In the latest episode of the Blockchain Gaming World podcast, editor-in-chief Jon Jordan talks to Jeff Zirlin, the co-founder of Sky Mavis.
To say a lot has happened in the year and a half since we last sat down for a proper conversation with Zirlin is an understatement. Of course this applies to the general crypto space, but even more so to Sky Mavis and the expansion strategy of its Ronin blockchain.
With this in mind, we had a lot to dive into as we tried to unpick the mind of one of the sector’s most prominent pioneers.
BlockchainGamer: Let’s start off with Axie Pals. What’s the thinking behind it?
Jeff Zirlin: Since the beginning of Axie, even before there was a game, people have loved their axies. The original Axie game was people looking at their axies, talking about them, imagining what they could be in the future. We always said, you can think of axies as similar to Pokemon or Tamagotchi.
We’ve done multiple iterations of the battle system over the years and obviously Axie Classic was something that got Axie and even web3 gaming as a whole to the next stage of traction. But something we’ve always had in the back of our minds is, Axie would be really interesting as a type of nurturing experience that leans into axies’ natural proclivity or appeal to pet owners. So that’s what this product is about.
What would an axie-Tamagotchi interpretation look like? Of course, this is the modern day and it’s very hard to create a physical thing to ship out to people, and add blockchain integration to that. So we met this team called Metapals, now called Kindred, and they have a very interesting product which allows you to have your NFTs on your browser at all times via a Chrome extension. It allows you to feed your axies, pet them, and throw them around your screen. In some ways I see them like a digital fidget spinner.
While you pet it, you also earn experience points (XP), which are stored onchain and can be used to progress your axie, make it more beautiful and also powerful in different Axie games.
The response has been quite positive so far. The day-7 retention rate is around 18%, and the day-1 was around 50%. The qualitative feedback has also been good. It’s something that’s got us dreaming and experimenting on the Axie side once again.
We’ve made some interesting progress when it comes to making axies dynamic NFTs and SLP is now deflationary. The Axie treasury is generating around $300,000 per month, which butts it up there. In my calculation, it’s the number one NFT project in terms of recurring sustainable revenue on a monthly basis. But I felt like, let’s experiment with something new. So that’s the thinking behind Axie Pals.
And what could it become in the future? Perhaps some sort of LLM integration where you can speak to your axies. What if we downloaded all of our support articles, then rather than speaking to Sky Mavis support staff, you could ask your axie? Another thing is, could this be like a web3 Twilio Rather than us sending text messages, which are quite intrusive, what if your axie told you when we released something new?
So it’s still a fairly experimental product, but with gen-AI you can imagine this kind of thing spinning out into something a bit bigger.
It’s also a take on the Telegram clicker meta in some ways. I think the theme with Telegram is accessibility, it’s very easy to open your Telegram app. Well, people are opening their browsers anyway, they’re using Chrome extensions.
In some ways, it’s a bit more of a product for the Axie professional class. People who have jobs can’t afford to spend time playing with their axies constantly and battling. This allows them to maintain that connection, seeing their favorite axies, playing with them, progressing them a bit every day.
You’ve got the Classic and the Origins games, then there’s Homeland and other products as well. How do you see the whole Axie ecosystem continuing?
We know that Axie is one of very few mature web3 gaming IPs on the market. It’s the IP that’s been in continuous development for the longest.
So what is Axie’s role in the broader Ronin ecosystem? For us it’s similar to Mario for Nintendo, where it’s that iconic flagship IP. Over time it will become just one of many prominent IPs on Ronin. Since it’s a mature IP, we can test out the next innovation. We experimented a lot and defined the playbook when it came to a mission of tokens and incentives to attract users.
The next thing to figure out is, how do you make it so that the people who are earning the tokens have a reason to hold rather than just farm and sell them. That’s why Axie has been at the forefront of experiments like dynamic NFTs, where you can spend excess tokens to upgrade your axis. That’s become a significant source of AXS sinkage or balancing.
All these learnings we get from Axie also end up being quite useful for our publishing arm. We need to be advising from a position where we’ve actually tried and documented a lot of the approaches that we’re recommending.
