Blockchain boosters have long touted cross-border remittances as a market that’s practically begging to be disrupted by their technology of choice, the public ledgers that underpin cryptocurrencies.
But what if early blockchain proselytizers weren’t quite right? What if the biggest impact blockchains will have isn’t enabling overseas workers to send money back home cheaply and quickly (and thereby circumventing the steep fees levied by services such as Western Union’s)? What if the real innovation lay, instead, in people’s ability to earn a living wage…while working from home…playing video games?
That’s the dream offered by Axie Infinity, a video game developed by Sky Mavis, a Singapore-based development studio. The game recently blew up, attracting more than 1 million daily players in August, up from less than 500 in July of 2020. (Yes, that’s a 200,000% increase in usage, approximately.)
Axie is a bit like Hearthstone, the popular, phone-based collectible “card” game, which is itself sort of like a digital Magic: The Gathering. The difference is that Axie uses blockchain tech to let people buy, breed, and battle a race of chubby, fantastical beasts called Axies.
Through playtime and match victories, Axie players can earn SLP, or “smooth love potion,” an Ethereum-based crypto token. People make money exchanging the token on online crypto exchanges, for fiat currencies. Alternatively, people can “burn”—or spend—the tokens to create more Axies, fueling the in-game economy.
I recently spoke to Gabby Dizon, founder of Yield Guild Games, a company that invests in Axies, SLP, and other in-game assets in order to rent them out to prospective players in return for a share of their virtual proceeds. Since we chatted last month, the Guild raised $4.6 million in investment from a16z crypto, the crypto-focused arm of the venture capital firm Andreessen Horowitz, along with other investors.
Axie is rolling in the crypto dough. SLP is now trading at $0.13, up from $0.02 in January—though down from an all-time high of $0.36 in May. Axie, itself, brought in $364 million in revenue last month, up from $196 million in July, according to data from the blockchain-tracker Token Terminal. In terms of revenue generation for a crypto project, that puts Axie second only to Ethereum, which brought in $670 million during the same period.
Third place at about $80 million went to OpenSea, a marketplace that sells NFTs, or non-fungible tokens, a technology that makes digital media—anything from artwork to pixelated profile pictures to virtual real estate—trackable and tradeable on blockchain.
On the strength of its uptake, Axie—whose Axie creatures are themselves NFTs—now claims the title as the world’s most popular collection of NFTs by total sales volume, according to CryptoSlam, an NFT market-tracker. Axies lead the pack with $1.7 billion in lifetime sales, while CryptoPunks (pixelated face images) and NBA Top Shot (digital basketball cards) place second and third with nearly $1.2 billion and more than $700 million total sales, respectively.
“If you think of Axie as a country that is remitting SLP to the Philippines, it’s now the number eight trading partner of the Philippines, in terms of remittance, so it’s higher than Hong Kong,” Dizon says. (Hong Kong remitted roughly $820 million to the Philippines in 2020, per remittance-tracker RemitFinder.) The game “actually has a pretty good chance of moving the GDP of the Philippines,” he says.
Axie became a much-needed life raft for many out-of-work Filipinos during the COVID-19 pandemic by offering them a way to make money by playing and earning SLP rewards, notes Leah Callon-Butler, who advises Yield Guild Games and other companies through her crypto consultancy, Emfarsis. What Axie enables is for people to stay at home, with their families, earning a living, even when the rest of the world is shut down.
“It really is changing lives. I don’t want to sound too cheesy—there’s so many people who are like, ‘NFTs are saving lives!’ Callon-Butler says. “But we do actually have like real use cases here and real-life human stories where you can point to people and go, like, Wow, they’re actually living it. This is not just hot air.’”
No, not hot air—more like a recipe for love potion.
Robert Hackett
@rhhackett
robert.hackett@fortune.com
DECENTRALIZED NEWS
Credits 🚀
Crypto jumped Thursday... Bitcoin broke back through the $50,000 threshold before slightly parting some of the gains... Ethereum advanced closer to $4,000... And Cardano, the crypto previously unknown to many, jumped to above $3 with the long-awaited Alonzo network upgrades finally starting to take shape... FTX.US president Brett Harrison told Fortune that the crypto exchange's deal for derivatives exchange LedgerX is the first move toward expanding into the broader world of financial derivatives... PayPal is wading into the stock-trading business... Binance founder Changpeng Zhao is pressing forward with plans to take its U.S. crypto exchange, Binance.US, public in the next three years... Former Ally Invest president Lule Demmissie has been named CEO of eToro's U.S. business... Cardano founder and Ethereum co-founder Charles Hoskinson sees crypto playing a bigger part of life in Afghanistan... Vitalik Buterin hopes to see Dogecoin switch to proof-of-stake "soon"... Cuba is moving to make crypto available for payments on the island... Andreessen Horowitz's Crypto fund led a $20 million Series A for crypto communications protocol XMTP... A DeFi project called Syndicate has conducted a $20 million Series A fundraise led by Andreessen Horowitz... Investors can now buy a fraction of the Doge meme NFT... The meme stock movement turned one year old this week.
