Unchained - Unconfirmed: How Axie Infinity Boosted Revenue 400%+ in 30 Days - Ep.253

Episode Date: July 9, 2021

Aleksander Larsen, co-founder and COO of Axie Infinity, discusses Axie Infinity’s recent growth, which has seen the platform do 20X the volume of NBA Top Shot in recent days. Show highlights: what is Axie Infinity? why there has been such an uptick in network activity and profitability how the Axie Infinity team came together  how Axie Infinity uses blockchain technology within its game how Axie Infinity leverages the ‘play to earn’ mania sweeping across Web3 applications what problems may arise as Axie Infinity starts to decentralize  how Axie Infinity is attempting to lower the expensive barrier to entry that comes with blockchain-based games why the Philippines is going crazy for Axie Infinity why building out a sidechain has been such a positive development for the company the two ways Axie Ininity makes money what’s next for Axie Infinity   Thank you to our sponsors! Crypto.com: https://crypto.onelink.me/J9Lg/unchainedcardearnfeb2021  Oasis: https://oasisprotocol.org  NEAR: https://near.org    Episode Links   Aleksander Larsen: https://twitter.com/Psycheout86 Axie Infinity: https://axieinfinity.com/    Content Philippines: https://www.cnbc.com/2021/05/14/people-in-philippines-earn-cryptocurrency-playing-nft-video-game-axie-infinity.html Sidechain: https://medium.com/axie-infinity/introducing-ronin-axie-infinitys-ethereum-sidechain-8745e31eaef1 The Game That Helps Pay Bills: https://startups.my/the-game-that-helps-pay-bills-axie-infinity/ CoinDesk write up: https://www.coindesk.com/axie-infinity-token-quadruples-nfts Play-to-earn: https://metaportal.substack.com/p/the-memetic-power-of-play-to-earn Unchained Axie Infinity write-up: https://unchainedpodcast.com/this-nft-marketplace-does-20x-the-volume-of-nba-top-shot/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unconfirmed, the show that reveals how the marketing names and crypto are reacting to the week's top headlines and can see insights keep on what they see on the horizon. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago, and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. This is the July 9th, 2021 episode of Unconfirmed. My book, The Cryptopians, Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Crates is available for pre-order. So you can go to Amazon, Barnes & Noble, Bookshop.org, or any of your favorite bookstores. You can go to Bitley slash Cryptopians, which is B-I-T-L-Y-S-C-R-Y-P-T-O-I-A-N-S to purchase. MIR is an open-source platform that accelerates the development of decentralized applications, overcoming high fees and slow speeds with its fast, scalable, low-cost, and climate-neutral blockchain protocol. Learn more at N-E-A-R-D-R-G. The OASIS Network is a privacy-enabled blockchain platform for open finance and a new data economy.

Start building your next idea on the Oasis Network. The crypto.com app pays you up to 8.5% interest on your Bitcoin. Get $25 when you download the crypto.com app with code Laura. The link is in the description. Today's guest is Alexander Larson, co-founder and CEO of AXA Infinity. Welcome, Alexander. Thanks, Laura. Happy to be here.

Axi Infinity is having quite the moment. As of Wednesday night, it had done about 28 times the trading volume of NBA Top Shot and the price of both the Axi Infinity token and the small love potion token. They're both up quite a lot in the last week. But before we dive into all that, let's just make sure all the listeners have a baseline level of knowledge. Tell us what is Axi Infinity. Sure, Laura. So at a very high level, Axi Infinity is a digital pet game universe where you have cute game characters called Axis that can be used across various games.

Some of the games are created by us. And some of the games in the future will be created by the community and other developers. And so why has there been such an uptick in activity on Axi Infinity as of late? Yeah, it's a combination of, I think, just actually hard work over several years. You know, we've been building since very early 2018, been tackling a lot of scaling issues. And, you know, finding product market fit over time. And then some of that was, you know, being hindered because we were using Ethereum as the, as the base layer for all the asset ownership.

