Update on August 31st, 2022, 6:45 PM:

At 6:20 PM, August 31st, 2022, Axie Infinity co-founder Jeff Zirlin, aka, Jiho, made an official comment that the mystery wallet is the Binance Ronin Gateway Contract, meaning, according to Zirlin, that it is part of the official infrastructure of Axie Infinity.

Original story below:

What if one wallet was holding half the token supply of one of the biggest crypto gaming economies in the world?

I have some news for you. That’s not a catchy headline. It's a developing story.

In this article, I’m going to be taking you along for the ride as I investigate the mysterious 22,000,000,100 Smooth Love Potion (SLP) wallet.

Key Points:

• Axie Infinity is one of the largest crypto games in the world.

• Players earn a crypto token called SLP by playing.

• It appears one wallet has been accumulating billions of SLP.

• This wallet controls over half the total supply of in-game token SLP.

• There are just over 43 Billion SLP in circulation.

• This mysterious whale wallet has over 22 Billion SLP as of writing.

• The wallet doesn’t appear to be a Sky Mavis wallet (creator of Axie Infinity).

• Sky Mavis has made no comment when inquiries were made.

• This whale could exert control over the in-game economy if it wanted to.

• Thousands of people’s livelihoods are linked to this token.

• This article traces my efforts to locate the source of the whale.

  
  

It’s an ordinary Thursday morning. I wake up unnaturally early, grab my phone and start scrolling Twitter. Then, something stops me.

Jiho, AKA Jeffrey Zirlin, growth lead of Axie Infinity is Tweeting about Axie Economics (you don’t need to read or understand the tweet):

When a user tweet replies:

I stop in my tracks. What? One wallet is holding half the supply of Smooth Love Potion (SLP)?

No ordinary Thursday anymore.

My first thoughts are, that this must be above board.

That it’s the wallet Sky Mavis uses to mint and distribute SLP to players.

I’m soon proven wrong, and the mystery deepens.

I log onto the Ronin Block Explorer and find the wallet in the user’s tweet reply:

ronin:030e37ddd7df1b43db172b23916d523f1599c6cb.

Going forward, I’ll refer to this mystery wallet as “Whale AX”.

Indeed, Whale AX is holding 22 Billion, one hundred Smooth Love Potion. That’s about half the total supply of the token. A token whose economics influences many thousands of gamers.

I want to spit out my coffee when I dig a bit deeper.

Deeper down the Axieverse hole.

I dive into the block explorer. I'm wondering if these tokens were minted into the wallet by Sky Mavis. Sky Mavis is the company that makes Axie Infinity and distributes SLP.

It seems, they’re not.

What makes the mystery deeper is where the tokens seem to be coming from Binance.

Normally, coins coming from Binance are purchased on the exchange. Or held there in a custodial wallet.

Billions of SLP coins have been sent from the Ronin Binance Wallet into Whale AX's anonymous wallet. This strikes me as odd.

Did Whale AX spend hundreds of millions of dollars buying SLP?

Or, did this mysterious entity already have access to the tokens and was storing them on Binance?

Perhaps, something else is happening.

Examples of these massive transactions

I’m pasting transaction screenshots to show what I mean.

Let’s say the Whale AX transaction above of 5,968,600,115 was a purchase (in theory).

Based on the opening price of SLP on November 1st, 2021 (the day of the transfer) of 7.1827 cents (according to Yahoo Finance), someone would have spent about $428,706,640.46 to buy those coins on that day.

Something doesn’t seem to add up.

Did a whale really spend that much on SLP in November?

For reference, at the current price (as of writing) of approximately $0.003989 USD per SLP, that same purchase would buy over 107,295,061,488 SLP: over twice the entire max supply of all SLP.

And just to explain: every single SLP was minted by a player playing the game, and at this point, it’s actually quite difficult to mint SLP.

Just for fun, I did some napkin calculations, and in my experience, it’s realistic that an average player with a half-decent team could win about 30 SLP per day playing the game.

This is based on the difficulty to mint in the last season of gameplay.

So, that amount of SLP (107 billion) would take one player 3.576 billion years to mint, if they didn’t take any days off.

Now, that was just one transaction, that accounts for a little under six billion coins in November. The wallet currently holds almost four times as much as that one transaction.

So, what is this wallet??

I initially figured this wallet was part of some system Axie Infinity had to automatically distribute SLP to players who earned it.

However, this doesn't seem to be true. If that were the case, there would be tens of thousands if not millions of transactions.

This wallet has a mere 3 pages of them. Most of them whale-sized.

Then, I saw “Binance” as the sender or recipient for many transactions. So I thought, this must be Binance’s wallet. It did strike me as a little odd that they had half the supply of SLP.

I looked through the transactions. No, I was wrong again. Whale AX’s wallet doesn’t seem to be Binance’s wallet.

Whale AX seems to be getting SLP as transfers from Binance’s wallet.

So, the wallet doesn’t appear to be related to distributing SLP as an official Sky Mavis tool. And it doesn’t appear to be owned by Binance.

So what’s going on here?

Why is someone moving these huge amounts of SLP from Binance to a wallet on Axie Infinity’s Ronin Chain?

That’s the 22 Billion SLP Question.

I ran through options of what this might be. It could potentially be Sky Mavis. For some reason, moving huge amounts of their own currency back and forth from Binance.

But why?

I thought, hey, is this possibly the community treasury? I checked and it doesn’t seem to be.

I found the community treasury wallet address in this official newsletter from Axie Infinity: https://axie.substack.com/p/community.

And it’s not Whale AX’s wallet.

