I’ve posted this in Leo Finance as it’s to do with crypto and investing but the truth is it’s about a lot of things - mooncats, DeFi and Axie Infinity.
The school holidays are over now which is bitter-sweet (more bitter than sweet?) for a teacher. The first day back is usually staff development day. The first question is always ‘How were your holidays?’. Well mine were pretty uneventful. With COVID restrictions, Sydney and other surrounding areas were off-limits, we had vague plans to go (further) west on a little van trip but with dodgy weather forecasts and memories of freezing in our little box last Winter, we decided to hunker down at home.
What did I do in the holidays? I did lots of crazy crypto things, not exactly the sort of thing you share with your colleagues - which begs the question, if I can’t talk about it - what am I doing exactly? And why? The answer is - I think - for entertainment - satisfying curiosity and intellectual stimulation (and trying to make money). I already wrote about my ‘meme investing’ rabbithole and buying a Curio card, buying Axie #3949 (non-Origin Japanese Axie) Daisy and two MEO II Axies. But it got much weirder the next day ...
Mooncats
I bought a mooncat. I ignored mooncats when they were all the rage on crypto-twitter in March this year. I just didn’t see their appeal. But thinking about meme investing as a thing and seeing folks on twitter with their mooncat avatars led me to dive in a bit more. I was originally going to buy some uGMC tokens on Unicly, which represent fractions of 24 genesis mooncats (the first mooncats - and the most rare). But I thought - why wait for the launch of these tokens on Unicly? Why don’t I just buy my own mooncat? Of course it wouldn’t be a genesis but it would be mine. I took a look on opensea. The cheapest ones didn’t seem that much - in the range of 0.2 to 0.3 ETH. I asked a few questions on reddit and discord, like ‘What price were floor mooncats during the March/April hype-cycle?’ - the answer was around 1 ETH. I also learned what mooncats traits collectors look for. A key trait is their rescue year. 2017 rescues are more valuable than most, for obvious reasons - it was early days back then. So I added rescue year 2017 as a filter. There were a couple I liked but they sold before I was ready to buy. As they sold, the floor price for 2017s was slowly rising. I noticed another one I liked was also a ‘pure bred’. Nice! 2017 pure breds are not to be sneezed at. The trouble was it was 0.99 ETH. Plus, why would anyone pay 0.99 ETH for a pixelated cat jpg? Well because it’s likely to be worth more in the future, that’s why! Get with the program. Long story short (most of which I will explain under the next sub-heading) I bought the 2017 pure bred cyan for 0.99 ETH. This cat is adorable! Mooncats have different ‘poses’ and ‘expressions’ - more reasons for me choosing #1459 were that this one is in ‘stalking’ pose (my favourite) with ‘pouting’ expression (also my favourite). On the opensea listing, you will see that #1459 has been accessorised with a rainbow. Fortuitously, the day after I purchased my little cutie, the mooncat boutique opened for business so I got him a rainbow because mooncats look cuter with rainbows.
Look at the little kittie - its coat almost matches my Mystic.
Compound finance
I really wanted that mooncat but I didn’t have 0.99 ETH. I didn’t really want to sell anymore crypto as I’d already sold my airdropped FORTH tokens the previous day. I pondered over the options - then I thought of Compound finance. Of course! I already had a fair amount of collateral in there earning some interest and (more importantly) COMP tokens. I could borrow the ETH! Was this wise though? I reached out to the #random-degen-trading channel in the Axie Infinity discord - no answer, just as well - hardly the place to seek financial advice, not that I was really after advice - just wanted to hear what other folks’ experiences borrowing on Compound were like. So I did it anyways. What a smooth experience - amazing, except I made one crucial n00b mistake. I should’ve borrowed DAI and swapped the DAI for ETH so then the loan would be for a stable asset. My logic was that I’d probably end up selling stuff for ETH (Axies) to pay it back so it wouldn’t matter. Ahh well (spoiler - this story has a happy ending). What I really liked about lending on Compound was that the interest rate for paying the loan back was less than the rate of distribution of the COMP token (at least that was my understanding) and I feel like COMP will outperform ETH in the short- to medium- term anyways.