On that note, from November 2023 when Pixels went live on Ronin, you’ve quickly expanded and you now have around 20 external titles announced. How has that transition been?
Our idea is that we go from mastering one game and learning what worked for that, creating the technical solutions, to then opening that up to different teams. But rather than spraying and praying at the beginning and giving out hundreds of different grants and a cursory amount of minor support to each team, we believe that we have the expertise necessary to pick winners.
So our approach is to back teams that we believe in. We spend more resources, time, and effort incubating them and giving them a warm introduction to our community. We show them the work, the ropes, teaching them what’s worked for us, what hasn’t worked for us, and also the things that we don’t really know.
And some success cases like Pixels, have validated our approach, but we can’t stay stagnant.
If the early approach of Ronin is more similar to an Apple-like approach, where it’s more focused, more vertically integrated, that approach starts to run into limitations in the long run. That’s why you see Google and Microsoft starting to overtake Apple‘s market cap.
This is related to things like Ronin Forge too, where we recently onboarded a cohort of teams that we’ll be a bit lighter in touch with. They’re more independent in that they can be more self-serving, or self-service, I should say. That also relates to zkEVM, this initiative to open up the Ronin network in general.
As for the phased, more selective approach, it cannot be our bread and butter forever. Now it’s about how we can start to scale up and make it so that anyone could theoretically launch on the Ronin network.
From the outside looking in, it seems you have too many MMORPGs on Ronin. Those are quite big games too, you don’t play three at once. But you know your audience better than me, or do you just really love MMORPGs?
At first it was like, do we have too many pixel games? But why do pixel games make sense? Well, the art isn’t very super involved to create, you can be a little bit faster and more iterative.
Our next thesis does center around MMOs, games that we grew up playing and that would have been a good fit for web3 technology, oftentimes old-school MMOs like RuneScape, EVE Online, World of Warcraft, and Diablo to an extent.
These are games that would have benefited from web3 because they have deep and complex economies, and that’s related to our MMO thesis. We have a bit of a bullish bet on minimum viable MMOs.
Some of them are more pixel related, like Lumiterra and Forgotten Runiverse. While Lumiterra is 3D, you still have that Paper Mario 2D quality to the characters. It’s time to start exploring MMOs and if we don’t do it, maybe nobody else will.
I think one of the themes that we’ll see is that these web3 MMO economies might be even more brutal than web2 MMO economies, where you have extreme scarcity. A lot of the next generation of web3 experimentation will be about, what does a web3 MMO economy look like?
What are the things we can learn from web2 and things like EVE Online? I’ve learned a lot from Hilmar, him just critiquing and telling us things that they learned while building EVE and how it relates to Axie and what we’re building.
Interestingly, lots of other developers have piled on trading card games, and you don’t seem to have any.
We have a lot of the TCG element in Axie, and we feel we’ve done quite a lot of exploration there. Our bullishness is more around things like Pixels, which is more of an RPG, MMORPG type of economy. I think if there were the right TCGs to come across our desk, we would onboard them, but it’s very hard to make something that’s better than Axie Classic and Origins, because those have been in iteration for a very long time.
Parallel is interesting, and it seems to be having some fair amount of success, and maybe attracting some of the Hearthstone players. They seem to be having some kind of a war with the Hearthstone community. I like it because it’s controversial.
Is the Ronin community still dominantly Southeast Asian?
I would say that Ronin has distinguished itself as the consumer crypto chain for both southeast Asia and LATAM. But we are a global, pretty diverse movement with a fair amount of Americans and Europeans and Westerners. And they do provide a pivotal role in the network, oftentimes being community leaders, content creators, and Ronin validators.
When it comes to the vast majority of the day-to-day players, the people who are grinding and playing the games, a lot of those are from emerging economies. But when we think about this as a blockchain network, there are a broad variety of archetypes of people.
And a lot of the developers, influencers, whales and the collectors are coming from places that aren’t necessarily typically associated with Ronin.
So far, 2024 has been pretty good for Sky Mavis. But as great as it is that some games on Ronin have picked up hundreds of thousands of wallets, very few other games in the sector have gotten that far. Would you like to see stronger competition from other platforms?
