Axie Infinity developer Sky Mavis launches the next act

During crypto’s booming bull market in 2021, Sky Mavis rose to phenomenal success with its pioneering game of making money Axie Infinity. Despite criticism of an exploitative in-game economy, Axie peaked at 2.3 million daily players in January 2022, driven by developing markets, such as its home in Vietnam, and it received funding from venture giants including Andreessen Horowitz.

The studio’s fortunes crashed in 2022. A $620 million hack of its proprietary Ethereum-linked sidechain Ronin, along with the general chill of falling crypto markets, decimated Axieits player base, which currently has around 260,000 daily users, according to Active Player.

As developers continue to rush into Web3 games — many eschewing the “play-to-earn” description — Sky Mavis remains the star of the space. On Thursday, it announced its next move afterAxie: An upgrade to the Ronin blockchain, along with the launch of a gaming ecosystem starting with four studios building on top of Ronin.

“We’ve been building in this industry for five years, so we’ve seen a lot of ebbs and flows,” said Aleks Larsen, COO and co-founder of Sky Mavis.

An updated Ronin

The first part of the launch is an upgrade to Ronin, a sidechain designed to speed up in-game transactions that ended up being an Achilles’ heel for the fledgling developer. On Thursday, Sky Mavis announced that Ronin would switch to a delegated proof-of-stake (DPoS) model, meaning anyone with a certain amount of RON, Ronin’s original token, can become a validator and produce blocks.

The difference between a regular proof-of-stake consensus mechanism, such as Ethereum, and DPoS is that in the latter, users of the network can choose “delegates” to validate the next block of transactions. Previously, Ronin operated on a proof-of-authority consensus model, where validators were chosen based on credibility, with prominent ones including Google Cloud, Animoca Brands, DappRadar and Nansen. The upgrade will apparently open up the Ronin ecosystem to more users, although it will still remain relatively concentrated.

Given the massive hack last year, the first order of business for Sky Mavis was to restore trust in the blockchain and the overall business. Larsen told Fortune that despite the high-profile nature of the exploit, Axieits troubles paled in comparison to other crypto headlines of 2022, from the collapse of TerraUSD to FTX.

“Obviously,” he added, “we don’t necessarily want to compare ourselves to the bad actors, but it’s becoming clearer that this was actually something that happened because of hypergrowth.”

He said Sky Mavis has been focused on increasing security in the wake of the hack – a fact that has built trust with partners, from game studios to Google. “They trust us more because we’ve gone through some difficulties and we actually solved the problem so well compared to so many others,” he said.

Larsen also acknowledged some of the early mistakes in Axie Infinity, attributing them to growing pains as the game’s user base exploded. “It started growing so quickly,” he added, “that the people who came didn’t have time to understand what the underlying vision for the core team was — with this game and this universe.”

Kent Byers, the chief product officer of Directive Games, one of the studios joining the ecosystem, said he was reassured to see Sky Mavis bounce back from the incident and court partners like Google.

“It still speaks volumes about their strength to what they can handle and deal with that kind of pressure and scrutiny and move forward,” Byers said Fortune.

The ecosystem

As part of the launch, Sky Mavis is also partnering with four game studios that plan to build on top of Ronin – some using intellectual property from Axie. These include Bali Games, which made the Korean title Anipang which received more than 130 million downloads, and Bowled.io, a sports-based platform that initially focused on cricket.

Fortune spoke with executives at Directive Games, a studio founded in 2014 with veterans from LucasArts, Square Enix and Ubisoft. Direct is the only studio to launch with a playable title, a shooter called The machine arenawhich will be available to players in closed beta.

Courtesy of Directive Games

Byers said that while Directive hopes to move into Web3 gaming, developers are still figuring out the best experience for users. Although The machine arena is technically launching on Ronin on Thursday, the Web3 features won’t yet be available as the studio tests out different approaches.

Much of the criticism directed at Axie stemmed from the in-game token system, which emphasized grinding rather than gameplay. Byers said Directive’s games will likely feature NFTs instead of tokens, meaning players can own and keep different skins or weapons earned while playing.

Despite a flood of developers to Web3, blockchain titles have yet to find a foothold with gamers, with many expressing skepticism about the “play-to-earn” model and potential titles still in beta.

Byers said players intuitively understand the model of earning rewards while playing, and even in-game ecosystems through titles like Runescape and World of Warcraftbut that developers must adjust based on preferences.

“Nobody wants a token in Mario Kart,” he told Fortune.