Axie Infinity has launched an automated market maker called Katana for its sidechain Ronin, and it had 25,000 people interact with it less than 10 hours into its existence, according to Jiho Zirlin, co-founder of the team that built the game.
“You can now swap, you can deposit liquidity and you can now farm with your LP [liquidity provider] tokens. We’re going to be turning on LP rewards this week,” Zirlin told The Defiant during an interview at the Axie Rally in Brooklyn, New York, following the NFT.nyc conference this week. The rewards will be in the form of RON, the new token for the Ronin sidechain.
There is already $115M in assets locked into Katana.
Zirlin explained that its community has been asking for a way to quickly move between tokens on Ronin. “Whenever we reduce friction and make things easier, we see higher growth rates,” Zirlin said.
SLP and AXS Trading
Katana will support trades between Axie’s two tokens, Smooth Love Potion (SLP), Axie Shards (AXS) as well as the stablecoin USDC and ETH (in the form of Wrapped ETH).
The new automated market maker (AMM) serves two purposes; it will give holders of Axie’s assets more flexibility, and it will be used to begin the distribution of the Ronin sidechain’s native token, RON.
The total supply will be one billion RON, of which 10% will be distributed to depositors in the AXS/ETH and SLP/ETH pools on the AMM when distributions start this week. Zirlin described it as a fair launch, only for those who already hold in-game cryptocurrencies.
“We’re in a good funding position,” Zirlin said, so they don’t see a reason to do a sale of RON, but they want it to begin circulating. When transaction fees are enabled on Ronin, they will be paid in RON.
The launch of the sidechain is what Axie team members and members of the community attributed the recent dramatic growth in Axie too. At one point this summer, it was earning more than the Ethereum network itself.
Katana is built off a fork of Uniswap v2. It will follow a similar model for transaction fees as SushiSwap: 0.3% per trade, with 0.5% going into a pool that will likely become the beginning of a Ronin treasury. The rest will be distributed pro-rata to liquidity providers in the pool that ran the trade.
With 90% of the RON tokens still undistributed, other distribution methods are on the way. Zirlin declined to discuss airdrops or other mechanisms.
“We’ll be releasing a whitepaper soon about that. We believe in lean token design,” Zirlin said. “You don’t want to lock yourself into mechanisms that might become outdated or just wrong a couple of months later.”
More DeFi Applications
More decentralized finance applications could be live on Ronin soon, Zirlin said. “Something like a money market might make sense. Something like an NFT collateralization platform,” he said.
The Axie team is in no rush to make RON widely available. “The only way to get it is to earn it.”