So part of the game was basically unavailable for me. many, many players. And now, over the past, you know, 60 days, we've seen tremendous growth because we changed a large part of our infrastructure to our own side chain to Ethereum, which is called Ronet. And that's pretty much where the growth is coming from, because we had a lot of, you know, pent-up demand from many, many players who were very excited to play the game, but just simply couldn't because the barriers of entry were too high. And they're still really high, but there was also, you know, many, many, like a lot of fees that was, that were being. being extracted by Ethereum, especially as, you know, we were competing with Defi and the,

and I guess, in DeFi summer over the past couple of, uh, 12 months or so. And, and other NFTs. Yeah. Yeah. Interesting thing, but when NFT drops are happening, that also spikes the, the, the, the, the, the, the, the, the, you know, the gas price really high. Um, block space is such a precious commodity. And I think that's something that, that we as a team have, have experienced, you know, very in depth and, um, has influenced our decision to it.

to move down this path. I love Axe Infinity's origin story. Can you tell us how you all got started? Yeah, you know, it's pretty interesting because we gathered or we met each other first playing Cryptokidies early in or late in 2017. And that's really when we started to understand the power of NFTs. And I was convinced that it's probably going to change the way the games are being played forever. I mean, we didn't have massive experience in creating games.

One of our co-founders have been creating games since he was younger, but nothing, you know, very in-depth. We kind of came into it a bit naively, had, you know, an initial sale of the Axi assets. And then we kind of kept learning and learning along the way. Shipped a few games. Some maybe weren't amazing. But now, you know, a lot of people are understanding, you know, where the value is coming from. So yeah, we just gathered, play that game, and then we figured that maybe CryptoKitties had a little bit of a different idea of how this should turn out. And I think they also understood that there are many scaling issues.

And then we just decided to double down on that one thing rather than focusing on many, many, I would say different products. So everything inside the same universe and that's really how it happened. So I understand there's kind of like a crypto-kitties element to X-Infinity in the sense that you can breed these pets. So can you describe how Axi-N-Penity uses blockchain technology and NFTs in a way that adds to the game and then separates it from typical video games? Yeah, so I think, you know, the way we can go down to kind of game mechanics, which is, you know, the breeding, which is happening on chain. where when you are breeding two axes, the genes are mixed and then you, and then we have an algorithm which then decides what's being,

like the child, how that will look like. And that also consumes some, some ERC20 tokens on the Roman side chain. I think that's like more on that technical side, but more on the high level side and what are the benefits of actually, you know, building on blockchain technology. I mean, in our opinion,

it's actually related to the transparency of players can actually see what's happening. ideally, you know, it would be all fully decentralized, but I think what we understood is that it's a long way out until you can get there. So, you know, transparency is a big part of it and, you know, the ability for people to own their own game assets and actually, you know, withdraw them or use them in many different things if that's really what they want to. And in our opinion, I kind of, it's related to actually owning your digital identity. Like game assets is such a natural thing for many, many players. And it's the natural, it's the, it's pretty much where people start there. digital journey. So it only makes sense that that's also what they would own and then be able to bring with them to many different things. Even if they can't use that, it's just the point of that they have it. And that's a part of your history and identity. And so earlier when you were

saying that you expected that others would also develop games on top, like presumably that's where they would take these assets to? Yeah. So we actually started seeing this happening very early in 2018. Because when we were on Ethereum, we had an API. People were able to tap into, you know, all the, uh, the art assets of axes and they started making something like flappy axi, which is like a flappy bird clone pretty much where you sign in using Web3. And then you can fly around with your Axi. That was like the very first proof of concept of a game that's not created by the main developers, but, but by someone else. And that really, you know, made us understand the, the potential for NFTs in the long term that they are the perfect

vehicle for, you know, creating these, these larger game universes. And, and then eventually what, what could become like a meta universe where, you know, all the assets of many, many different games are being pulled into. But that's, I think, maybe a decade ahead. So a lot is also made of this play-to-earn concept in X-E-Infinity. Can you explain, you know, what that is and also why that's so powerful. Play to earn is an interesting, interesting concept because a lot of, I guess, more traditional game developers and, you know, skeptics, they don't really understand how it's possible that people can actually play a game to make money. But everything is actually tied into the way the economy works. And to understand that first, you need to, like, our thesis is that games are

