TL;DR: Axie Infinity is about to reach 10M all-time players, arguably the most-used blockchain application that is live today. We are writing a 4-part series focused around the explosive growth of Axie Infinity. This first part is a cohort analysis which highlights Axie Infinity’s sky high player growth and retention and contrasts it with the low popularity and retention of some in game functions (such as breeding). All insights are derived from on-chain data provided by Covalent.

Introduction

Axie Infinity is by far the most popular blockchain game with more than 8.3M players all-time and over 1M daily active players. The game began on the Ethereum blockchain and has since moved to a gas-free chain made specifically for the game, called Ronin. With Covalent, we could analyze data from both of these chains and look at the full evolution of Axie Infinity, but let's focus this analysis on the recent history and the game’s explosive growth fueled by the Ronin chain.

This analysis will center around the players in each of the five categories shown in the table below. We will look at the acceleration of growth, compare new and existing users, and examine month over month player retention in each category.

Here are some facts to set the stage:

• Axie infinity will pass 10M all-time players in the month of December if growth continues at the three-month average.
• Player retention is extremely high with almost 75% of players returning for a second month after joining the game (over the past 3-months).
• Over 62% of players have claimed rewards from the game.
• Only 14% of players have ever bought an Axie and 9% have sold one.
• Less than 5% of players have ever bred Axies.
• Less than 5% of those that do breed, continue breeding in consecutive months.

1. Active Players

Axie surpassed 1M daily active players for the first time on November 13, 2021 and has also surpassed 5M monthly active players. This puts Axie Infinity on a similar scale to popular sports games such as FIFA 22 and Madden 22 [1].

November closed out with 6.6M players and if growth continues at the three month average, December will far surpass the 10M player mark. The table below shows both total and new player counts as well as their respective growth rates since the launch of the Ronin chain.

The average new player growth rate of the past 3 months was 74% and if that continues into December we could see over 6.5M new players this month. The total player growth rate over the past 3 months was 70% which if continued this month, would put Axie at 11.3M monthly players.

The chart below shows a visual representation of the exponential growth. Over 50% of the users each month are new, and the existing users continue to grow month over month as well. Lets move to the next section and explore the player retention.

Explosive growth is not sustainable without equally high player retention. The table below groups new users into cohorts based on when they first joined the game and tracks their cohort throughout the months since they started playing.

Average Month 1 retention is 82% and nearly 80% of the new users from May, June, and July were still playing in October - just over 65% of them played in November. The fact that retention is relatively steady month to month means that Axie has been successful at gaining new users but also keeping experienced users active and engaged - this suggests the game has plenty of growth potential ahead of it. Below we dive into the different functions of the game and how the players are interacting with them.

2. Players who have bought an Axie on the marketplace

To play the game, you need to buy (or borrow) 3 Axies. Buying can be a financial strain for some people so it has been popular to borrow Axies in a scholarship program where you split the earnings with the player who loaned you the Axie. The table below shows a low number of total buyers and an unsteady (sometimes negative) growth rate.

Of note in the above table is the negative growth in new Axie buyers in September. This is in stark contrast to the 1M+ new players in the game in September. In November though, it seems the game broke through the buyer stagnation of previous months and the growth in both new and returning Axie buyers is recovering strongly.

However, about 50% of traffic in November was from previous buyers each month since September. This also implies a high churn rate for new users. Let's dig into the buyer retention analysis below.

From the first cohort in May, there is a higher Month 1 churn rate in buyers than the Month 6 churn rate for the same cohort of players. That said, the first cohort still has the highest retention of Axie buyers.

The increasing number of players and small number of buyers shows that the demand for Axies might be stagnant because of the number available through the scholarship programs. This suggests that the early cohort may have bought a significant number of Axies and they are now loaning them to other players in order to earn SLP. The next section explores those players earning SLP so keep reading!

