Jack Kubinec

<div id="highlights-block_62b638fedca88" class="highlights">
 <ul>
 <li>The bridge will reopen on June 28th with more validators</li>
 <li>Sky Mavis raised $150 million in a funding round led by Binance to restore the stolen funds</li>
 </ul>
 
</div>



Barely three months after popular blockchain-based game Axie Infinity’s asset transfer protocol was breached for more than $500 million, the so-called crypto bridge is set to reopen.&nbsp;



The speedy reopening was aided by a Binance-led $150 million <a href="https://www.binance.com/en/blog/ecosystem/binance-leads-$150m-funding-round-of-sky-mavis-the-creator-of-axie-infinity-to-restore-funds-on-the-ronin-bridge-and-to-build-a-sustainable-global-ecosystem-421499824684903659" target="_blank" rel="noreferrer noopener">funding round</a> meant to help Sky Mavis reimburse users on the play-to-earn gaming platform. The company claims to have undergone multiple audits and upgraded its security since the March hack, but it remains to be seen whether users will trust Ronin with their funds again.



In the game, the largest based on non-fungible tokens (NFTs), players battle to earn tokens that can be exchanged for other currencies through the Ronin bridge. Players without access to Binance have been unable to withdraw their tokens since the hack and subsequent shutdown.



The hackers wrested control of the Ronin bridge’s validator nodes and stole 176,300 ether and 25.5 million USDC. The exploit was one of multiple recent transfer protocol hacks, with Wormhole and Horizon also suffering heists in the hundreds of millions this year.



“While racing for mainstream adoption, we made some trade-offs that ended up leaving us vulnerable to this sort of attack” Sky Mavis said in a blog post.



Following the funding round, Sky Mavis underwent an internal audit and two external audits. The company also pledged to increase its validator nodes from nine in-house operated validators to 21 more-decentralized validators. Binance CEO Changpeng Zhao is optimistic that enhanced security measures will restore belief in Sky Mavis.



“We have seen the tremendous work and growth of the Sky Mavis team since working together on the Axie Infinity project on Binance Launchpad,” Zhao said in a statement. “We strongly believe Sky Mavis will bring a lot of value and growth for the larger industry.”



Sky Mavis has promised to return all stolen user funds when it reopens the Ronin bridge on June 28. It remains unclear how many users will resume use of the product.&nbsp;



The Axie Infinity influencer “cloudwhite” told Blockworks he believes most gamers hoping to withdraw their funds from Axie have already found a way to do so. The remaining users should continue to use the Ronin bridge once it reopens.



“The good news is we’ll know which way things swing in less than a week,” cloudwhite said.



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Following Hack, Sky Mavis Reopening Ronin Bridge With Enhanced Security

Morgan Chittum

<div id="highlights-block_624d9f40b7d24" class="highlights">
 <ul>
 <li>Hackers breached the Ronin Network for over $625 million on March 29</li>
 <li>On Wednesday, Binance said that it has fully resumed withdrawals and deposits on the Ronin Network</li>
 </ul>
 
</div>



A week after one of the largest cryptocurrency hacks to date — a <a href="https://cms.blockworks.co/sky-mavis-ronin-network-bridge-exploited-for-over-600m/" target="_blank" rel="noreferrer noopener">$625 million breach</a> on the Ronin Network bridge — Sky Mavis, the company that built it, <a href="https://twitter.com/trungfinity/status/1511416163313414147" target="_blank" rel="noreferrer noopener">acknowledged</a> that its haste to grow the platform’s user base may have caused it to cut corners on security.



The Ronin Network is an Ethereum-linked sidechain used for blockchain game Axie Infinity. The bridge connecting it to the Ethereum mainnet was exploited, and an attacker drained 25.5 million USDC and 173,600 ETH on March 29, totaling about $625 million.



“While racing for mainstream adoption, we made some trade-offs that ended up leaving us vulnerable to this sort of attack,” Axie Infinity said in a <a href="https://axie.substack.com/p/funding?s=r" target="_blank" rel="noreferrer noopener">blogpost</a>. “It’s a lesson that we’ve learned the hard way.”



Sky Mavis announced a $150 million raise, led by Binance, to reimburse affected users. Other contributors to the round include Paradigm, Animoca Brands, Dialectic, Accel and Andreesen Horowitz.