networks. And if you can, you know, reward players for contribution to their network, that that basically means that you can do yield farming inside games. As long as there is, like, the yield that's being generated by these players, that has a specific use case inside the game. So for us, you know, the smooth love potion, for example, that's like a core piece of how the play to earn economy works. It's not something that we've ever sold as a company. The only way you can get that smooth love potion or small love potion, as it used to be called, is by actually playing the game. And that part, like that, it's basically proof of work or proof of play, because you play the game and you are rewarded by this token, which then again is required to breed for a new

axi. And if there isn't any, like if nobody's playing in the game, there will not be produced any new axes. So we are like, we players are, I would say, they see that, that we have this game, they want some axes. And then there was an initial, you know, sale of axes where they were able to get their first ones. So this kind of SLP production could start. And I think that's, you know, where we come from. And the reason why we can reward players is, once again, like it comes from that network effect thing that we're looking for. Because each person, in our opinion,

they have an unlimited potential to add value to any kind of network. They tell their friends. They can create content. They create their streamers. They do all of these things that, you know, connects humans together. And that's why we can afford to reward them. And then there's, you know, another challenge for games. I think it's the same thing.

It's not the same thing as mining crypto, but where you have, you know, people who are not abusing per se, but they, in the game sense, they are botting. In crypto sense, they might be using, you know, Asics miners or things that are way too efficient or kind of, it changes the rules of the game, so to say. So we are, you know, combating that a little bit and that kind of goes against the decentralized ethos. But for us, I mean, this is how we have to, you know, build a network. You can't just ship, like, it's not finished by just like shipping it.

like it requires a lot of iteration. And I think that's, you know, how we found that that play to earn kind of makes sense for us. And I guess as a final point, I would say that it's related to also how we view players. Because in a traditional game studio, your goal as a game studio is always to extract the maximum amount of value from the players. In Axi, we actually delayed the gratification pretty heavily. So we, you know, had these smaller early sales where, you know, we did primary sales. But then rather than, I guess, diluting the NFTs by, you know, reissuing more and more and more, you know, we kept just adding more and more value

to the NFTs that we issued. And that is a very kind of different way of looking at it because we believe in the long tail of the ecosystem so that we can capture value from a protocol or like a, like a rather game perspective if there is a long tail. Like, and that's really when, you know, the marketplace fees started kick in. When people start using the product because they love it, because they actually want to play the game. And that I think is the key here,

because you need to make something that people actually love to play and that they want to hold on to these assets. So in a moment, we're going to discuss more about some of these issues. But first a quick word from the sponsors who make this show possible. Did you know nearly $338 million worth of the NFTs were sent last year? And in 2021, that number is growing faster than ever. If you're looking to make your first NFT, check out NIR's fast, scalable, low-cost, open-source platform. NIR is investing 80 million NIR tokens in community-led projects over the course of five years

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Its unique privacy features can not only redefine defy, but also create a new type of digital asset called tokenized data that can enable users to take control of the data they generate and earn rewards for staking it with applications, creating the first ever responsible data economy. Back to my conversation with Alexander Larson. So going back to that bot issue that you mentioned, I saw people were criticizing that you had put the composh on that. And I wondered, is that something that you feel you would just do now in this early

stage while you're kind of more centralized, or do you imagine that that would even happen later on? There's an ongoing discussion about, you know, how, how decentralized the game should be. And you have the, you know, the purists that believe that all rules should be on chain. And what's possible from, from, you know, a bot perspective, if bots can use it, then they should be allowed to use it. And it kind of goes a little bit against, you know, the network thing that we are aiming for because we need humans to actually care about the product. And if only bots are there, then, I mean, it's only fun for the people who own the bots and not real humans. So we're very confident in our approach right now, even though it isn't decentralized per se, because the game as a whole is like there, there's so many centralized pieces of the game that we can tweak here and there because it's not, you know, ready to be released into the wild as a decentralized product.

