ArenaX Labs has closed a $5 million seed funding round that was led by Paradigm Capital with participation from Framework Ventures. The funds will help accelerate the development of AI Arena, a player vs. player fighting game where the characters are powered by artificial intelligence (AI). The game is based on the Ethereum blockchain.

AI Arena players own their own fighters that contain typical non-fungible token (NFT) attributes such as power, speed and accuracy. The fighters are also embedded with an artificial neural network, enabling them to operate autonomously.

“You have this autonomous AI that can compete with other autonomous AI around the world. The goal is to train [the fighter] to get better and better so you can earn more on our play-to-earn platform,” ArenaX founder and CEO Brandon Da Silva told CoinDesk in an interview.

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The AI fighters are trained through either imitation learning, where the player takes control and “teaches” the AI character how to react to a variety of circumstances, or self-play, where the AI character is set loose to start training on its own.

The play-to-earn aspect of AI Arena involves ranked battles where leaderboard standings determine the number of tokens a player receives. Da Silva says ArenaX is planning a wagered battle mode further down the line where players can bet against their opponent.

ArenaX expects to launch AI Arena at the end of the first quarter of 2022 or the beginning of the second quarter, Da Silva told CoinDesk.

“We love the team and think the concept of AI characters as collectibles is ingenious. We’re excited to see how crypto and game mechanics can help drive forward innovation and reward researchers in artificial intelligence,” Dan Robinson, head of research at Paradigm Capital, said in a statement to CoinDesk.