Axie flip
Just hours after loaning 1 ETH on compound to buy a mooncat, I noticed something on twitter about the floor price for ‘frosty’ Axies going crazy. ‘Frosty’ Axies are cute white ones with a little bell under their chin that could only be bred during a 2019 Christmas breeding event. I have (had) two frosties, one I FOMOd into last year not long after first seeing one and another I won in a giveaway earlier this year. The news of this sharp price rise piqued my interest especially as I had that 1 ETH loan in Compound. The floor price for zero-breed frosties was around 5 ETH. Wha? So it was a no-brainer - I listed my zero-breed frosty for 5 ETH. Back when I got that little guy I just wanted a frosty. I didn’t look at it through the lens of ‘Scarcity, Utility, Aesthetics’. #139924 does not have much utility at all. Put this little guy in the Arena and the poor thing is just a sitting duck. Now it’s one thing to list something at floor price, it’s another thing for a buyer to come along and buy it.
The other thing that had me excited was if I sold this Axie for its listed price and paid back the 1 ETH on Compound, I still had plenty of ETH to spare. There was another Axie that I’d been pining over for weeks - meet Axie #26480, listed for 2 ETH (still leaving plenty of ETH, cha-ching!). First of all, he definitely ticks the box for aesthetics - sooo cute! Next, scarcity - #26480 has two rare parts. Those little floppy ears are called ‘Merry lamb’ - they were parts that were bred during the 2018 Christmas breeding event (not to be confused with the 2019 Christmas breeding event which gave birth to the first frosty Axies). That little arrow poking out of its back is the ‘Hamaya’ part, it’s a Japanese part. That means both these parts are unbreedable so they are now capped. What got me most excited is that both these parts are from different ‘series’ of scarce parts. It’s one thing to have a double Mystic Axie or an Axie with multiple Xmas parts - those are super-rare and super-valuable but it’s very unusual to find an Axie with crossover rare parts like this. I did some research on this - there are (and will only ever be) 44 Xmas 2018 / Japanese parts Axies. Finally, utility - not too bad, he has some good damage cards and the ‘Merry legion’ card has a nice shield on it.
Those ears!
I woke up excited the next day, hoping for the email to say ‘Your Axie has sold’ - but it didn’t come. I checked to see if #26480 was still on the market. It was. Phew! I lowered the price to 4.8 ETH. No interest. I also noted that pricing for the frosties seemed really inconsistent. Some priced lower had more Christmas parts, some priced higher had none (‘frosty’ refers to the body type - it’s not a part, so it’s possible for a frosty to have no Christmas parts)! I guess the folks with their Axies set at higher prices weren’t necessarily needing to sell in a hurry. On Friday afternoon I noticed in one of the Axie discord channels folks discussing #26480. I panicked - I misread it and thought it had sold. ‘It’s all over’, I thought. When I realised it wasn’t that’s when I decided I had to lower the price of my frosty to make this flip happen. I was just lucky it had stayed on the market for this long. I put it down to 3.1 ETH to cover the price for #26480 and the loan on Compound. The next morning the email came ‘Your Axie has sold’. Woop! So I had the funds to make #26480 mine. I breathed a sigh of relief when I saw him in my inventory. I bridged the rest of the ETH back to the Ethereum mainnet and so the loan was paid back. Hats off to Compound, what an efficient machine! In the end the interest I paid over the few days was about the price you’d pay in gas for a small transaction on Ethereum. No great loss.
Current state of the Axie Infinity ecosystem
There are some very strange things happening right now. For starters, the price of SLP - at time of writing it’s greater than 0.29 USD. That means earning 200 SLP a day will return nearly 60 dollars. That’s crazy.
As a result, so-called ‘printed’ Axies are selling at crazy-stupid prices (swear I’ve seen them at 3 ETH!). Printed Axies are those that have high purity, so when you have two or three of these, you can create a breeding farm which means there is a very high chance that all their offspring will have the same parts, meta- parts. I come up against these same Axies nearly every battle! Why?
Firstly, because wealthy scholarship managers have plans to breed them for their scholars so they can consistently earn lots of SLP (now worth a lot). It’s a weird flywheel. It all feels very bubbly.
Secondly, the price of AXS has risen a lot recently too. Consequently, the price to breed when converted to USD is getting much more expensive. It looks like folks selling these ‘printed’ Axies are wanting to maintain their margins, thus the price of AXS is pumping their ETH re-sale value.
Finally, the price of all Axies have gone pretty hyperbolic - mystics, MEOs, frosties, etc, so it’s just a trickle-down effect. I wonder if the core Axie team (Sky Mavis) are conjuring up any more ‘levers’ to pull to rein in all this craziness?