I'm not going to say that we're ever going to get there because it has never been created before. in a sustainable way, where you can actually do this, can actually have a release of tokens without some kind of butters abusing the principles of the rules of the game that you said. But I mean, we do have an approach where we want to turn Axi into more of a decentralized organization. I don't like the word Dow per se because I think like an autonomous organization is also very far-fetched.

But like having a decentralized organization where we can have token holders who have a stake in the ecosystem, not only us, you know, Sky Mavis, the team behind the main game, but then we have other, you know, major stakeholders who have a vested interest in that this ecosystem is working as it should. So I think actually we're treading new grounds here. He's very easy to criticize. Oh, these guys aren't doing it in a super decentralized way.

I mean, I would advise to take a step back and, you know, see that. But we're also experimenting here. And we have to be very upfront about these are the things that we can change. And we try to do that as much as we can. but those who feel like this is like goes against their principles, then yeah, probably actually it's not the place to be right now. And you also talked about how the price for the characters,

I believe has, you know, just really gone up. So, you know, at this moment for people to kind of enter the game, it's quite cost prohibitive. So how are they starting with the game? As in like basic economic. It's all driven by, you know, supply and demand. And we, I guess in Axi, we kind of control the invisible hand because we can because we can increase or decrease the production cost of these axes so that we ensure

that there is like a healthy inflation of newly Axis being produced. Because we do believe that each Axi is a special character. And what the price should be for an Axi is not like 100% set yet because we are, you know, seeing very heavy growth spikes because nobody has, I guess, ever seen a game like Axi before. So suddenly you get a lot of people who are super excited. But one of the ways that we can combat this or to kind of make it a little bit more democratic is by letting other players, you know, borrow the axes of that other players own. So right now this has been done, you know, purely player driven. They've started, you know, in-game, I would say scholarships or guild systems,

where that, where, where if you're a player, you don't own any action. You can go to another player and borrow from them. But that's, you know, very, it's difficult to set it up. So right now, you know, we're working on an internal tool to make it easier for players to, you know, let others borrow the axes that they own. And I think I'm very excited to see, to see that happen. And but what you're referring to is the Yield Guild was that. Yeah, Yield is one of the, yeah. Yield is one of the, you know, companies that sprung out of AXE.

Super interesting. I know Gabby very well. He's one of the co-founders there. So, I mean, the thing is this blockchain game ecosystem has been slowly brewing in the back, not seeing much of the spotlights compared to defy. But it takes a long time to build a sustainable ecosystem within games. And I would say, you know, actually is probably a product cycle ahead of many others, because, you know, we've been just doing it over, like for the same thing over and over again

for many, many years. And in the end, I guess if you just keep doing things for long enough time, as long as it's not the worst thing ever, then probably people are going to start noticing it. So Yield Guild Guild, yeah, it's super exciting to see how they are, how much attraction they are finding too. I think they have over 1,500 employees or scholars who are being hired by them. And they're also producing a whole lot of yield, so to say,

for their future token holders, I think they're planning to do. And Axi Infinity is also especially popular in the Philippines. Why is that? Yeah, I think it's related to the go-to-market strategy that we had when we were, when we were experimenting a little bit. We quickly found that the Philippines is a great test market for games because there's a high level of English knowledge there and the cost of labor is quite cheap. So if you can then empower a couple of influencers in the right,

in the right place, then they will quickly sort of say spread the word about this opportunity. And we saw that happen in like a small village outside, wherever I see, I believe it's called. It's even a documentary about AXI Infinity, how it started there, where people are quitting their normal jobs to play AXI to farm there. I think that's incredibly powerful. The interesting thing is in the Philippines right now, I think SLP and the Axi game has quite a meaningful impact on the GDP and the growth of that entire economy, which is a interesting thing. crazy. And it's not something that I think we had initially imagined, at least that it wouldn't

happen as fast as it suddenly did. But yeah, when people realize that something new and exciting is happening, that they can actually use their cryptos for something inside the game, I think that's really when things started to blow up. Yeah, there's at least one multi-generational family that was playing it as a way to earn money during the pandemic. Can you talk a little bit about that story? I'm not sure if I recall. Oh, yeah, there is an older, I guess, a grandparent who learned it from their children. And he was playing, I think, while he was at work.

