Disclaimer: Nansen has produced the following report as part of its existing contract for services provided to Sky Mavis (the "Customer") at the time of publication. While Sky Mavis has the right to review and provide feedback to Nansen, Nansen maintains full editorial control over the publication of this report. All views expressed are the independent opinions of Nansen's research analyst(s) who are the author(s) named in this report. This report is intended for informational purposes only and does not serve as investment, financial, professional, or other advice. For more information, please refer to the disclaimer at the end of this report, as well as our Terms of Service.

Overview

Ronin is Sky Mavis’ proprietary blockchain network built using the EVM, created to be an industry-leading blockchain for gaming. It was created to fuel the Web3 gaming revolution and has become a key player in the crypto gaming space. The network powers the entire Axie Infinity ecosystem, facilitating transactions and holding its assets - Axies, Land, SLP, AXS, Wrapped ETH (wETH).

Since the introduction of Axie Infinity: Origin’s new features, Sky Mavis has updated  the game every season, balancing the features to improve the gaming experience and mechanics based on previous seasons.

With the addition of 8 new validators this quarter, Ronin Chain is one step closer to reaching its goal of 21 independent validators to secure the network, following the hack in Q1 2022. Notably, with Google Cloud as its partner, Sky Mavis (the parent company of Axie Infinity) aims to establish Ronin as the default NFT scaling solution for gaming.

Check out Nansen’s previous reports on Ronin Chain and other chains here.

What are sidechains?

A sidechain is a separate blockchain that runs in parallel to the Ethereum network and operates independently. It has its own consensus algorithm and is connected to Mainnet by a two-way bridge.

Sidechains support general computation and are EVM-compatible. However, they are less decentralized and use a separate consensus mechanism. In the worst case scenario, a quorum of sidechain validators can also commit fraud but since sidechains are independent, the damage will be contained within that chain and will not affect the main chain in the case of a hack or compromise.

Key Developments

Ronin Chain

• Added a total of 8 Validators on Jul 30, 2022 and Aug 17, 2022.
• Integrated Ronin Network to TrustWallet.
• Sablier tweeted their launch on the Ronin Chain on Jul 21, 2022.
• Community Gaming integrated with Ronin to support Axie World Championships on Jul 20, 2022.
• Ronin Chain launched their website on Aug 16, 2022. More details here.
• Ronin Network and Axie Infinity support Ethereum Proof of Stake after Ethereum Merge.
• Revealed new version of Ronin Wallet Extension on Sep 27, 2022.

Axie Infinity

• Land staking was launched on Jul 1, 2022.
• Bridge issue for deposits from Ethereum blockchain.
• AxieCon was held in Barcelona from Sep 7, 2022 to Sep 10, 2022.
• In Season 21 Arena, 130,171.90 AXS were distributed to the top 300,000 players.
• Lunacian Summer Event lasted for 50 days: from Jul 14, 2022 to Sep 3, 2022.
• Origin Season 0: Phase 3 was released on Aug 12, 2022.
• Axie Origins Season 1 started on Sep 14, 2022.
• Axie Esports Grant with 160,000 AXS in total funding to grow the gaming ecosystem.
• Partnership between SkyMavis and Google Cloud . More details here.

Ecosystem

Since Ronin was made to be a gaming-specific layer one (L1), it leverages on the advantages of building a dedicated sidechain with near-instant transactions and nominal fees, allowing for millions of in-game microtransactions. This is aligned with Ronin’s goal of onboarding gaming studios and bringing together the next generation of gamers.

On Sep 9, 2022, Sky Mavis announced a collaboration with Google Cloud, whose deep technical expertise in blockchain infrastructure and running validators, bolstered the security on the chain for developers.

Axie Infinity

Axie Infinity released the Alpha version of Origins on Apr 7, 2022. Season Alpha served as a testing ground where all items and rewards earned were reset in the official release.

Axie Infinity Origin introduced new features like free Starter Axies, Arena Mode, Crafting, Runes and Charms. Furthermore, Axie Classic holders would still be able to utilize their NFT Axies in Origin.