Debits 🐻
SEC Chair Gary Gensler warns a payment for order flow ban is "on the table"... Shares of Robinhood and Charles Schwab promptly dropped on the news, as did those of market making giant Virtu Financial... Virtu CEO Doug Cifu has pushed back on Gensler's remarks saying that the change would likely "result in worse outcomes for retail investors"... The revolving door of former D.C. regulators at crypto companies keeps speeding up with former Commodity Futures Trading Commission Chair Chris Giancarlo, a.k.a. "CryptoDad," leaving the board of BlockFi after just four months on the job... Billionaire John Paulson sees a bubble that will "eventually prove to be worthless" in cryptocurrencies... BitConnect founder Satish Kumbhani, as well as promoter Glenn Arcaro, have been charged by the SEC for an allegedly fraudulent $2 billion offering... Tether wants to block a Freedom of Information Law request to the New York State Attorney General's office from CoinDesk to obtain documents related to the issuer's reserves... Former President Donald Trump worries cryptocurrencies are "potentially a disaster waiting to happen"and prefers the "currency of the United States."
FOMO NO MO
Over the last year, "stocks only go up" has become a refrain that now represents an entire investment philosophy to some on Main Street and Wall Street.
Even as the news cycle brings plenty of causes for concern, traders and investors keep betting that stocks will point up and to the right—with many expecting the federal government to not waver from its support of the recovery and the U.S. central bank to keep interest rates low for the foreseeable future, The New York Times' Matt Phillips reported Tuesday. That's not to say there aren't naysayers like Mike Wilson, chief U.S. equity strategist at Morgan Stanley, though.
"We think that the extraordinary fundamentals are about to deteriorate and we're going to see growth start to decelerate significantly," Mr. Wilson said. "And we're going to see the Fed start to remove accommodation."
Both factors lend themselves to lower stock prices. Mr. Wilson said he believed that the market was due for a correction—Wall Street's term for a decline of 10 percent or more.
But, he said, the sell-off could be worse the longer the market rises and the further stock prices get out of whack with standard measures of value.
"That correction can be more than 10 percent," Mr. Wilson said. "It can be 10 to 20."
BUBBLE-O-METER
14%
FTX.US is quickly carving out a sizable chunk of the U.S. crypto-trading landscape, recently surpassing more than $50 billion of notional traded volume in August.
THE LEDGER'S LATEST
This 'financial astrologer' sees the future of Bitcoin—and says it could go to zero by Shawn Tully
Crypto exchange FTX.US wades into derivatives with deal for LedgerX by Declan Harty
'Active ETFs': Inside the booming (and potentially profitable) new investing trend by Jessica Mathews
Controversial CEO, ousted after pushing bankers' work-life balance, gets new role rebuilding post-Brexit Britain by Jeremy Kahn
Tech stocks could rise another 10% in 2021, says one analyst. Shares in these company should benefit by Anne Sraders
TIAA continues to add to its C-suite diversity by Sheryl Estrada
SEC accelerates inquiry into gamification of trading on sites like Robinhood by Declan Harty
Databricks CEO on why Morgan Stanley is leading its new round of funding by Lucinda Shen
Cuba will recognize and regulate cryptocurrency by Marco Quiroz-Gutierrez
Crypto transactions reach $1 trillion milestone, says Blockchain.com CFO by Sheryl Estrada
A new technology being used in Chicago could protect cities from blackouts and cyberattacks by Shawn Tully
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
MEMES AND MUMBLES
A Redditor—u/HandHoldingClub—supposedly proposed to their girlfriend of four years with an NFT recently.
It did not go well. The girlfriend had previously taken issue with HandHoldingClub's investment choices, as they had recently lost half of the couple's savings in Dogecoin. So, when HandHoldingClub got down on one knee and "presented her the NFT" (printed out? on a phone?), the girlfriend promptly began crying before asking how they could do this. Here's HandHoldingClub: "I explained to her that in ten years we could buy a mansion with this and it's a symbol of my love and devotion but she sees it as selfish and foolish. I don't want to sell the NFT because it's once in a lifetime and I don't want to leave her. What can I do?"
Maybe not getting relationship advice from Reddit would be a good start?
This issue of Fortune’s The Ledger was assembled by Declan Harty, who you can follow here.
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