I think what you’re getting at is, yes, we’re dominating within web3 gaming – but web3 gaming as a whole isn’t as large as it could be if we were all pulling our weight.
Theoretically, from Ronin’s perspective, we shouldn’t be trying to maximize for market share. We should be trying to maximize for a good chunk of a very large industry. Right now the pie is relatively small.
We do see some experiments happening like MapleStory Universe on Avalanche. I got to give them a shout out for having some interesting shots on goal. Apart from MapleStory, Avalanche has Off The Grid, which is attracting some interest. Although it’s very hard to pull off something like that beyond the initial hype cycle, but I’ll be watching to see if they can actually onboard people onchain.
The rest of the space is learning and getting better. When it comes to web3 gaming, the thing we’re competing against is meme coins in a way, for a lot of the capital and interest from the rest of the space.
What do you think about that?
We won that battle before, so it’s not an impossible thing. I remember last cycle, meme coins, Dogecoin, and SHIB were very much in vogue for the first half of 2021. But that started to peak out after Elon Musk went on Saturday Night Live in 2021. The second half of that year was totally driven by Axie and NFTs on Ethereum.
While meme coins have attracted a lot of market share, it’s still quite early in the cycle. I think we’ll see some incentive crypto products also leading mindshare when it comes to the broader overall space. We’re deep into it because Bitcoin started its rally earlier, ahead of schedule this time.
Within blockchain games, we’re seeing more of the tension between the bad actors who just want to make money, the inexperienced people who want to make a game but can’t, and the very few teams who do know how to make a good game and are rigorous enough to not just rug people.
I think it’s very hard. There’s a lot of people who have expertise in making games, but they don’t have this burn the ships mentality, where if they start to struggle, they almost run out of money, they’re gonna go back to doing what they know is a share check or a share bet, which is making traditional games.
We’re in a quite unique position where we have six years of expertise around making web3 games. We have a skill set which is hard to expect or project onto others.
It’s something that we can share with the games that we’re working with on Ronin.
Do you think games are big enough to drive a cycle themselves or are games subservient to the wider crypto cycle?
I would argue that crypto is still a seasonal industry where it seems like once every four years we have positive optimism that basically drags everything up, and with that goes gaming.
But the craziest part of the cycle in 2021 was being driven by Axie and a lot of web3 games. Can all of crypto and web3 escape broader macro conditions? I think eventually yes, but it will take some time and innovation when it comes to token value and sustainability.
Basically you can have product market fit that is tied to increased demand for the token, without as many incentives. That just comes to network maturation.
You mentioned that the Axie treasury is increasing. Are you getting a better grip on that, because you are still giving away quite a lot of AXS tokens?
I believe so. One stat that I got recently was on our bounty board system, where we give out tokens for doing tasks of varying complexity within the Axie universe. 70% of the tokens we give out every week are either held or staked – so only 30% is being sold. If users are holding or staking it, that also increases their loyalty. This also gets rid of supply overhang.
How I think about computing the cost of these incentives, is that you’re actually paying in sell pressure rather than paying in the full price tag, if that makes sense.
Wrapping up, can you mention a couple of games that you’re excited about on Ronin that people should be checking out?
I’m playing Ragnarok Monster World right now, which has just hit over 100,000 downloads. And that’s from the iconic Ragnarok, which is a Korean IP popular in Thailand and in the Philippines.
It should be on app stores, but if it’s not available in your region, just go to ragmon.gg and download the Android APK. My wife is also playing it, that’s a positive sign.
Other than that I’m excited about Lumiterra. The next test for that should be coming up this autumn. I also had a lot of fun with Forgotten Runiverse. Likewise, it should have its next launch in November, if everything goes according to plan.
Yesterday my friends were asking me, what about big web2 game developers coming in and eating your lunch? Well, I think the ones that are going to be more open are going to be the Chinese and the Koreans because they’re faster and more iterative and experimental. Especially in Korea, a lot of the population already owns crypto. Many of these gaming execs already own crypto and understand it relatively well.
We’ve set a precedent that a lot of web2 gaming companies that come into the space, if they’re in Korea or in China, they want to have a conversation with us.
You can stay up-to-date on Ronin via its website