Trading cryptocurrencies is not for everyone due to their volatile nature. But the technology behind it has given rise to several businesses and profitable investment opportunities such as Non-fungible tokens, DeFi, among other things. Crypto gaming industry for example has grown into a massive investment opportunity. The interesting combination of Non-fungible tokens and a social network of fellow gamers has revived the gaming industry in a sense.

Sky Mavis, a Vietnam-based gaming company has successfully onboarded potential investors on its most popular pokemon-like video game called Axie Inifnity. The game features “Axies” , a type of creature that player use to combat with, against each other. These Axies are digital creations or NFTs that can be bred, created, bought and sold among players connected through a social network. The game presents a unique play-to-earn model that incentivises frequent and active players.

What is interesting is the fact that 2018-founded company, Sky Mavis, successfully raised $161 million in funds at a $3 billion valuation to expand and improve the Axie Infinity game which would continue to monetize through NFTs. 

Nguyen agreed that “The growth of Axie Infinity recently was a little beyond the team’s expectations”

But how did Sky Mavis get to this point and where is it headed towards? Let us delve deeper into the past, present and future of this particularly which attracts both crypto enthusiasts and ordinary investors who share the love for video games.

Trung Nguyen, Cryptokitties, and the Phenomenon called Axie Infinity

SKy Mavis was founded by a 29-year old entrepreneur and developer who became the first Vietnamese tech billionaire in less than 3 years. The current CEO and co-founder of the company are Trung Nguyen, who is also an avid gamer. 

At the age of 19, a fresh drop out of FPT 2012 batch, Nguyen co-founded Loship, a Vietnam-based e-commerce platform that assured deliveries within an hour under the banner of  Lozi

Nguyen was also the chief technology officer at Lozi that turned into a social network used by Vietnamese food bloggers. By 2015, Lozi became quite famous and went on to raise a total of $12 million by 27 investors including Golden Gate Ventures, a leading private equity investment company. But Nguyen chose to end his journey with Lozi in 2015 while the company was expanding because he felt that his aims no longer aligned with the other co-founders. 

He stayed in Ho Chi Minh City and joined Anduin Transactions as a software engineer for 3 years. There he ensured that investment deals were quicker and more transparent. Nguyen was interested in the accountability provided by Anduin’s platform so blockchain quickly grabbed his attention. 

It is difficult to even imagine that Nguyen used to hate blockchain at first when 2017’s ICO boom got people around the world rushing to invest in an underdeveloped cryptocurrency project. Nguyen believed that people did not need a lot of capital to develop blockchain-based projects appropriately. Thinking of ICOs as a tech company’s product was against Nguyen’s beliefs as a tech engineer. 

Unlike others obsessed with the ICO craze, he believed that blockchain was not a short-term game with quick yet risky profits. He was fascinated by Cryptokitties, an Ethereum-based blockchain game of unique virtual cats that users can buy, sell, or breed. Cryptokitties gave Nguyen an idea about how blockchain can transform the way games are built. 

It did not take time for Nguyen to get addicted to Cryptokitties after playing for a few months. By 2017, he ended up with thousands of virtual cats as the game and NFT tech continued to trigger his imagination. Nguyen also revealed in an interview that he actually invested $600 to play Cryptokitties before the idea of building a similar game hit him.

Nguyen said “One day, I became curious when hearing about a game developed on the platform of blockchain. I tried it and realized that blockchain is not as bad as I had imagined before. The key lies in how you apply the technology.

Nguyen says that the game was created with the help of 4 co-founders including Tu Doan (art director and game designer), ex-colleague from Anduin Transactions, Andy Ho (chief technology officer), Aleksander Leonard Larsen (chief operating officer), and Jeffrey Zirlin (growth leader). Nguyen met the foreign co-founders through the game itself as they played together. For a long time, they did not get to meet each other face-to-face but continued to stay in touch online.

“Our original idea for Axie came from a kid's game with a potato. Back then, we used to attach accessories to a potato or combine cutting to create the animals/characters that we wanted” CEO Trung Nguyen

The plan was to make a blockchain-based game that brings together true ownership and other advanced systems just like Cryptokitties but has a competitive side to it like his childhood favorite titles like Pokémon. The game went under development and was launched in the Beta in mid-2018 as Axie Infinity. 

Nguyen said in an interview that “We (him and the other co-founders) did not think too much when beginning to develop Axie Infinity. At that moment, we just wanted to do something with an entrepreneurial spirit. As people who have a passion for games, we wanted to make some changes to the industry.”

