Valuing DAOs: What is Axie Infinity Really Worth?

The Axie Universe has a self-contained economy. Players can buy and sell digital goods. For example, players can buy and sell Axie (the Pokemon-esque creatures). This economy is built around two cryptocurrencies: AXS and SLP.

There’s one catch here, and that’s the dilution of the token. If someone were to buy 100% of AXS tokens today, they would only actually own ~25% of tokens in five years. That’s because Axie Infinity is printing more tokens at a really aggressive rate. Therefore today’s token holders wouldn’t actually get $19 billion - it’d be more like $5 billion.

Anytime there is a transaction in Axie Infinity, a percentage of the transaction goes to the Axie community treasury. This is a common revenue model:. Today Axie takes 4.5% of every transaction.  Right now, “transactions” mean buying, selling, and creating Axie creatures, but almost anything is possible down the line - from selling virtual plo... See more

Axie needs to pay its development team. It also has to pay the players. It’s a business, it has expenses. To pay for all of this, Axie does what many tech companies do: they issue shares. Right now there are about 60 millions AXS tokens in existence. In about five years there will be 270 million tokens. The 210 million new tokens will be issued to ... See more

The most optimistic scenario for Axie Infinity, the absolute ceiling, seems to be $3.7 billion. Right now, there are 60 million AXS tokens trading for $77 a piece. At that price, buying every token would cost about $4.5 billion. $4.5 billion sale price for a business worth, in the best possible scenario, $3.7 billion. Even if Axie Infinity becomes ... See more

When Axie Infinity launched, AXS tokens were owned by the creators and developers behind the game & private backers. The platform then issued additional AXS tokens that were sold to the public. Today, tokens are bought and sold similar to equity shares. As discussed later, new AXS tokens continue to be issued to key stakeholders (developers, pl... See more

AXS is the Axie Infinity governance token. Governance tokens are to DAOs what equity is to corporations. Token holders vote on how to run the business and can elect to distribute profit from the business to themselves.

Having said that, Axie Infinity demonstrates that DAOs are an incredibly innovative business structure with significant potential for value-creation. In the coming years, more DAOs with tangible earning power will emerge, and investors should consider adding exposure to this emergent asset class.  

Anybody who wants to play Axie Infinity has to use real money to buy SLP cryptocurrency; that’s the price of admission.