Katana, also known as Ronin Dex, is a recently launched decentralized exchange (DEX) on its own Ethereum sidechain, Ronin. Ronin is a blockchain based on the Ethereum Virtual Machine (EVM), and was created by Sky Mavis to support the popular play-to-earn game Axie Infinity. Ronin’s cryptocurrency, the RON token, currently trades at $2.11 per token, with a circulating supply of 148 million for a market cap of $312 million.
What Are Katana and Ronin?
The ecosystem supporting the game Axie Infinity rely on two main elements:
- Katana: Katana, or Ronin Dex, is a DEX created specifically for Ronin-based projects and tokens. It’s an application that allows people to exchange between the various ERC-20 assets within the Axie Infinity ecosystem — namely, Axie Infinity Shards (AXS), Smooth Love Potion (SLP), Wrapped Ether (WETH), and US Dollar Coin (USDC). With Katana, these assets can be exchanged within the Ronin wallet at any time and anywhere on the Ronin blockchain for a low fee.
- Ronin: When Sky Mavis, the development team behind Axie Infinity, became aware of the game’s stunted growth due to the Ethereum mainnet‘s limited scalability, the company produced a solution. The result was the EVM-based blockchain known as Ronin. The idea was to create a sidechain for developers who wanted to build games with player-owned economies, rather than centralized gaming models. Ronin was built as a way to support the emerging “digital nation” concept of the online ecosystems that are bringing together community, leisure, and economy. NFT trades, trader volume, and active game players reportedly increased significantly once Axie Infinity began to operate on Ronin. This is likely due to the availability of cheap and fast transactions and quick confirmation times.
As the largest exchange for the ecosystem’s tokens, Katana’s vision is to foster a user-friendly environment that maintains low costs for members of the Axie Infinity digital nation without relying on third-party exchanges. As an automated market maker (AMM), Katana is always available for the immediate buying and selling of tokens. This makes it an efficient exchange service and makes it easier and cheaper to use of the ecosystem’s products, like Axie.
How Does the Ronin Chain Ecosystem Work?
The aim of Ronin is to allow the large volume of microtransactions to occur with affordable fees, and near-instant transaction times. The Ronin ecosystem is made up of the following parts:
- Ronin Wallet
- Ronin Bridge
- Ronin Block Explorer
- Axie Staking
What is Ronin Wallet?
Ronin wallet is a crypto wallet which operates on the Ronin blockchain. It was developed as the official sidechain wallet for Axie Infinity, but is also compatible with other NFT games on the Ronin blockchain such as Gunship Battle, a war strategy game. Ronin wallet can be used to send and receive crypto and NFTs whilst maintaining low transaction fees. Each user will receive a certain amount of free transactions per day, calculated against the assets they own. Users can receive anything from 3 transactions (owners of 1x Normal Axie) to 350 transactions (owners of 1x Mystic Land), for free on a daily basis. 20 free transactions are also rewarded to any marketplace account upon activation, when linked with a Ronin wallet.
What is Ronin Bridge?
The Ronin bridge is a gateway that allows Axie Infinity players to transfer their ERC-20 tokens onto the Ronin network, and vice versa. The bridging process is necessary for the transfer, since Ronin is a sidechain. The Ronin bridge is easy to use, and each transaction takes around 10-15 minutes only.
What is Ronin Block Explorer?
Ronin Block Explorer is an analytics platform developed for Ronin. The online blockchain browser, built by Sky Mavis, shows the details of all transactions that have ever occurred on the blockchain network. The use of the Ronin Explorer brings transparency to the network and provides data accessibility for users.
AXS Staking and Ronin DEX
It’s possible to stake AXS tokens in order to receive AXS returns as a reward. When staking AXS, the tokens are locked up through the staking dashboard. While they remain untouched, the rewards accrue over time to allow users to earn more AXS for their input. Staking AXS also offers the users voting rights, and an influence upon the decisions that occur within the Community Treasury.
A diagram explaining the Axie Staking process (Source: Axie Infinity)
How Does Ronin Work Together with Axie Infinity?
Axie Infinity is a play-to-earn (P2E) NFT-based game where players earn tokens through collecting, breeding, raising, battling, and building kingdoms for virtual pets called Axies. Ronin was built to create a faster, more reliable network which could cater to the gaming needs of Axie Infinity. In order to play the game, users are required to purchase three “starter Axies” using the Ethereum network cryptocurrency, Ether (ETH). Players can then use the Ronin wallet to manage their assets (AXS tokens, Axie NFTs etc.), and transfer them between the Ronin and Ethereum network. Each Axie is designed as its own non-fungible token (NFT), therefore holding unique value within the ecosystem.
Cover image for Sky Mavis’s P2E game Axie Infinity (Source: Yahoo)
Axie Infinity can also be used to make real-world income by selling Axies for AXS tokens, or finding the tokens within the game. The tokens are able to be transferred into a fiat currency of the user’s choice.