And that was also featured in the play to earn documentary. So incredibly strong story there. I think he wrote that he was praying that Axi Infinity would never go away. And sometimes you almost get emotional when you read some of these things because it's so crazy. But from a team perspective, we try to keep a little bit of a distance there and stay focused because if not, then you, I mean, the responsibility just kind of piles on and on and on and on in the end. Because suddenly a lot of people are, you know, they might depend on this for their living, which is, which is pretty, pretty wild. Yeah. And I think someone on your team noticed

that there were like multiple players at the same IP address. And they investigated that because they thought it looked fishy. And then somebody took a little video and it was like, yeah, all these different members of the family that were all playing. Yeah. And so let's also now just touch on the side chain that you mentioned earlier, Ronan. What technology does it use? And now that you've implemented it, how has it affected?

play on Axi Infinity. Yeah, so, you know, we came up Axi as Ethereum maximalists, I would say. I mean, we love Ethereum. We think that probably Ethereum would be the, will be the foundation of Web 3 if it isn't already. So the story goes that we were on Ethereum. We were looking for various scaling solutions even early on in 2019. And that's when we deployed a large part of our infrastructure on the Lume network. which at the time was being, you know, pitched as the end or the deal of scaling solutions.

It was using plasma. Everything was going to be great until it wasn't. So they pivoted into something else that wasn't game related at all. And that, you know, not only Axi, but also so rare had deployed a large part of their infrastructure there. And so rare is another, you know, very successful, I would say a DAP, maybe not as known in the crypto space, but I think the valuation for that company is something like $3.6 billion. They were also using Loom Network at the time.

And when they pivoted, we realized that we need to take a step back and, you know, do more research into it. And then it turned out that not that many scaling solutions were really where we needed them to be. There was a lot of promises in terms of, you know, optimism, CKSings and even StarCware seems very promising. But, you know, none of them were production ready and especially not for NFTs. So then we just decided that, okay, I mean, we've been building on Ethereum for so long. We know the EVM. We're just going to build our own side chain to Ethereum, make it more centralized so that it fits our needs specifically, like only for Axi-related stuff, only NFTs.

And the comparison that I would take is, you know, we believe that we're in the server eras of blockchain technology. And when I say that, I mean, back in when the internet was scaling, was the same thing that was happening, you know, the most successful applications or website, they needed to have their own, you know, backbone in the basement to be able to handle all of the, all of the traction that they were getting. And that's pretty much the choice that we made. Okay, so we're building using the Ethereum virtual machine, building a side chain that it has to be connected to Ethereum and then we can take a step back in terms of decentralization for now, using

POA at first, and then it's going to be POS once we release the Rolden token to the chain. And then we have a couple of validators, some of our closest partners, and eventually we might open it up. But everything that we do with Ronan, it comes from, you know, it's by necessity. It's not something that we necessarily wanted to create. And I'm not sure if it's going to be the end all, be all of scaling solutions. Our approach is very simple. We want to make a holistic end package for the user, for the consumer who wants to experience. experience blockchain technology in an easy way.

And if you can then combine, like you can take, if you build using the EVM, you can take things that exist on Ethereum like the Dexas that are there and all these other cool defy things and put onto your own side chain eventually. And any kind of innovation that's also happening on the Ronin EVM, will that also benefit the Ethereum main network. So that's our belief. And that's why we chose to build using the EVM. And how does Axi Infinity?

make its money. So Axi Infinity has currently two ways to earn revenue. A part of that is whenever an Axi is being bred or becomes produced by the players, there is that smooth or small love potion part that I mentioned, but there's also a developer fee that we take. Right now, that developer fee is about $40 per Axi that's being bred because it's paid in our AXS, like native token and then, you know, that gets put into the, into our treasury. And on the other side, we have our own, you know, native marketplace where we take a 4.25% fee. And the interesting part here is when we look at revenue streams, back in January, we had about 100k in total revenue across the board. And then, and then in April it was about 600k. In May, 3 million. And then June,

