With the launch of Katana, many players are feeling overwhelmed with the amount of options now available in regards to the Axie Infinity economics.
Once AXS staking became the norm a few months ago, now users find themselves with a variety of options including the staking of the new token pairs, liquidity pools and swapping from one coin to another.
Today, we will try to explain in an easy-to-undestand way which options are available for you and a possible path for you to follow to make the best out of all the available options.
AXS Staking
This was already available a few months ago. The mechanics are simple and based on old principles that already applied to any savings account. The issuer of the staking contract (Sky Mavis) asks to use your selected amount of AXS for their own management and profitability through their actions, and you get an extra amount of AXS in return once you claim your initial amount of AXS. This model has been working great so far and the returns received are more than satisfactory.
In the case of crypto staking, the borrower makes profit by using the tokens for smart contract validating. For each block that is successfully validated you get assigned a % of profit, depending on how much you lent.
Liquidity Pools
To understand liquidity pools you need to imagine that you are renting a share of a server. In this server there are a number of operations (transactions) happening on the daily, could be hundreds, could be trillions. By providing liquidity to the server, you are renting a share of that server's profitability. The higher your share, the higher your % of "ownership" and the higher your returns. in Katana, instead of providing one single asset (AXS, SLP, WETH, USDC) you need to first create a pair, meaning you will need to own atleast 2 assets to make a pair, and then let Sky Mavis add that amount of paired tokens to the pool in order to start receiving profits.
Farming
Farming is very similar to AXS staking, only it is also done with token pairs, and instead of getting your rewards in form of an extra amount of the pair provided, you are getting your rewards in Wrapped Ron ($WRON). Although there is still no use for the Ron Token, we know it will be used as the means to pay for transactions across the Ronin network and Axie Infinity, so it makes sense to farm WRON early on to get extra free transactions in the future, or sell the WRON once there is scarcity, hence value.
Thoughts
It seems like AXS will be removed from the Axie Infinity experience to become uniquely the governance token. This means that if you are more of an active Axie Infinity player you are interested in earning WETH to buy better Axies and WRON to make your transactions cheaper. This doesn't mean you need to stop thinking about AXS, this just means it's value is not likely to grow as much as, for example WRON.
It is difficult to make an assessment while there isn't a market value for Ron, but taking the daily amount of contracts signed in the Ronin network, it makes sense to think that it is going to be a valuable asset.
The option that seems to give the best outcome right now is still the AXS staking. You can then swap part of those AXS into WETH and start farming WRON with the AXS/WETH pair. It doesn't matter if you start with a very small amount, what matters is that you are consistent and keep increasing the value of your assets. If once Ron is launched you don't like the value it has, or you have too much of it, you will always have time to swap it back again to AXS and sake it.
disclaimer: this is not financial advise, these are just thoughts put into words, the reader should and must do their own research to make their opinion about what their best solution is