“Sky Mavis is committed to reimbursing all of our users&#8217; lost funds and implementing rigorous internal security measures to prevent future attacks,” Trung Nguyen, chief executive of Sky Mavis, said in the Wednesday <a href="https://axie.substack.com/p/funding?s=r" target="_blank" rel="noreferrer noopener">statement</a>.



On Wednesday, Binance said that it has fully resumed withdrawals and deposits on the Ronin Network after suspending them last week.



“In order for the global ecosystem to continue thriving and maturing, it is imperative that we work together, especially when it comes to security, which is our strong suit,” Changpeng “CZ” Zhao, chief executive of Binance, said in a statement.



Of the stolen ether, more than 170,000 ETH remains <a href="https://etherscan.io/address/0x098b716b8aaf21512996dc57eb0615e2383e2f96" target="_blank" rel="noreferrer noopener">in the attacker’s wallet</a>, and thousands of ETH have been transferred to Tornado Cash, a privacy tool for Ethereum.



“Sky Mavis’ Ronin chain currently consists of 9 validator nodes. In order to recognize a Deposit event or a Withdrawal event, five out of the nine validator signatures are needed,” per the breach’s <a href="https://roninblockchain.substack.com/p/community-alert-ronin-validators?s=w" target="_blank" rel="noreferrer noopener">announcement</a>. “The attacker managed to get control over Sky Mavis’s four Ronin Validators and a third-party validator run by Axie DAO.”



The Ronin Network bridge will reopen, Sky Mavis said, once it has undergone significant audits and security upgrades, which can take several weeks.



Among the security improvements, Sky Mavis will increase the validator group to 21 validators within the next three months, which will be split among various stakeholders including partners, community members and long-term allies.



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Axie Infinity Developers ‘Made Some Trade-offs’ That Enabled $625M Ronin Breach

<div id="highlights-block_62432ab13c83b" class="highlights">
 <ul>
 <li>Exploiters used hacked private keys to forge fake withdrawals on March 23</li>
 <li>“We are working with law enforcement officials, forensic cryptographers, and our investors to make sure that all funds are recovered or reimbursed,” Ronin Network said in a statement</li>
 </ul>
 
</div>



Ronin Network, an Ethereum-linked sidechain used for blockchain game Axie Infinity, was breached. Hackers exploited the network for roughly $625 million, or <a href="https://etherscan.io/address/0x098b716b8aaf21512996dc57eb0615e2383e2f96" target="_blank" rel="noreferrer noopener">173,600 ether</a> and 25.5 million USDC, according to a Tuesday <a href="https://roninblockchain.substack.com/p/community-alert-ronin-validators?s=w" target="_blank" rel="noreferrer noopener">statement</a>.



Exploiters, per the network’s post, used hacked private keys to forge withdrawals on March 23. The breach, however, wasn’t discovered until Tuesday, when a user was unable to withdraw 5,000 ETH.



Ethereum and USDC deposits on Ronin have been drained from its bridge contract. Users, as of now, are unable to withdraw or deposit funds. The Ronin Bridge and Katana DEX, as a result, have been halted.



“Sky Mavis’ Ronin chain currently consists of 9 validator nodes. In order to recognize a Deposit event or a Withdrawal event, five out of the nine validator signatures are needed,” the blogpost said. “The attacker managed to get control over Sky Mavis’s four Ronin Validators and a third-party validator run by Axie DAO.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">There has been a security breach on the Ronin Network.<a href="https://t.co/ktAp9w5qpP">https://t.co/ktAp9w5qpP</a>&mdash; Ronin (@Ronin_Network) <a href="https://twitter.com/Ronin_Network/status/1508828719711879168?ref_src=twsrc%5Etfw">March 29, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> 
</div></figure>



Sky Mavis, the creator of Axie Infinity, said it is “committed to ensuring that all of the drained funds are recovered or reimbursed.”



“We are working with law enforcement officials, forensic cryptographers, and our investors to make sure that all funds are recovered or reimbursed,” the network said in a tweet.&nbsp;



Most of the stolen ETH remains in the attacker’s wallet, but 6,250 ETH (about $21 million) has been transferred out, including hundreds of ETH sent to the FTX Exchange.