12 million and now in July it's been eight days and we've already made something like 13 million. So this is going pretty crazy exponential and from a developer's perspective it's of course cool but I mean it's going into the treasury so it's not like I'm putting all that money in my pocket. I mean we we

have our belief in the tokenomics have been developed by Delphi Digital or in collaboration with them very early. We're one of the first projects that they worked with. Oh, wow. Great. Yeah, Telfi Digital is a great organization. All right. Well, what's next for Axi Infinity? The current game, I think this is a little bit less known by some players. But, you know, the current game that we have, it was released into the market about 18 months ago. So early on in 2020. Over that time, we've been, you know, polishing and looking a little bit into that. And then we've been, like, developing at the same time a new, like, battle version, which then we then was. will be like parts free to play, newer game mechanics, better graphics.

So I would say like an upgraded version of the battle game that we have, just primed for even more mainstream adoption so that we can distribute the game on traditional app stores like Epic Games, Google Play and the app store. For now, there is no way to even get started with Axi unless you go directly to us. So I'm incredibly excited, you know, to finally open it up a little bit more. And, you know, the comparison I'd like to say is right now, Axi is like an island without a bridge to it. Everyone has to swim to get there.

It's super hard. You need to download our wallet and all that stuff. And then eventually it will get that bridge. So I think that's really where we are, where we're headed. Just making it easier for players to play the new battle game. And then eventually, you know, releasing the decks that we have on the Roland side chain and then land gameplay eventually. And so the culmination of all this is going to be an Axi, you know,

virtual world. And I think that's the interesting part of how we are developing. Actually, is that, you know, when you see something like DeCentraland or the sandbox or even Somnium space, the end goal for them is also to make their product into a virtual world, but they don't have the content piece. Our belief is that to make something into a virtual world, it's much easier to go from a place where you have users who actually love your product to actually play, play with it every day, because then you can bring the users from that one game into anything else. that you create. So users are power and that's, you know, basically what we understood when we're making a consumer facing product, as I think should be pretty natural.

Great. Well, we'll have all that to look forward to. I'm really excited to see where all this goes. And it's been such a pleasure talking to you. Thank you so much for coming on Unconfirmed. Thank you for having me. Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this short break. With over 10 million users, crypto.com is the easiest place to buy and sell over 90 cryptocurrencies. Grow your crypto with crypto.com earn, which pays up to 8.5% interest on your Bitcoin and 14% interest on your stable coins. When it's time to spend your crypto, nothing beats the crypto.com visa card, which pays you up to 8% back instantly and gives you 100% rebates for your Netflix, Spotify, and Amazon Prime

subscriptions. Download the crypto.com app now and get $25.com. by using the code Laura. The link is in the description. Thanks for tuning into this week's news recap. First headline. UK bank customers are being blocked from Binance. On Monday, Barclays announced that its customers would no longer be able to use credit or debit cards to make payments to Binance. The UK-based bank sent a notice saying, quote, as you've made a payment to Binance this year, we wanted to let you know that we're stopping payments made by credit slash debit card to them until further notice. This is to help keep your money safe.

On Thursday, Spanish banking giant Banco Santander announced a similar move by blocking payments to finance for UK customers. A spokesperson explained, quote, in recent months, we have seen a large increase in UK customers becoming the victims of cryptocurrency fraud. Keeping our customers safe is a top priority. Additionally, according to the Financial Times, finance has temporarily suspended payments from the single euro payments area or SEPA, the EU's payment network. finance described the suspension as, quote, beyond our control, instead it is, quote, working hard to find a solution with our partners. The company expects to have SEPA payments live within seven days. For now, customers in 36 countries cannot use this system to deposit cash on a finance, though withdrawals are still allowed. Binance's regulatory struggles come after a June announcement from the UK Financial Conduct Authority, or FCA, which said Binance should not be allowed to operate within the UK. likely as the result of numerous actions adverse to finance across several jurisdictions. On Thursday, CEO Chang Peng Zhao published a blog outlining the company's plan for regulation

and development as the crypto industry grows. Zhao called for clear regulations and express plans to grow Binance's international compliance team, expand compliance partnerships with companies like CipherT trace, which disclosure is a former sponsor of my shows, and to localize business operations. According to CNBC, Binance's struggles have boosted rival exchanges. For example, BitStamp has seen its customer base grow 138% since the FCA's notice, and Cracken and Gemini have seen an uptick in UK signups over the past few weeks.

