Zima Red ep 78: Aleksander / Psycheout - Transforming A Game Into A Digital Nation
Primer: Aleksander / Psycheout is the co-founder and COO of Sky Mavis, the company behind Axie Infinity. He shares with Andrew Steinwold his background in competitive gaming and their struggles in the early days of Axie Infinity.
Origins
Competitive gamer that represented Norway in Warcraft 3 and Dota. Top 200 player in Dota 2
Went to one of the top business schools in Norway. Dropped out of the program and went to work for the government
Discovered crypto through his father. His father was trading cryptos in 2013/2014. Thought it was scammy stuff
Found Ethereum and understood the potential of smart contracts
CryptoKitties came along and he started trading cats. Got to know Jiho, Trung, and Pranksy in the CryptoKitties community
Set out together to build a company with Trung and Jiho. Left his job and moved to Vietnam. Joined as co-founder and leads the business side
Competitive Gaming
Loved playing games
Played Warcraft 3, which was tactical and micromanagement intensive
"I figured one of my skill sets, you know, to really double down on something that I love."
- Aleksander Larsen
Evolved into Dota. Played for 10 years
Peak achievement was beating Sweden. Norway and Sweden had some rivalry in Dota
Learning About Crypto
His Journey
Learned about crypto from his father. His father was trading Bitcoin and he thought that was dumb
His father used technical analysis which he doesn't believe in
Looked into Ethereum when it came out
On Bitcoin
Never believed that Bitcoin would change the currency of the world
Bitcoin makes sense as a store of value, but not much more than that
Attraction To CryptoKitties
"And I was like gaming and crypto. Wow, this is amazing. So I just started playing it. I think I was, maybe, on day 1, even just before it was raised, maybe I was the first person ever to stream CryptoKitties."
- Aleksander Larsen
Reaching the peak of his Dota career and was burnt out
Looking for something else to play and came across crypto
Voraciously read through crypto-related subreddits and came across CryptoKitties
Reached out to the founders and Benny sent him some super rare cats that he subsequently gave away
Thought it was expensive to mint/breed a new cat, but just went ahead and tried it out
Over the weekend, it went viral and prices went crazy
Started trading and selling like crazy for the next couple of weeks until the bubble burst
CryptoKitties Community
Many strong individuals and community builders in the CryptoKitties community
Jiho is a good example
Remembered Pranksy coming in a bit later and going very deep into CryptoKitties
A lot of the community members started building their own stuff
"Jiho is perfect example of that. I remember he was running around. I thought he had ADHD because he was everywhere. He was chatting so much to everyone, like this dude's crazy. What am I doing? But yeah, in the end, it was the perfect person to have as a community builder."
- Aleksander Larsen
When Did He Realize That NFTs Are Going To Be Massive
Started looking into the applications of NFTs when he bred his first cat
People had the idea of making other games inside CryptoKitties. However, Dapper Labs did not have the vision/capability to build stuff on their own
Ended up with low tier applications that were built by other people
At that point, he realized that NFTs are the perfect vehicle to travel from one game to another
Meeting Trung
Trung sent him a message on Discord about making a new project. Wanted him to be a part of it
Joined as an advisor to Axie Infinity in the initial stages
"So it's pretty magical. I mean, it was, yeah, so many interesting characters. I remember those days really strongly, because we had nothing, right. It's just the community of believers."
- Aleksander Larsen
Trung invited him to help build Axie Infinity and he left his job and travelled to Vietnam
He recommended Trung to hire Jiho. Met Jiho in Vietnam as well
Early Days Of Sky Mavis
Talked about everything and got to know each other
His focus was on how the MMR system was going to work
In the beginning, Axie was a Pokemon-like game where players can breed their Axies and play with them. Terrariums (initial version of land) existed back then as well
The original Axie community came from the CryptoKitties community
Had a referral campaign where referrers would get an Axie Origin Coin (AOC) if the referee purchases an Axie. AOC was the only way to get Mystic Axies
As they grew, they created a company called Sky Mavis, with the company owning Axie Infinity
They were inspired by Steam and Epic Games
Steam owned Half-Life and Counterstrike and, from there, developed their Steam platform
Epic Games owned Fortnight and, from there, began building their publishing platform
"I see ourselves being more like Valve, where Steam is one product, Axie is another products, the Ronin blockchain another product, the decentralized exchange that we'll be launching soon, yet another product, any product that can be created. Even lending products in the future, that's something we can also create."
- Aleksander Larsen
Purpose For Building Customized Products
People have made generic products for everyone and they fail because they are too general
Decided to make a holistic product package that is specific to their use case
Ronin blockchain is built using the Ethereum Virtual Machine (EVM) codebase, so that they can tap on any innovation happening on Ethereum
Can give back to the Ethereum community as any innovation happening on Ronin will also benefit Ethereum
Deployed Axie Infinity on Loom Network in 2019, but it failed. Experienced some hard earned lessons from it. It delayed their go-to-market for a ~year
Mavis Hub
💡 Mavis Hub: A Steam (the game publisher/platform) concept for the Metaverse
Andrew: If I'm a game dev, what are the pros and cons of integrating my blockchain game with Mavis Hub?