All $25.5 million in USDC has been transferred out to various wallets and DeFi protocols, according to <a href="https://etherscan.io/address/0x098b716b8aaf21512996dc57eb0615e2383e2f96" target="_blank" rel="noreferrer noopener">Etherscan</a>.



RON, the native token of the Ronin Network, is down 23% on the news, according to <a href="https://coinmarketcap.com/currencies/ronin/" target="_blank" rel="noreferrer noopener">CoinMarketCap</a>.



This is a developing story and may be updated as new information becomes available.



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Sky Mavis’ Ronin Network Bridge Exploited for Over $625M

Jacquelyn Melinek

<div id="highlights-block_61e1df04302f8" class="highlights">
 <ul>
 <li>Axie Infinity was anticipating an “aggressive target” of 250,000 users by the end of 2021, but finished the year with a community of 2.9 million members</li>
 <li>Campbell estimates that less than 20% of Axie Infinity’s universe has been deployed and told Blockworks that there is a lot more work to be done</li>
 </ul>
 
</div>



Axie Infinity, a popular play-to-earn (P2E) game, experienced serious growth — and serious growing pains — in 2021. But this year, its focus will be all about gameplay, according to Andrew Campbell, an Axie Infinity program lead who spoke to Blockworks.&nbsp;



2022 is all about launching its battle experience, Origins, and a land-based gaming experience, Project K, said Campbell, whose official title is program lead for Esports and content creator programs at Sky Mavis (the company that develops Axie Infinity).



In addition to updating game graphics, animations and <a href="https://cms.blockworks.co/btc-stumbles-on-6-8-cpi-print-axie-infinity-teases-future-gameplay-markets-wrap/" target="_blank" rel="noreferrer noopener">gameplay</a>, Campbell said, “We’re creating more options, more complexity and less random elements,” he said. 



Each of these games will include a number of new features that will affect the economy balance, the company said in a <a href="https://axie.substack.com/" target="_blank" rel="noreferrer noopener">post</a>. Origins is targeted for a second quarter 2022 release, Campbell noted.



<h3 class="wp-block-heading">Growing pains</h3>



Sky Mavis launched Axie Infinity in May 2018 as a virtual world P2E game where users earn cryptocurrency rewards that can be sold on centralized exchanges like Binance or can be swapped for ether, USDC or Axie governance tokens (AXS) on Axie Infinity’s decentralized exchange.



Specifically, players can trade, battle and breed NFT pets called Axies — which is similar to a Pokémon-style investment opportunity. The big difference is that there is a market for in-game resources, such as Axie&#8217;s body parts and appearances, that are open and controlled by players, the company <a href="https://www.notion.so/axie/Axie-Infinity-Media-Kit-e02838bee25441838850c21f116af319" target="_blank" rel="noreferrer noopener">said</a>. 



During the second half of 2021, Axie Infinity saw an unexpected jump in players and transaction volume with a monthly cumulative transaction volume of about $3.8 billion in December 2021, up from $206 million in transaction volumes in June 2021, according to data from Token Terminal.&nbsp;



By the end of 2021, the game’s total revenue reached about $1.3 billion, compared to $18.8 million six months earlier. 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="463" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png" alt="" class="wp-image-15428" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screen-Shot-2022-01-14-at-3.36.38-PM-1024x463.png?w=1421 1421w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Monthly cumulative transaction volume vs. cumulative total revenue since launch. Source: Token Terminal</figcaption></figure>



The Axie team was not prepared for its success, according to Campbell. Originally, it was anticipating an “aggressive target” of 250,000 users by the end of 2021, but finished the year over 1,000% higher with a community of 2.9 million members.



“We never expected to have this many users, so we were not prepared for that,” he said. “Our servers couldn’t handle it.”



<h2 class="wp-block-heading">Managing the growth</h2>



Due to its massive growth in such a short timeframe, Axie developers had to focus on scaling its infrastructure to accommodate demand, Campbell said. This focus slowed down the launch of the next phase of the game, which is Origins.