Next headline, R-Eval ransomware attackers demand $70 million in Bitcoin. Last Friday, Ransomware Cybercrime Syndicate, R-Eval, executed an attack that impacted the systems of at least 200 companies in the U.S. On Sunday, Our Evil published a statement declaring, quote, we launched an attack on managed service providers. More than a million systems were infected. If anyone wants to negotiate about universal decryptor,

our price is $70 million in Bitcoin. Once paid, the group would publish a decryptor in less than an hour that would decrypt the victim's files. The hackers initially broke in Kasea, a Miami-based IT firm, and used that access to breach Kaseya's client information, disrupting the systems of hundreds of companies. John Hammond, a security researcher at Huntress, called Our Evil's move, quote, a colossal and devastating supply chain attack, an increasingly prevalent form of hacking that involves taking over one piece of software to compromise hundreds slash thousands of computers. Our Evil is also connected to the attacks and subsequent Bitcoin Ransoms of Colonial Pipeline and JPS Holdings.

The two companies ended up paying ransoms of $5 million and $11 million in Bitcoin, respectively. For now, no ransom has been paid or reported, and President Biden has directed U.S. intelligence to investigate the situation. Next headline. Circle to go public. Circle is going public via a SPAC transaction valuing the Crypto Financial Services Company at $4.5 billion. Once closed, Circle will trade on the New York Stock Exchange under the ticker CRCL. The company's announcement comes after raising over $1.1 billion in capital, including a $440 million round last month, one of the largest raises in crypto history. The company is going public just as its stable coin, USDC, is at an all-time high of market cap of $26 billion. Masari's Ryan Watkins in a Monday tweet storm made a case for USC as, quote, the dominant stable coin on Ethereum in large part due to its growing role in defy.

Watkins says, quote, over 50% of the USDA supply now sits in smart contracts and has become the preferred staple coin in D5 for now. Next headline, Ethereum's London Hard Fork set for August 4th. Ethereum's much anticipated London Hard Fork is expected to launch on August 4th at block number $12,965,000. London features five Ethereum improvement proposals that aim to make the blockchain more efficient while preparing the network for Ethereum 2.0, which will replace proof of work with proof of stake. Notably, London introduces EIP 1559, which introduces a new fee structure for transactions.

On Unchained, as I recently discussed with Taylor Monaghan and Tim Bako, EIP 1559 should make gas prices easier to determine and could potentially make ether a deflationary asset, since part of every fee on Ethereum will be burned. EIP 3554 is also highly anticipated. as it effectively freezes Ethereum's mining difficulty until the blockchain is ready to shift to proof of stake. Next headline. The Bitcoin Mining Council claims half of Bitcoin's electricity usage is sustainable. According to a statement from the Bitcoin Mining Council, 56% of the electricity used to mine Bitcoin came from sustainable sources during quarter two of 2021. The statistics stem from a voluntary survey of the Bitcoin network, which the BMC plans to initiate,

and publish every quarter. The BMC claims to have collected information from 32% of the current Bitcoin Network. Survey participants say they currently use a 67% sustainable power mix, and the Council estimates that this means the global industry's sustainable energy mix is at 56%. However, as the Blocks Larry Sermak debated the merits of the survey, asking on Twitter, how can any conclusions be made from the survey if more than 50% of hash rate went offline and is relocated? at the moment, which can easily take months. Speaking of hash rate, on Saturday, Bitcoin's mining difficulty dove 28% at Block 689-471, marking the largest decrease in mining difficulty ever. The adjustment is the third straight decline in mining

