Ronin: Gaming L1 Platform
Ever since Facebook changed its name to Meta there has been a mad dash by both retail and VCs to invest in blockchain gaming projects and related NFTs. Projects like Decentraland and Sandbox saw a massive growth of users and investors in the past three months with both project’s tokens sitting at around a $5 Billion market cap today. There is such a mania around “metaverse” tokens that even using the word in a project's whitepaper causes token price to skyrocket. The continued success of these established projects and projects yet to ship is already priced into token valuations. This glut of metaverse related blockchain projects has made it near impossible to separate wheat from chaff. In a market where scarcity drives value and projects promising to usher in the metaverse number in the thousands we must optimize for the scarcest resource of all: Legitimacy.
One of the most legitimate and long-lasting projects in the blockchain gaming space is Axie Infinity. Their legitimacy is well earned through their proven product, massive user base, and insane sales numbers. Axie Infinity is a play-to-earn blockchain game by Sky Mavis that is reminiscent of Pokémon. Each Axie is its own NFT that lives on the Ronin sidechain. Players buy Axies and battle them with other players or the environment while earning $SLP and $AXS. While $SLP and $AXS both act as in-game currency, $AXS is much harder to come by as it also acts as the governance token for Axie Infinity. Although Axie Infinity is fully enjoyable in its current state, new features and innovations are being worked on by the Axie Infinity team. As of right now, players can breed their Axies, buy land in Axie Infinity’s virtual world Lunacia, and battle Axies. Even with just these three features $118.93 million worth of Axies have been sold on the Axie marketplace in the last thirty days. This is all while the Axie protocol charges a 4.25% fee on every transaction that takes place on the Axie Marketplace. On top of that the AXS token has generated $12.8 million in revenue in the past 30 days.
This growth has all been led by Sky Mavis which has been steadily innovating and growing the Axie ecosystem since founding Axie Infinity in late 2017. When Axie Infinity launched there was no distribution platform, crypto wallet, or tailored blockchain. Now, there is Mavis Hub, Ronin Wallet, and Ronin Blockchain which are all tailored for blockchain gaming. Sky Mavis has earned legitimacy and now wants the Mavis Hub and the Ronin Blockchain to be the go-to marketplace and deployment platform for blockchain games. On 1/27/2022 Sky Mavis launched the $RON token which is now the gas and governance token of the Ronin blockchain. $RON currently has a market cap of $421 Million and is steadily growing as Axie Infinity migrates from the Ethereum blockchain to the Ronin blockchain. Soon all of Axie’s ecosystem will be on the Ronin blockchain although users can bridge their assets back to Ethereum at any time using the Ronin Bridge. The Ronin blockchain was created to facilitate fast transactions and low gas fees for the longevity of Axie Infinity. Because of this the Ronin protocol is extremely centralized. While Sky Mavis plans on decentralizing overtime they do control what smart contracts can deploy on the Ronin Blockchain. The ultimate goal of this control is to filter for highly optimized smart contracts that do not congest the blockchain. An inefficient blockchain game can congest a blockchain through improper use of smart contracts which in turn raises gas fees to a potentially crippling level. We saw this happen on the Polygon layer two when the blockchain game Sunflower Farms drove gas fees to record highs which essentially grinds all other activity on-chain to a halt. While Ronin is currently an application specific blockchain, its final form may look more like a blockchain game specific blockchain. Sky Mavis plans on allowing other blockchain games to deploy on Ronin giving those projects a chance to tap into Axie Infinities giant user base. Sky Mavis and Axie Infinity will continue to be staples in the blockchain gaming space.
Who’s behind Ronin?
Sky Mavis was founded by Trung Nguyen, Aleksander Larsen, and Jeffrey Zirlin who currently act as CEO, COO, and Growth lead respectively. Nguyen, Zirlin, and Larsen are all seasoned veterans in the crypto space and have grown Sky Mavis and Axie Infinity into behemoth projects. Axie Infinity is a shining example of the potential of blockchain gaming and has acted as proof of concept for many other projects. Sky Mavis has raised a total of $161 million over three rounds from Andreessen Horowitz, A16Z, paradigm, and other VC and private capital.
As blockchain games become more popular the need for block space on chains that aren’t congested will rise. Sky Mavis and the Axie community are very familiar with the negative effects users can experience when using a suboptimal blockchain. The Ronin blockchain has the potential to be both the premier blockchain for gaming and the onboarding channel for many new crypto users. $RON has a market cap of $412 million while $SLP and $AXS both sit at around a $5 billion market cap. As more Axie Infinity assets move from Ethereum to Ronin the $RON token will receive more use and these market caps should start to look similar. I haven’t seen another layer 1 in which the gas token had a lower market cap then the tokens on it. Blockchain gaming is here to stay, and Axie Infinity continues to prove this. We have entered a multi-chain world; Ronin may be the chain for gaming.
Written by David Coryat, Crypto native and Analyst at Istari Capital LP.
This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this report constitutes a solicitation, recommendation, endorsement, or offer by Istari or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Please be advised that Istari Capital LP is invested in the project discussed in this article and/or in projects related to this article.