Products Offered by Sky Mavis

Sky Mavis essentially builds virtual worlds and operates its infrastructure putting users first by providing them with true ownership.

  • Games

Sky Mavis is particularly famous for its immensely popular blockchain game Axie Infinity which features different kinds of unique NFT animals in a virtual world with player-owned economies and digital property rights.

  • Marketplace

Sky Mavis also offers a safe and secure hub where players can buy and sell their digital in-game items with anyone anywhere. The marketplace ensures that the property rights are appropriately transferred from one user to another.

  • Hub

The hub is a launchpad created and managed by the Sky Mavis team. This is where new and upcoming games will be available. One can build, raise funds, and grow their games using the hub.

  • Ronin

Ronin is a customized blockchain developed by the Sky Mavis company which was created to support the incessant growth of blockchain gaming and NFT collectible projects. Recently, Sky Mavis has transferred the infrastructure of Axie Infinity, their most-played game to Ronin.  

  • Wallet

Any project that has anything to do with crypto collectibles must require a safe and seamless digital wallet where players can keep their digital assets like currencies. Sky Mavis offers easy and simple wallets for the same purpose.

Market Growth, Competitors, and Partners

Since Cryptokitties, the world of video gaming turned to a new direction which was NFT collectibles and blockchain gaming. Consequently, Axie Infinity after its release has observed exponential growth within the market with players that mostly belong to developing countries. The game’s play-to-earn model has generated millions of dollars in revenue for its owner company Sky Mavis. Since it was launched back in 2018, the company has seen a massive jump in revenue which was around $485 million in July as compared to the $21 million the company logged in its founding year.

Nguyen said, “It is not correct to call me a dollar billionaire, because the market capitalization of AXS tokens is completely different from the capitalization of Sky Mavis.”

The reason for this unprecedented growth has been tied to COVID-19’s effect on several developing countries where the economy took a hard hit and it resulted in business closures and mass layoffs. The game became a way to earn cash to stay afloat during challenging times for millions of people who lost all sources of income due to lockdown.

Several news articles explained how former IT execs made hundreds of dollars by playing Axie Infinity daily for hours. On October 5th, the game broke its record of daily active users that exceeded the 2 million mark. The most expensive Axie (a game character from Axie Infinity) ever sold was worth 300 ETH (roughly $1,240,755).

Currently, the game has generated up to $2.3 billion in total sales since 2018. Axie token called Axie shards (AXS) hit all-time-high values on the same day after the project leaders announced that staking capabilities and token distribution for early adopters are on the way.

“Axie Infinity is a category-defining game that is changing history by creating an entirely new digital economy,” said Sky Mavis CEO Trung Nguyen in a statement. “We are on a mission to create economic freedom for gamers and are making this happen by turning players into owners of in-game assets unlike the traditional model where publishers, distribution platforms and game developers retain control and benefit the most,” he added.

Competitors:

Forte: San Francisco-based private media and entertainment company Forte which also deals with blockchain tech and games is a direct competitor of Sky Mavis. Forte managed to raise up to $185 million 5 months ago. Forte has been on a hiring spree for a while which has contributed to the company’s overall growth.

PlayDapp: PlayDapp is an Ethereum-based blockchain gaming platform that also supports Polygon networks. It allows users to play games in order to earn NFTs and other rewards in the form of PLA tokens. 2017-founded company PlayDapp Limited also operates and owns a marketplace. 

Somnium Space: It is an open and social VR world where participants can buy, build, import, and monetize lands to have fun in a Metaverse shaped by NFTs. It was founded in 2017 by Artur Sychov. Somnium Spac raised $1 million during its seed round. It later joined Virtual Reality Blockchain Alliances as a member. 

Sky Mavis partners include;

  • Samsung
  • HTC
  • Ubisoft
  • Kyber Network
  • Klaytn
  • Binance 

Nguyen said “It’s amazing to see everyone come from around the world, and the community is like a family”

$161 Million and 3 Funding Rounds

Sky Mavis is an early-stage venture at this point but it has been funded thrice with the support of a total of 25 investors since its co-founders started the business in 2018. According to Oddup’s research, it was found that the company’s benchmark valuation is close to $3.1 billion (12th October 2021). 

