chain for Axie Infinity. It remains to be seen whether or not other games would ever build on Ronin as well, particularly since Ronin has struggled at times during peak periods. Even if it only ends up being the chain for Axie Infinity, it’s a great piece of infrastructure in and of itself. Who wouldn’t want exposure to it?
Any number of things can happen from here so it will take some time before we know what fair prices for SLP and RON will be for the foreseeable future. And that’s without other major releases expected over the coming months, namely Battles V2 and landplay.
Currently my strategy is this - re-stake half of my AXS staking rewards. With the other half, swap half for wETH so I can provide more liquidity to the wETH/AXS LP and stake to receive RON rewards. With the little amount of SLP I farm from play-to-earn I’ll try to add some to the wETH/SLP pool. Although the risk of impermanent loss is greater with the SLP LP, it will be a more active pool - meaning more fees from Katana (plus RON rewards). Boom!