difficulty, which has not occurred since 2018. With mining difficulty plunging, mining profitability should increase and already has in some cases. As metrics from BitUDA, a digital asset financial services platform show. Revenue has potentially almost doubled. Accordingly, June results from Marathon Digital, a Las Vegas-based mining firm, show the miner produced 17% more Bitcoin than in May, bringing in 256.6.3rdquins, Marathon's Q2, Hall of 654 Bitcoins, is more than three times its production from Q1. Next headline. Tesla could face $100 million in Bitcoin impairment. According to CNBC's, Kate Rooney, Tesla may have to list its Bitcoin holdings at a loss due to how the SEC requires companies to report intangible assets. When news of Tesla's purchase of $1.5 billion in Bitcoin was

announced in February of this year, Bitcoin traded at $38,000. In Q2, Bitcoin fell as low as $31,000, the number Tesla must report on its balance sheet. Like any intangible asset, Bitcoin must be listed as an impairment charge if the price dips below the initial value it was purchased at. While Tesla has not published its Bitcoin purchase price, Rooney explains that analysts expect to see a loss between $25 million and $100 million in Tesla's next quarterly report. She added, quote, The big thing crypto and analyst communities are watching.

Did Tesla sell any Bitcoin in the quarter to make up for some of those losses? Per SEC guidelines, Tesla could not work up the value of its Bitcoin. Of course, Tesla sold 10% of its Bitcoin in Q1, a sale made public when Bitcoin was priced for, around $50,000. Next headline. Defy Summer Part 2, Institutions Welcome. Two Defi Protocols set to release in an institutional product saw their tokens jump this

week. AVE increased by about 25% after announcing its AVE Pro platform would launch later in July. AVEPRO is a permission version of AVE built for institutions. Through partnership with fireblocks, AVEPRO will require institutional investors to pass KYC verification to interact with the DFI. protocol. Comp also jumped about 25% following an institutional defy announcement of its own. Last week, Compound Labs, the company behind Compop announced a new company, Compound Treasury. In collaboration with fireblocks and circle, Compound Treasury will allow institutional investors to access juicy

defy yields without directly interacting at a protocol level. The newly minted institutional defy company is offering a guaranteed interest rate of 4%. In addition to Ave and Comp, many of the best performing tokens came out of the defy sector this week, including over the past seven days, synthetics being up about 45% and uniswap up also 15%. Next headline, Wyoming welcomes first legalized Dow into the U.S. On July 1st, the American crypto Fed Dow was legally recognized in the state of Wyoming, becoming the first decentralized autonomous organization to be recognized in the United States. The recognition arrives after Wyoming passed a bill in March, allowing Dow's to officially register

and obtain the same rights as LLCs within the state. The American Crypto Fed Dow is built on the EO's blockchain and plans to create a fee-free monetary system via its algorithmic stablecoin, DuCott. The Protocol's governance token, Locke, will be minted according to the token definitions and SEC Commissioner Hester Persis safe harbor proposal, which would grant projects a three-year grace period to decentralize before coming under U.S. securities law. Time for fun bits. Zero Contact to be first feature film NFT. Two-time Oscar winner Anthony Hopkins' latest film, Zero Contact,

will be released on Vuella's NFT viewing platform, marking possibly the first time a feature-length movie will be minted and sold as an NFT. VELE will most likely have four to five different NFT drops in July and August regarding Zero Contact. While the NFT distribution tactic is bold, it sounds like the entire film is a bit out there. Quote,

everything about this film is unconventional from the way we shot at using Zoom and remote production to its distribution, says Rick Dougdale, producer and director of Enderby, the company behind Zero Contact. All right, thanks for tuning in

to learn more about Alexander and AXI Infinity. Be sure to check the links in the show notes. Heads up, everyone. The Unchained newsletter has switched from a weekly news recap to a daily email. Each morning, you'll get

four to five, quick headlines, a crypto meme or two, and a few recommended reads. Head to Unchainedpodcast.com, and the sign-up from the newsletter is right on the homepage. You can also find the link in my Twitter bio. Unconfirmed is produced by me, Laura Shin, with help from Anthony Yun, Mark Murdoch, and Daniel Ness. Thanks for listening.