Recap · August 31, 2025 · 28:53
Jihoz: Crypto Gaming's Future, Building Axie Infinity and More | TG Podcast
The Signal
Sky Mavis co-founder Jeff 'Jihoz' Zirlin traces Axie Infinity from CryptoKitties-inspired experiment to a game that generated $1 billion in 2021 protocol revenue and introduced millions to onchain ownership. Ronin is now returning to Ethereum as a gaming-focused L2, replacing validator subsidies with programmatic rewards for builders and betting that crypto gaming's next capital cycle is closer than the market thinks.
Key Takeaways
- 01
Games make crypto legible
Jihoz came to crypto through CryptoKitties and built Axie around the same insight: games can make unfamiliar technology intuitive. Roughly half of Axie's players were new to crypto and 75% were new to NFTs, with especially deep adoption in the Philippines, Brazil, and Argentina.
- 02
Axie proved onchain revenue
Axie generated $1 billion in protocol revenue in 2021 through breeding and marketplace fees, while its token reached a $40 billion fully diluted valuation. Jihoz says that success helped establish the idea that a token should sit beside a real onchain business and treasury.
- 03
Ronin is becoming Ethereum's Nintendo
Moving from its own L1 to an Ethereum L2 lets Ronin outsource security and redirect tens of millions of dollars in token incentives toward games that attract actual users and activity. Its differentiation is explicit: gaming and adjacent gamified applications, not a generic blockchain pitch.
- 04
Risk-to-earn fixes the subsidy loop
Rather than paying users simply to show up, games such as Cambria and Pixels are testing poker-like pools funded mainly by players. Skillful players can win, others may lose while still buying entertainment, and developers take a small cut.
- 05
Gaming needs capital-markets fit
Jihoz believes product quality has advanced materially, but crypto products also need capital to activate their reflexive loops. Five to ten credible games now exist where Axie largely stood alone in 2021; the missing ingredient is a coordinated return of attention and liquidity.
On the Record
“Games were a great way to get people introduced to new technologies.”
“AXI made a billion dollars in protocol revenue in 2021.”
“People say, 'Oh, you ruin a game by adding money to it,' but nobody ever said that about poker.”
“The era of undifferentiated blockchains is over. Every blockchain needs to have a very clearly defined niche.”
The Breakdown
From beetles and StarCraft to CryptoKitties
Jihoz connects collecting insects and fossils with his first online game, StarCraft: both taught him how games and collections form relationships. CryptoKitties was simple and ultimately constrained by Ethereum fees, but its Discord became a breeding ground for OpenSea, Axie, Pranksy, and the earliest NFT creator culture. He joined Axie as a community contributor in 2018 and became a Sky Mavis co-founder.
The game that onboarded emerging markets
Axies are onchain pets that can be battled, collected, and bred, and were among the first gaming NFTs able to earn a token. After years of quiet building, Axie and its purpose-built Ronin chain reached millions of users. Jihoz says the product resonated most in countries with unstable currencies and weak trust in government, where people still stop him to explain how the game changed their lives.
A billion-dollar revenue experiment
Breeding fees and a 4% marketplace fee sent real revenue into Axie's treasury, producing $1 billion during 2021. The boom also exposed token-incentive abuse and the limits of a basic card game. Sky Mavis has since added spending sinks tied to evolving and customizing Axies, while the population itself has become deflationary.
Ronin comes home to Ethereum
Ronin brings $4.5 billion in lifetime NFT volume, 30 million wallet downloads, and more present onchain activity than during Axie's peak. Ethereum brings security, Wall Street attention, and a more responsive foundation. By no longer spending RON to secure its own validator set, Ronin can distribute those incentives to builders based on measurable traction through a proposed proof-of-distribution system.
From grants to measurable distribution
Jihoz and Threadguy agree that upfront grants reward applications and relationships rather than delivered results. Proof of distribution would instead route rewards programmatically to teams producing onchain volume and revenue, borrowing from Kaito's mindshare model. The available staking rewards represent tens of millions of dollars in protocol tokens.
Why money can improve a game
Axie's newer peers point toward risk-to-earn rather than open-ended emissions. Players fund a pool, compete, and receive rewards according to performance, giving the economy the same grounding that money gives poker. Jihoz thinks this works best in genres with established player economies—RuneScape-like worlds, trading-card games, and Eve Online—not hyper-optimized mobile shooters or FPS titles where tokenization adds little.
Waiting for gaming season's signal
Gaming had the greatest excess last cycle, so its reset has lasted longer, but Jihoz counts five to ten teams now showing real progress. He argues they have product-market fit without capital-markets fit: once prices and liquidity return, launches held back for 'gaming season' can arrive together. Ronin's immediate priorities are the Ethereum L2 upgrade, an Axie MMO, and helping games including Cambria, Fableborn, Moku, and Grand Arena reach scale.
Distilled from the episode transcript · Counterparty Recap Desk
