The game public chain Ronin Chain's debut was lukewarm, and Axie has fallen from grace

Original Title: "RON 'Debut' Cools Down, Axie Falls from Grace"

Author: Kyle

In the public chain field, Ronin Chain is a special existence. It was born out of the insufficient performance and experience of Ethereum, which could not support the Axie Infinity game. The game developer Sky Mavis created Ronin and migrated Axie to this chain in May 2021.

Closely linked to the phenomenal game Axie Infinity, Ronin has attracted attention since its inception. On November 5, 2021, Ronin launched the distribution of its on-chain token RON in the form of liquidity rewards. Since the reward period lasts for three months, current liquidity contributors can only view the amount of RON rewarded but cannot claim it. On January 6, FTX launched perpetual contracts for RON, and after market speculation, the futures price of RON maintained around $4.3.

This price performance fell short of participants' expectations. During the liquidity reward phase, the "shovels" that obtained rewards saw significant declines—AXS, SLP, and ETH fell by 50.3%, 79.5%, and 29.3%, respectively. Based on the current futures price of RON, the returns from contributing liquidity are far from compensating for the losses caused by the asset declines.

Ronin's market "debut" was lukewarm, and looking at Axie Infinity, its recent operational status is also poor. Data shows that the game's daily revenue has dropped from a peak of $17.5 million to around $5.8 million, and the trading volume in the NFT market has also fallen from over $30 million per day to around $6 million.

Some observers believe that for Ronin to further develop, it cannot rely solely on Axie Infinity and must quickly strengthen the layout of other applications on the chain.

A positive signal is that Axie Infinity will undergo a game upgrade in 2022, introducing new gameplay such as land trading, construction, work socializing, and strategic games in the virtual world, while improving the economic model to reduce the speed of SLP token output. These improvements are expected to enhance the game's operational performance. In the later stages, it will depend on whether Ronin can support more chain games under the development of GameFi to expand its value boundaries.

RON 'Debut' Futures Price Drops

As the exclusive side chain for the phenomenal chain game Axie Infinity, Ronin Chain has been in the spotlight since its launch. Unlike new public chains like Solana that aim to be all-encompassing, Ronin's goal has always been to become the most commonly used Ethereum side chain for NFT games.

This vision has long been believed by many, as GameFi leader Axie Infinity migrated to Ronin in May 2021. Both are developed by the Sky Mavis team.

During the previous investment boom for Axie Infinity, the expectations for Ronin were amplified. Until November 2021, when Ronin launched the distribution of its native token RON, it attracted a large number of players to contribute liquidity in exchange for mining rewards.

On November 5, 2021, Ronin launched liquidity staking incentives through its self-built on-chain DEX Katana, opening the AXS/WETH pool and SLP/WETH pool, allowing users to earn RON rewards by providing liquidity to the two pools. Like other public chain tokens, the primary future use case for RON is as gas for the Ronin network.

RON Liquidity Mining Page

The initial liquidity mining will last for three months, during which 10% of the total RON supply, or 100 million RON, will be generated. As of January 6, RON is still in the reward phase, and players can only view the amount of tokens rewarded but cannot claim them. On the same day, the FTX trading platform launched perpetual contracts for RON, meaning that before RON officially enters circulation, it will have a futures price generated through market speculation.

At 10 PM on January 6, the RON perpetual contract officially appeared on the FTX market. RON futures opened at $4.95, peaked at $5.36, but then began to decline. By January 7, RON futures had dropped to $4.3, a decrease of 13% from the opening price.

This market performance disrupted the footing of liquidity contributors. At the beginning of liquidity mining, many participants expected RON to reach $10, but the current futures price is less than 50% of that expectation.

It is important to note that players contribute liquidity not for free but must hold or purchase two tokens, AXS and SLP, within the Axie Infinity game, and then pair them with WETH for staking. Since November 5, the prices of the three assets have all declined to varying degrees, with AXS dropping from $145 to $72, a decline of 50.3%, SLP falling from $0.095 to $0.0195, a decline of 79.5%, and ETH decreasing from $4477 to $3165, a decline of 29.3%.

The significant drop in the "shovels" for mining has brought considerable losses to liquidity contributors. Just as people were pinning their hopes on RON, the futures market's "debut" poured cold water on them. Mining players found that based on the current futures price of RON, the mined tokens could not compensate for the losses caused by the drop in the value of the "shovels."

A mining player, "Summer After Rain," disclosed his profit and loss situation on social media. He revealed that he invested over $600,000 to contribute liquidity over two months, and after accounting for RON's earnings, he still lost $230,000. "I can see that this is my most failed operation of 2021."

Axie Infinity's Operational Data Declines

Ronin, once shining brightly, has faced criticism from participants due to its lackluster market performance, a result that seems to have been foreshadowed. At the beginning of the token distribution for Ronin, GameFi was still a hot topic in the crypto space, but the enthusiasm for this sector has significantly declined. Coupled with the recent sharp correction in the entire crypto asset market, RON's poor performance was also predictable.

Of course, the decline in Axie Infinity's operational status is undoubtedly the main reason for RON's poor performance. Currently, the ecosystem on the Ronin chain is particularly singular, with Axie Infinity being the largest application, followed by the DEX Katana. However, users lack trading demand on this DEX, and mining RON is the primary application scenario. Aside from that, the Ronin chain only has basic infrastructure tools like cross-chain bridges and blockchain explorers.