On Aug 12, 2022, Season 0 which marked the transition into Phase 3 was released. In this phase, SLP was moved from Axie Infinity Classic (V2) to Axie Infinity Origin (V3). The transition from Classic to Origin helped balance the SLP economy by making SLP a requirement for crafting various Charms and Runes. NFT Runes and Charms (ERC-1155 tokens) can be bought, sold or gifted through the marketplace. Additionally, the leaderboard in Season 0 featured 60,708 AXS distributed among the top 20,000 players.

Season 1 was released on Sep 14, 2022 and it featured the largest leaderboard prize pool yet with 112,000 AXS paid out to 40,000 players. Season 1 also featured a longer season spanning 60 days, compared to the 30 days of Season 0. This change was made in order to affect the pacing and sense of progression on the leaderboard. A new roadmap for Origins was released during AxieCon with plans and ideas for Season 2 in the making.

New Validators

By the end of Q3 2022, 8 new validators were added to the Ronin Network, bringing the total number of validators to 18 and making progress towards achieving their initial goal of 21 independent validators collectively securing the network. Notable mentions include Efficient Frontier, Community Gaming, Nansen and Google Cloud.

Community Gaming

As a result of the partnership with Ronin Chain and expanded platform features, Community Gaming is now able to host Axie Infinity tournaments on the Ronin Chain, with AXS or SLP prizes paid directly to a player’s linked Ronin Wallet.

At AxieCon, Community Gaming oversaw all tournament operations, including the on-site Axie: Origin BYOD Series and Axie: Origin Stadium Series. As the first seven-figure prize pool for a blockchain-based game, these tournaments represented a major milestone in Web3 gaming history.

Ronin Website

Ronin Chain released a new website that provides documentation for developers to learn about the advantages of building games on the Ronin Chain and receiving ecosystem support. The site also provides information for users to receive news on the Ronin Chain.

Nansen On-chain Data

Daily Transactions (vs Ethereum)

Overall, Ethereum remained fairly consistent in Q3 2022 with ~1m to 1.8m transactions while the Ronin Chain fluctuated between ~100k to 400k transactions. However, Ronin Chain transactions surged during the period of Sep 26 to Oct 7, peaking at ~2m transactions on Oct 4, 2022, before returning back to its daily numbers. This was likely led by the distribution of Season 0 Leadership rewards. On the other hand, Ethereum transactions count increased slightly in September, likely due to hype around The Merge that occurred on Sep 15, 2022.

Katana DEX

Katana is a decentralized exchange on Ronin. Currently, the available tokens on Katana are wETH, AXS, SLP, USDC, and RON. Through Katana DEX, Breeders can trade AXS while users can trade SLP for wETH to buy additional Axie teams with minimal fees.

SLP is a utility token used to breed Axies in the Axie ecosystem. When SLP is minted more than burnt, the value of SLP drops due to oversupply on the market. Runes and charms that expire at the end of each season were introduced in Origins to remedy the situation. This led to a huge increase in SLP burn to balance the SLP market supply. On Aug 12, 2022, there was a sudden spike in SLP minted due to the SLP migration from Axie Infinity Classic (V2) to Axie Infinity Origin (V3) as part of Phase 3. Additionally, the increase in SLP burns stayed consistent since Jul 14, 2022, likely due to the Lunacian Summer event.

Total Value Locked

Source: DefiLlama as of 30 Sep 2022

In Q3 2022, TVL increased slightly as the crypto market showed a slight upwards trend. However, the increase in TVL in Q3 2022 was higher for the Ronin Chain at 5.82% compared to Ethereum’s slight increase of 0.45%. The increase in TVL for the Ronin Chain shows a positive outlook, considering the volatile market conditions. The Slight drop in ETH TVL towards the end of Q3 2022 also coincided with The Merge that occurred on Sep 15, 2022.

Closing Thoughts

The Ronin Chain made significant developments this quarter, with the release of a new website and a new version of the Ronin Wallet Extension. Additionally, Ronin Chain prioritized the increase in network security by adding 8 new node validators to secure its network in light of the Ronin Heist in March 2022.

As Ronin was built specifically for the Axie Ecosystem, SkyMavis has been constantly updating the game to improve user gameplay and attract new players. Notable updates include Land Staking, Origin Phase 3 and Season 1. Building upon its community efforts, the Play-and-Earn game was able to further connect with its community by organizing its first AxieCon.