3. Players who have claimed $SLP

The key feature of Axie infinity is its Play-to-Earn nature and in this section we explore how many players are earning. In a different report we will dive deep into who is earning and how much everyone is earning but right now we are exploring how many people are earning, how many of those are earning for the first time, and how many earners continue earning months down the line.

The growth of players claiming SLP has been slowing since July - until November broke that trend in astonishing fashion. The previous decrease was troubling because the growth in the number of players remained more or less steady the past few months. This meant that the number of players increased but the number of players claiming SLP was not increasing at a proportional rate - so each month a smaller percentage of the total players were claiming rewards. November flipped that trend and saw 171% growth in players claiming SLP - which is a great sign for the P2E aspect of the game.

In previous months, more than 50% of the players claiming SLP were existing players - November broke this trend as well.

If the previous months had continued, we would have started to see “the rich get richer” within the game. The breakout growth of new players claiming SLP in the month of November is a hopeful sign to buck this trend. But we will need to check in again next month to see the retention of this new cohort.

The October cohort for example, has the lowest claiming retention of any cohort across any time frame - meaning only 57% of players that claimed SLP in October also claimed SLP in November.

The table below groups players that claim SLP by the month in which they first claimed it and tracks whether or not they continue to claim rewards in the following months.

The November cohort broke the trend for new users claiming SLP but the October cohort also broke the trend of 70%+ retention. The decrease in retention is expected because of the explosive growth, but it is not ideal. We will dig into the wealth distribution related to this retention in the next article.

Beyond the growth rates and retention, it is also important to look at the proportion of new players who are also new SLP claimers. This is a proxy for the “success” of new users. In August, roughly 71% of new players also claimed SLP. This dropped to 44% in October, but November again bucked the trend and saw a new record of 73% of new players also claiming SLP.

4. Players who have bred an Axie

The other way to get more Axies is through breeding. This requires two Axies and costs SLP in increasing amounts depending on how many times each Axie has been bred previously as well as one AXS token. The benefits of breeding would be maximized when the price of SLP and AXS are low and the price of Axies are high. Currently, the price of Axies are high, SLP is low, and AXS is very high. This is reflected in the decline of breeders since August and the negative growth rates shown in the table below.

Not only is the total number of breeders shrinking month over month but the number of existing breeders is also shrinking - this means it is not currently profitable for anyone regardless of their experience level. With decreasing growth rates and a decline in existing breeders the retention rates shown in the next section are bound to be low.

The breeders have the lowest retention of all activities. Only 4% of players that were breeders in the May cohort bred Axies in October despite the fact that 78% of the players from this cohort were still playing in October.

Interestingly though, over 51% of the new users in May were also breeders. This percentage has steadily fallen to the point where only 2.7% of new users are breeding now.

Conclusions and Implications

Players are joining Axie infinity at staggering rates that continue to increase each month. The game sees an average of 65% more new players than it did the previous month and it retains roughly 81% of those players on to the second month and roughly 70% continue indefinitely. If this continues, Axie Infinity will exceed 11M players in the month of December.

Digging deeper though, we see that not many players are buying or breeding Axies which raises sustainability concerns. This means that the new players are likely joining through scholarship programs which are controlled by existing players. Without ownership, we should see the churn rates start to rise and the price of Axies might start to decrease as a result. If this leads to an increase in first time Axie owners, then the growth and retention should continue, but if this dip is bought up by existing players and we don’t see new buyers coming to the marketplace, then the game risks being dominated by high-net-worth players and slowing growth.

The play to earn nature of the game appears to be in great order though. More than 75% of players have collected earnings every month since joining the game which means that if a player reaches the point of collecting SLP then they are very likely to continue playing and continue earning. However, earning through breeding and selling Axies appears to be unprofitable given the negative growth and high churn rates of those activities.

What’s Next

• Axie Infinity Pt. 2 - Road to Profitability for 10M Players
• Axie Infinity Pt. 3 - Marketplace Characteristics
• Axie Infinity Pt. 4 - DeFi on Ronin