How Does Katana Work?
Katana bases its services on three main features:
- Swap allows users to exchange between the various ERC-20 assets within the game by leveraging the assets shared within its liquidity pools. Owning an activated Ronin wallet will provide players with the space for this to occur easily and inexpensively within the ecosystem’s blockchain.
- Pool allows players to provide liquidity to the decentralized exchange and earn fees and rewards in return. The funds added into the pools improve the trades for users looking to swap their assets.
- Farm allows users who have earned liquidity pool tokens to stake them in exchange for RON tokens, the cryptocurrency that powers the Axie Infinity ecosystem.
Any user with a Ronin wallet can take advantage of the swap feature.
How to Farm RON Token?
However, in order to farm RON, a user must already have liquidity provider (LP) tokens in their wallet. The components of this process are as follows:
- Liquidity pool: This is a pool of funds that are locked into a smart contract. Users are then able to add funds into the pool to make it more liquid, and as a result are called liquidity providers (LPs).
- Pair tokens: This is where two equal amounts or two sides of a trading pair are added into the pool to provide more liquidity. The supported pairs on Katana are AXS/ETH, SLP/ETH, ETH/USDC, and RON/ETH.
- Rewards: Users earn trading fees (around 0.25%) from the trades that occur within the pool, proportionate to their input. Additionally, as a way to represent the value added by the user into the pool, and therefore the share of the pool owned, LP tokens are generated.
- Staking: The LP tokens generated by the added liquidity can be used to farm RON tokens by following the process within the user’s Ronin wallet.
Sky Mavis’s announcement of liquidity pools (Source: Twitter)
Who Is Behind Katana DEX?
The Katana Dex was created by Sky Mavis, a technology and games development company that focuses on decentralized applications and services. Sky Mavis was also the creator of the popular game behind the Ronin sidechain and Katana Dex, Axie Infinity. The company was founded fairly recently in 2019, and is headquartered in Ho Chi Minh City, Vietnam.
The CEO of Sky Mavis is Trung Nguyen. Nguyen is a former software engineer and a co-founder of Lozi, an e-commerce platform offering 1-hour delivery in Vietnam. He is represented on CoinDesk’s Most Influential 2021 list.
What Can Be Traded on Katana?
A few different assets can be traded within the ecosystem of Axie Infinity, each with a unique purpose in supporting both the game and the community:
- Smooth Love Potion (SLP) is one of Axie Infinity’s in-game tokens and is used for breeding Axies, the virtual pets. This token is earned by gameplay, and has no fixed supply since it’s necessary for continued gameplay.
- Axie Infinity Shards (AXS) is the governance token of Axie Infinity and an asset of the Axie community. AXS holders will be able to participate in decisions around the direction of the community and its success. The supply of AXS is capped at 270 million.
- Wrapped Ethereum (WETH) is the ERC-20 version of Ether (ETH), one of the most commonly used cryptocurrencies today.
- USD Coin (USDC) is a stablecoin that remains at a constant 1:1 ratio with the US dollar (USD).
What Is RON?
RON is the native currency of the Ronin blockchain, and is intended to eventually power all transactions that occur within the ecosystem. The token was launched alongside Katana and is planned to be used to pay gas fees and secure the network for Axie Infinity, as well as any future games and products hosted on the chain.
The RON token’s primary purpose is to ensure that the Ronin community will always hold ownership of Ronin. RON tokens have been launched through liquidity pools on Katana, as previously mentioned.
RON Price Analysis
At its launch alongside Katana in late January 2022, the RON price went up to $3.74 before falling with the Bitcoin (BTC) trend over the course of the month. The token eventually reached a low of $1.90 at the start of February 2022.
Throughout February, RON token’s price hovered around $2, reaching an all-time low of $1.80 towards the end of the month before levelling out at its current value of $2.11. Since the coin was just released roughly one month ago, there’s not enough historical data to inform an accurate prediction for its future.
RON price performance from January to February 2022 (Source: CoinMarketCap)
What Is the Future of Ronin?
Since the time RON was launched, some aspects of the blockchain have been adjusted. Prior to the launch, users were offered the advantage of 100 free transactions per day, but moving forward, gas fees will be paid in RON. However, Sky Mavis has generally held onto its low fee vision by offering gas fee discounts for NFT holders and one-off advantages to first-time users.
Along with Katana and RON, Sky Mavis announced an application called Scatter. Scatter can be used to send RON to multiple wallets at the same time to help with ease of distribution regarding certain aspects of Axie Infinity. This is another feature that’s intended to provide a user-friendly model to the community.
Generally, the Ronin community tends to focus on freedom, rights and collaboration within the industry, and puts out a positive message for the future. Ronin hopes to co-create with NFT game developers in the future in order to form a broad-based gaming ecosystem that shares assets and concepts across many communities. With a builder incentive program coming up and with frequent updates for the game itself, the community offers plenty of events to look forward to.