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Appraising Digital Real Estate: The World of Lunacia

Jul 16, 2021 · 8 min read

By Medio Demarco, Jeremy Parris, Joo Kian, and Aaron D.

You thought Axie was just a battle pet game? Think again. Soon Axie will be getting a whole new layer of playability in the form of a virtual world named Lunacia. Similar to how Axies belong to different classes, the world of Lunacia will be made up of several different types of Land, varying in rarity and utility. Some are close to roads, which improve travel speed, while others are near resources, enabling their extraction. At the heart of the world lies Luna’s Landing, where many major events and battles will take place. In Lunacia, you’ll be able to build a home for your Axies, form guilds, build structures, battle Chimera, gather resources, access dungeons, and so much more. 

For all of the opportunity and fun that Lunacia represents, few understand how to evaluate the Land market. In this report, we aim to demystify it. We’ll start by covering recent trends in the marketplace. Then we’ll discuss what attributes make certain plots of Land more valuable than others. Finally, we’ll conclude with analysis on the current Mystic Land market.

Land activity and speculation have steadily been on the rise since May, benefiting from the recent virality and overall growth of the Axie ecosystem. This is evident when assessing the rising floor price, as seen in the table above. 

While the number of Land holders has been on a steady uptrend, it’s growth has lagged that of Axies (the battle pets) in absolute terms. The difference between the two could be due to a variety of reasons, such as a lack of understanding or current utility. If you’re optimistic on the future of Axie Infinity NFTs but you aren’t finding attractive enough opportunities for rare Axies, this could perhaps be an indicator that you should shift your attention to an underappreciated Land market.

While the number of Land holders is still relatively small, that doesn’t mean there hasn’t been plenty of speculation happening already. As you can see in the chart above, the Land marketplace has seen a surge in volume over the past month. In fact, when we were sourcing data to use in this report, we encountered many situations where savy speculators were buying up areas of the map, only to re-list them right away at a hefty mark up. This is both a positive signal in terms of market expectations but also a forewarning to err on the side of caution before rushing in.

Until recently, Land prices have been relatively flat. Unsurprisingly, however, when speculators did enter the market they headed straight for Mystic Land, perhaps expecting to see the impressive price appreciation Mystic Axies have already undergone. Before we focus in on Mystic Land plots, let’s take a step back and answer the most basic question – what makes Land valuable to begin with?

Aside from rarity, which is self intuitive enough, Land is valuable based on its proximity to 4 main things – 1) roads, 2) rivers, 3) resources/chimera nodes and 4) Luna’s Landing.

  • Roads: These grant your Axies a 300% speed bonus, which is critical for helping you maximize resource gathering.
  • Rivers: Can be farmed / fished for unique water resources and items.
  • Resources: Adjacent Landholders have first rights to any resources that spawn nearby. After 24 hours, any unharvested resources will be made available to the public. Even then, however, Landholders still receive a portion of all the resources harvested on their Land.
  • Chimera: Resource nodes are also where Chimera, the enemy plaguing the world of Lunacia, will spawn. They can be battled alone or in groups, with victorious battlers earning resources / items.
  • Luna’s Landing: The beating heart of the world, both in terms of location and gameplay. The full benefits are still shrouded in mystery but they are likely meaningful.

Importantly, items and resources can provide an income stream when sold in the marketplace. In effect, this makes Land a yield generating asset. The more resources that can be extracted from the Land, the higher its yield can be.

In the table above, we’ve provided data on the total plots of Land by type and how many are adjacent to the value drivers discussed above. Savannah and Forest are the least rare and thus could be considered “economy” tier Land plots. With that said, it’s worth noting that Forest has far greater access to resources than Savannah and is closer to Luna’s Landing. Arctic is true middle ground, in terms of location, access to resources and scarcity. Mystics are premium, having a relatively small amount of plots, abundant in resources, and close to the center of the map. Genesis is the “ultra premium” tier, with the small amount of plots that comprise this group directly adjacent to Luna’s Landing. As seen in the table below, the market is pricing Genesis Land true to its ultra premium classification.

Before we move on, it’s worth pointing out that Savannah prices are actually slightly higher than Forest prices on the marketplace right now. This is surprising due to the reasons we just outlined in the previous section. Is Savannah overvalued or is Forest undervalued?

Only a quarter of the map is in circulation today. This naturally sparked a few questions – when will the rest be released? how will it be distributed? who will benefit from its release? and is the current map finite?

After talking to the team, they stated that their plan is to release the rest of the land further in the future once gameplay has been rigorously tested and the player base better understands what it is they’d be buying. Importantly for AXS holders, they did confirm that proceeds from future Land sales would go to the community treasury. If current market prices are indicative of future proceeds, then this could be very value accretive to AXS holders. On the point about whether the map is finite or not, they said that would likely be up to the community’s governance to decide.

We’ve explained what attributes make Land valuable but is the current market actually pricing plots according to that framework? To answer that question, we pulled data and pricing for all ~25k plots currently available. The heat map overlaid below shows current market prices per plot in ETH (Note – Genesis plots and other extreme outliers are excluded because they skewed the data too much).

What’s the takeaway? Certain areas are priced as highly as you’d expect, with warmer colors closer to the center of the map and resources. However, there is also a lack of fundamental justification behind the pricing of certain plots, particularly the bright red circles on the periphery.

For the sake of time, let’s zone in on a specific area of the map that most of our readers are properly interested in – Mystics. Now, there are two ways to buy Land – single plots or bundles of multiple plots. The bundles are more expensive in total but the singles are more expensive per plot. If you’re a prospective Mystic Land buyer flush with liquidity, you’d get much better value buying a bundle than buying single plots individually. In fact, during our analysis, we noticed that a lot of market participants actually bought bundles and immediately broke them up into singles in an attempt for a quick flip at a steep mark up.

If you are interested in bundles, there are two which stood out to us. The first is bundle 3680, which is selling 20 plots of Land close to Luna’s Landing, a resource node, and road intersection for an average price of 18.7 ETH each, below the current floor price for Mystic singles of ~20 ETH. This is primo real estate. The other bundle is 3681, which has many plots adjacent to a road and resource nodes. While a bit further away from the center, its average plot price of 17.8 ETH is also attractive relative to what else is for sale on the market.

Closing Thoughts:

For those looking to be active players, Land closer to the center of the map, where events / enemies will spawn, is something you’d likely be more interested in. If instead, you’re looking to generate passive yield, targeting resource rich areas makes a lot of sense.

There will be many different ways to play inside the world of Lunacia and leave your mark. You could build a massive estate out in the Savannah or you could launch a guild focused on battling chimera. The opportunity and evolution of the world is only limited by the imagination of the players who govern it. All we know for certain is that once the world of Lunacia is live, Axies will finally have a home and players will have a place to build out their metaverse dream.