Up until now, unless I missed something, Whale AX’s wallet has been flying mostly under the radar.

The Scary Part

The boogie man in the closet is if this isn’t Sky Mavis, Binance, or a responsible investor in Sky Mavis.

What if it’s an independent whale?

That would be much more confusing, and much more problematic. But why?

Thousands of people’s livelihoods depend on (or have depended on) Axie Infinity.

The main token earned by playing this game is SLP.

If one rogue whale owned half the supply of SLP, they could manipulate the price or even crash it.

For example, any token price is naturally controlled by supply or demand.

Let’s say due to natural market conditions the token price should rise. There’s a supply crunch or demand goes up. Or both and it should shoot up meteorically high, allowing stakeholders who have been in a long HODL to cash out tendies.

A whale with such massive holdings could slowly flood the market with more SLP. As supply is crunched, it could replace supply. Or as demand goes up, it could increase supply.

Making the price stay flat instead of going up. All while cashing out huge profits.

This kind of potential action could influence many thousands of people's lives.

People who can’t afford that.

So what does all this mean?

It means we don’t know whose wallet this is or what it is being used for. Why they’re buying or being transferred so much SLP and AXS. And finally, what they plan to do with it.

Research I did.

The first thing after seeing the tweet was to go to the ronin block explorer and find this wallet.

The original tweet was a screenshot without the full address. So I searched by asset, which organizes wallets by their holdings.

It was easy to find Whale AX’s wallet as the first one. For reference, the second largest wallet has 5,121,563,949 SLP and is listed as the [Deprecated] (sic) Ronin Gateway as of writing. It looks to be an official Sky Mavis or Axie Infinity Wallet.

Then, I copied the wallet address and googled it, but didn’t come up with anything I could make sense of. So I searched the wallet address on Twitter.

Only about 7 tweets came up.

It was mostly community participants asking Sky Mavis staff what this wallet was. I couldn’t find any replies.

I then tweeted at a known crypto sleuth, whose work I had admired in the past, asking what they made of this wallet.

I haven’t heard back yet.

I then looked for a press contact for Sky Mavis, and couldn’t find one.

Since I couldn’t find a press email, I tweeted at them: Sky Mavis, Axie Infinity, and the COO who seems nice. I haven’t heard anything back yet.

I also sent one of their staff a DM on Twitter, but I didn’t get a reply yet.

I emailed Binance’s PR email address. I briefly explained the investigative piece I was working on. Then asked if they had any insights (disclosure: I trade crypto using Binance.US). As of writing, they have not returned a comment.

Diving deeper into Whale AX

Now, there’s another option of what’s going on here. It would completely explain these transactions, and also likely be 100% above the board.

Binance owns a sizable amount of Sky Mavis. There’s also the possibility that these transactions are not purchases or independent holdings. But that they are internal transactions between Binance and Sky Mavis. Or, they might be Sky Mavis transactions that don’t include Binance. But again, regular internal company workings.

Then there’s another theory of what’s happening which may be possible. And it would make sense that Sky Mavis wouldn’t want to disclose.

It’s possible that these could be coin buybacks. Players deposit SLP on Binance, cash out, and then Sky Mavis buys the coins back. I need to repeat, that this is a theory, not a statement of what is actually happening.

In this scenario, it would support the SLP price or prevent it from a total collapse. Afterward, they then would send the SLP back to their wallet on the Ronin Blockchain. This would account for the large transfers.

More questions tho

Not only is the wallet holding SLP, but it’s holding large amounts of other coins too. One that raises eyebrows is the amount of AXS it’s holding.

Not only is it holding 4,672,754 AXS as of writing, but it also appears to be staking millions of them. And claiming hundreds of thousands AXS as staking rewards at a time.

This means that over the course of a year Whale AX will have the opportunity to earn huge volumes of AXS. Likely worth tens or hundreds of millions of dollars depending on the token price.

This was a recent AXS staking claim by Whale AX. But there are also other large claims, like this 737,550.4 AXS claim on May 2nd.

The complete list of Whale AX’s 178 (by my count) transactions runs 3 pages on the explorer.

Most appear to be of truly massive scale.

There are a few that make you wonder. Like a transaction consisting of 777 SLP on May 16th, 2022, worth at the time under $10.

The above screenshot shows Whale AX staking two million more AXS. These transactions are all public and may be viewed by anyone at the block explorer. Here’s a link to that transaction: https://explorer.roninchain.com/tx/0x63ae85ff115285757485b9c4cbb34e1543c15a2ce9557998de10314cbacc341b.

So, is this Sky Mavis’ AXS stash? If so, is this where the AXS that’s being used for season leaderboard rewards and prizes is created? My guess is probably not, but the amount of AXS held raises many more questions than it answers.

The less interesting holdings, but worth noting, are 1,747 WETH worth $2,969,551 as of writing, and .26 USDC.

This is all the information I have at press time.

All information presented in my investigation is publicly available to the best of my knowledge.

I will update this as soon as, or if, further significant developments are made.

If you uncover any data that may offer clues or see any errors I made, email or tweet at me (@michaelbenko).

Thanks for tuning in. Til next time crypto explorers, stay vigilant!

Photo Credit for Featured Image: Clint Patterson Via Unsplash.

Disclaimer: I am a holder of SLP, AXS, Axie NFTs and some RON tokens. These tokens are part of the Axie Infinity economic ecosystem, and some are discussed in this article. None of these holdings influenced my reporting of this ongoing mystery.

Disclaimer 2: I in the past applied to be a creator in Axie Infinity’s content creator program, and never heard back. That didn’t influence this article, and I have no contact within Sky Mavis or form of communication with the company.