"Axie Infinity is at the intersection of gaming and NFTs, two of the fastest-growing and most promising cryptocurrency use cases.  With over 30,000 daily active users, they have proven product-market fit and an incredibly passionate community.  We're excited to support Sky Mavis as they scale to the next 300,000 and then 3 million users." - Ari Paul, CIO at Blocktower Capital

Sky Mavis' last valuation took place after the end of the Series B funding round which came out as $3 billion which puts the post-money valuation somewhere near $3.1 billion (Series B). Oddup also ran several algorithm background research as a means to pinpoint how the company fares as a potential leader in the blockchain gaming industry considering key factors like competition, demand, and potential. The overall score Sky Mavis achieved is 65.41.

Seed - $1.5 Million

Sky Mavis first made its mark in November 2019 when the Axie Infinity developer raised $1.5 million during the seed round. The lead investor in this round was Animoca along with other participants from Hashed, Pangea Blockchain Fund, 500 Startups, and ConsenSys. Animoca has been actively investing in blockchain companies, particularly those which own NFT-related projects. 

Other investments under Animoca’s belt are Cryptokitties, the inspiration of Axie infinity and OpenSea, the leading NFT marketplace. According to Sky Mavis, the funds were utilized in the further development of Axie Infinity and the creation of other practical blockchain applications.

Series A - $7.5 Million

This year in May, Sky Mavis announced the Series A funding round which closed successfully after raising $7.5 million in total. It was led by Libertus Capital, a blockchain-focussed fund that invests in projects that prioritize individual freedom and privacy. Other participants include Mark Cuban, CMT Digital, Backed VC, Konvoy, DeFi Alliance.

After wrapping up the Series A funding round, Sky Mavis went on to expand its team by hiring talents in different ranks. There were many recurring investors in this round like Pangea Blockchain Fund, 500 Startups, Animoca Brands, etc. 

"The Sky Mavis team is pioneering community-owned games. They have fostered a community of committed players because of their ability to provide true economic freedom within their ecosystem. We are thrilled to be investors in them and to be supporting their quest to showcase the power of player ownership."- Jason Chapman, Partner at Konvoy

Series B - $152 Million

The parent company of Axie Infinity raised more than a hundred million dollars for the first time during its series B funding round which was joined by none other than Mark Cuban, a16z, FTX, Seven Seven Six, Paradigm, Libertus Capital and BACKED VC.

The finance round was led by Andreessen Horowitz venture capital firm based in California, United States which has already invested in several types of promising blockchain ventures. The total amount raised during Series B is $152 million that propelled the company’s total valuation in billions.

Arianna Simpson, a partner at Andreessen Horowitz focused on crypto investments, explained on the VC firm’s website. “The game’s consistent, unifying thread is the Axie, an NFT character that is used across games and can be traded on secondary marketplaces.”

“The Axie team has unlocked a new way to build and play games that is already completely redefining this category. The game’s growth is a phenomenal testament to how deeply this model is resonating with people around the world,” Simpson added.

What’s next for Sky Mavis?

Sky Mavis is working on getting rid of the problems associated with the Axie Infinity platform after it was criticized that their gaming model is exhaustive and leads to serious addiction and other health-related concerns.

Sky Mavis Chief Operating Officer and co-founder Aleksander Leonard Larsen said, “Some people say we’re like the Fed but we are ultimately the creators of this universe and are responsible for making sure that it lasts. We are always tracking the economy to make sure it stays at a healthy level.”

But the co-founders have a positive outlook for the growth of this unique blockchain-based game platform which presents an easy way to own valuable NFT collectibles.  

“Because we started so long ago, in 2018 with the game launch, we have this product and we have this community,” cofounder Zirlin said. “It’s not something that’s speculative or theoretical. That’s really something in the market.”

“We can be a pioneer because blockchain is one of the newest technologies in the world, so the development in this field is not much different between countries. Nearly everyone in this world is at the same starting point in developing and applying blockchain to everything in life. Even if we are good enough, we can get ahead of the world,” CEO Trung Nguyen. 

But according to Larsen, COO of Sky Mavis has untapped potential despite its shortcomings and that is why the active players and supporters keep joining their side to bring a wave of change in blockchain gaming and the use of NFTs.

Larsen said “Axie Infinity is a digital nation and, like in any society, certain people might be criminals,” said Larsen. “How do we deal with those who might be abusing other scholars or players? These are challenges for us internally. We see it as more of a social network than a game,” he said. “People come in because it's such a new opportunity, then they fall in love with the community and the game that we’ve been building over time.”