Pros:
Tap into their collective experience
Getting access to a marketplace
Getting access to the userbase
Cons:
Always the chance that they might fail
Earning Money From Game Developers
Axie Infinity itself can be thought of as a game platform
People can build their own Axie Games on top of Axie Infinity and revenue will accrue to AXS token holders
As Axie Infinity is one of their products, they will not be taking a cut of the revenue for the 2nd time at the Mavis Hub-level
Many potential paths to monetization:
Publishing fee
Marketplace fee
Grand Vision For Sky Mavis
Many different paths they can take
Axie Infinity is already a virtual world where people are living inside it and making money
The Axie Infinity game world will be opened up to players
Sky Mavis as a platform means that users can tap into financial services and purchase other games that they publish
Early Days Of Axie Infinity
Initial Build
Was inspired by CryptoKitties. The drawback of CryptoKitties' breeding system is that they do not have any limits on breeding. This meant that there is a heavy inflation of cats
Trung made the algorithm to create Axies
Had the designer help with the design of all the various parts of the Axies
Has some influence from Japanese culture
In the 1st iteration, battles were on-chain. Had to scrap that idea
The next version was more centralized. Battles involve creating a team of Axies, selecting their abilities, arranging their order, and sending them into battle. Eventually had to scrap that idea as well as it was not dynamic enough
The subsequent version is a card-based game where players can play against monsters or other players by playing cards and spending energy
Working On Axie Infinity In The Early Days
Was very difficult as they were trying to build something and did not get traction
Remembered celebrating 100 active daily users early on
Happy to chat with everyone in the community to make them feel seen and heard
Hosted smaller competitions to incentivize the community to create content. Rewarded contributors with Axie characters as they didn't have any money
Managed to survive when many of their competitors went bankrupt. Credited their survival to Vietnam's low cost of living
Only a few teams from that time is still around (e.g. Dapper Labs, ImmutableX)
"It was really hard to make people understand the benefits of blockchain. Nobody cares when the prices is low. And Ether is like $400, 300, 200, 100. Try telling your friends about crypto at that time and they just kind of laugh in your face."
- Aleksander Larsen
Getting The Play-To-Earn Formula Right
First version of Axie Infinity introduced a proof-of-play mechanism. Players are rewarded for in-game actions
XP is required to breed Axies. Each Axie has its own XP level
People began automating the game and inflating the number of Axies through breeding
Released a new battle mode that required people to actually play the game. Changed XP to SLP. Wanted to make it a more liquid market
Did not add liquidity for SLP. It was the community that initiated the creation of the SLP-ETH liquidity pool on Uniswap
Partnered with Samsung and Ubisoft. People noticed it and started pumping the price for SLP on 4chan. Shortly after, it dumped
With a higher price point for SLP due to the pump, they found product-market fit within the Philippines. It was enough money for Filipinos to earn and live inside the game
Started to double down on the Philippines
High Price Point Deterring Access To Axie Infinity?
Looking deeply into what the price of an Axie should be
Axies are productive assets so it makes sense for their price to trade at this level
Tries not to take a too active approach on market activities
They have various ways to regulate the market (e.g. increasing/decreasing the breeding cost)
Their team looks at a problem in many different directions before executing a course of action
Most Difficult Aspects Running Axie Infinity/Sky Mavis
Have to handle many new problems that pop up everyday
In the future, regulation could be another concern
Owing to their success in the Philippines and other developing countries, they ended up being responsible for putting food on the table for thousands of players each day
Security of smart contracts and possible hacks
Best Aspect Of Running Axie Infinity/Sky Mavis
Doing different things everyday
Humbling to see Axie Infinity enabling people from developing nations to put food on their table
"It's very humbling to be in this position, where we have the ability to impact the lives of so many, and potentially even help shape the future of society into hopefully becoming a better place."
- Aleksander Larsen
Thoughts On Play-To-Earn
Nice way to grow a community
Play-to-earn mechanics have to be integral to the core design of a play-to-earn game. It has to be done in a specific way
If not done correctly, it will burn out fast
Response To Critics
It's about how the game and the economy is designed
It's fine to be growth-focused at the start
The game and the community plays a significant role in the sustainability of play-to-earn mechanics
Once a game hits the total addressable market and no new players are coming in, it is the game and the community that keeps it going
To increase the longevity of a game, games can be built within games
Thoughts On The Metaverse
Believes in the Metaverse
It is great that assets are not controlled by corporations
Need to have games that breakout and draw in a lot of people into crypto
Doesn't think that Axie Infinity, Decentraland, Sandbox Game is the Metaverse. Believes that the Metaverse has to be created by the community for the community
His Grand 10 Year Vision
Goal is to make Sky Mavis one of the largest and most amazing companies in the world
Favourite Video Game
Single Favourite NFT
Axie #69. First Bird Axie
Josie Bellini's Ethereum Girl
Most Controversial Thought On NFTs
Don't believe too much in interoperability and composability of assets
They have been burned in the past by spending developer resources on things that do not have any tangible business impact
Taking a pragmatic view as to whether an action would lead to the onboarding of a lot of new users into crypto
Incentivizing Developers To Add Different Entities To Their Games
Eventually, developers will be forced to do so
If they do not adapt, they will end up dying
If You Could Improve One Thing In The Space
A gallery that can be used to view all his NFTs, regardless of which chain they are on
The gallery has to allow the display of the NFTs on the walls and allow viewers to walk in it
Closest example is Oncyber.io
Does not want to buy land in virtual worlds just for the sake of displaying his NFTs
NFT Ecosystem In 3 Years
Axie Infinity is going to be a worldwide phenomenon that rivals Pokemon
Going to have a few breakout games. Thinks Sandbox Game has a chance of becoming a really good game
Hope that artists would not view NFTs as a cash grab, but to build communities around their art
People will be apeing into profile picture projects because they missed out on CryptoPunks
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