It is not an exaggeration to say that Ronin's current market valuation heavily relies on the operational status of Axie Infinity, and in recent months, both the total revenue and NFT trading volume of Axie Infinity have significantly declined, with the game's popularity waning.

Token Terminal data shows that in the past six months, Axie Infinity's total revenue has been on a downward trend. The chain game once created a single-day revenue peak of $17.5 million on August 6, 2021, but has since declined. Between October and the end of November, Axie Infinity's daily revenue fell to around $5.8 million, and after entering December, its revenue dropped sharply, with daily revenue only at the level of $800,000.

Axie Infinity's Total Revenue Continues to Decline

The NFT trading volume in the Axie market is also continuously declining. Last August, the daily NFT trading volume could exceed $30 million, but recently it has only been around $6 million.

Some players commented that Axie Infinity has entered a downward spiral, with the prices of Axie NFTs continuously dropping, and the main source of income for "play-to-earn," SLP (Smooth Love Potion), has also plummeted, making it difficult for players to earn profits easily. The overall activity of the game has significantly decreased.

In August 2021, Axie Infinity even surpassed the mobile game Honor of Kings with a monthly income exceeding $334 million, attracting frequent media coverage, but this phenomenal performance could not be sustained, and this top chain game has fallen from grace.

With Axie Infinity struggling to maintain itself, it is not surprising that Ronin has cooled down.

Ronin Ecosystem Applications Await Expansion

The singularity of the Ronin ecosystem is a phase fact, and it has to face the situation of "suffering together" with Axie Infinity. In the short term, this situation is difficult to change.

Some Ronin observers believe that for this public chain to further develop, it needs Axie Infinity to boost its performance on one hand, and on the other hand, it must quickly strengthen its ecosystem on the chain.

In the past year, Axie Infinity has accumulated 2.9 million users. Although its current situation has declined significantly from its peak, Axie is still a barometer in the GameFi field, with every move attracting external attention.

Some players have pointed out that the limitations of Axie Infinity mainly lie in its singular gameplay and lack of playability. Most importantly, the game's activity is related to the price of SLP. When the price of SLP is too low, players will leave due to insufficient earnings from "gold farming." From Axie Infinity's latest developments, it is working to address these two major issues.

On December 31, Axie Infinity released a game upgrade preview on its official forum. In 2022, it will introduce a gameplay code-named Project K, where "K" stands for Kingdom. In the new "Axie Kingdom" product, virtual land trading gameplay will be introduced, and new game scenarios will be established.

It has been revealed that Axie Infinity has welcomed a new senior game designer who has improved the existing design of Project K and brought many foundational design improvements to the core gaming experience; the development team has also hired an art director to make strong stylistic choices to refine and clarify the game's core aesthetics (as shown in the image below).

Axie "Project K" Game Design Sketch

According to the plan, Project K will be gradually deployed in existing games in multiple phases.

In the first phase, it will focus more on virtual land management (production, resource collection, construction, and trading); in the second phase, additional management game elements (such as skill trees, work, and social/cooperative activities) will be established; in the third phase, more attention will be given to team strategy games (defense, combat, conquest), etc.

Additionally, to achieve a good gaming experience and visual effects, the team will no longer use the previous 2D art style and has rewritten the core engine using 3D technology to immerse players in a more realistic Axie world.

The emergence of more gameplay and new elements will help Axie Infinity recall lost old players and attract new users in the future. Regarding the game's economic model, especially concerning the output of SLP, the Axie team also plans to make changes.

In the current game version, the output of SLP is unlimited. Although breeding Axies in the game requires consuming SLP, the speed of minting SLP still far exceeds the speed of destruction, leading to continuous selling pressure on SLP and a constant decline in asset prices. On January 5, Axie Infinity released a development log on "economic balance," stating that it would reduce SLP supply and increase demand to lower the inflation rate of SLP.

In terms of reducing supply, Axie will lower the SLP release rates for daily tasks, PvP, and PvE, and will replace SLP rewards with increased AXS rewards; at the same time, it will reduce SLP generated through automation and robotics, making it easier for real players to earn money. In terms of increasing demand, Axie will establish a buyback mechanism and expand the use cases of SLP in gameplay.

The upgrade of gameplay and the improvement of the economic model are positive signals for Axie Infinity, which is in a downward trend. As Axie's operational situation begins to recover, the Ronin chain is also expected to gain more expectations.

Of course, as a public chain vertical to NFT games, Ronin also needs to accelerate the development of its ecosystem and establish more applications and games.

From the current performance, Ronin has made significant improvements in transfer efficiency and transaction speed compared to Ethereum, with a user experience similar to BSC and Solana. Since RON has not yet officially circulated, transferring on Ronin does not incur gas fees, and the gas consumption level of this chain is still unknown. However, it can be confirmed that as a public chain that needs to support high-frequency game operations, Ronin's on-chain gas fees must be significantly lower than Ethereum's to have competitive strength.

Some GameFi industry observers have pointed out that Ronin has a unique positioning vertical to NFT games, and it has gained fame thanks to Axie Infinity's initial launch on the mainnet, laying a good foundation for subsequent development. Both GameFi and the metaverse are in their early stages of development, and it is expected that 2022 will see more intensive deployments and iterations. If Ronin can become a popular source of chain games in the future, its potential will expand accordingly.