Instead the Axie team spent the better part of a year building out blockchain components made specifically for the game, which consisted of staking as well as an Ethereum-linked sidechain <a href="https://whitepaper.axieinfinity.com/technology/ronin-ethereum-sidechain" target="_blank" rel="noreferrer noopener">Ronin</a> and its DEX <a href="https://axie-infinity.gitbook.io/katana-docs/" target="_blank" rel="noreferrer noopener">Katana</a>.



“Now we’re set for the foreseeable future in terms of scaling in that regard, but it really slowed down our progress of launching Origins and [Project K].”



In October 2021, Axie Infinity launched a staking program for its governance tokens, Axie Infinity Shards (AXS) and Smooth Love Potion (SLP), which introduced a new component to its gaming ecosystem. As a result, AXS holders can stake their tokens and, in the process, earn rewards over a five-and-a-half-year span, Blockworks previously <a href="https://cms.blockworks.co/axie-infinity-rolls-out-staking-program-shakes-up-gaming-business-model/" target="_blank" rel="noreferrer noopener">reported</a>.



<h3 class="wp-block-heading">The ‘tip of the iceberg’</h3>



2021 was an eye-opening year for the team, according to Campbell — not just in the growth of the game’s user base but also in expansion plans for Axie beyond gameplay.



On top of the game’s growth story, its parent company Sky Mavis closed <a href="https://cms.blockworks.co/axie-infinity-developer-scores-152m-in-series-b-funding-nearing-3b-valuation/" target="_blank" rel="noreferrer noopener">$152 million</a> in a Series B funding round, bringing its valuation to $3 billion at the time of the raise. The capital will be used for staff expansion, scaling infrastructure and to build its own distribution platform, according to Sky Mavis.



<blockquote class="wp-block-quote">“We see this whole world being very user-generated in some way and really has a huge ceiling in terms of different things you can use your Axies for,” said Campell. “I think it gets really exciting when you start thinking about the different games that people could build around Axies and the different applications that people will be able to build on Ronin and plug into the blockchain universe.”</blockquote>



Campbell estimates that less than 20% of Axie Infinity’s universe has been deployed and said there is a lot more work to be done.&nbsp;



“This is really just the tip of the iceberg of how we think about this project and this giant universe we’re trying to deploy,” he said. “We say this a lot, but this is just the beginning,” he added.



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Axie Infinity Program Lead: 2022 Will Be ‘All About Gameplay’

<div id="highlights-block_615c9ca26fc57" class="highlights">
 <ul>
 <li>The round was led by Andreesen Horowitz with participation from Accel and Paradigm</li>
 <li>Axie Infinity breached $2 billion in all-time trading volume in September, according to DappRadar</li>
 </ul>
 
</div>



Sky Mavis, the company behind blockchain-enabled video game Axie Infinity, <a href="https://axie.substack.com/p/seriesb" target="_blank" rel="noreferrer noopener">announced</a> a $152 million Series B funding round on Tuesday. The raise brings Axie’s parent company to a total valuation of almost $3 billion, according to a recent <a href="https://www.theinformation.com/articles/andreessen-horowitz-values-developer-of-nft-game-axie-infinity-at-3-billion" target="_blank" rel="noreferrer noopener">report</a> in The Information.&nbsp;



Led by Andreessen Horowitz (a16z), the capital will be used towards staff expansion, scaling infrastructure and to build its own distribution platform. Other participants in the round include Accel and Paradigm, according to <a href="https://axie.substack.com/" target="_blank" rel="noreferrer noopener">Axie’s Substack</a>.&nbsp;



<a href="https://a16z.com/author/arianna-simpson/" target="_blank" rel="noreferrer noopener">Arianna Simpson</a>, a general partner at a16z, described the NFT-based game’s growth as a “phenomenal testament to the power of the [play-to-earn] revolution” in <a href="https://a16z.com/2021/10/05/investing-in-axie-infinity/" target="_blank" rel="noreferrer noopener">a recent blog post</a> detailing the venture capital firm’s investment.



“Axie embodies a new generation of games, where game creators are not operating from a place of fear but rather as an open, free market economy that allows players to move freely in and out of,” Simpson added.



<blockquote class="wp-block-quote">“What this means for the future of games, and really the web as we know it, is as big as your imagination will allow.”</blockquote>



As a play-to-earn (P2E) game, <a href="https://axieinfinity.com/" target="_blank" rel="noreferrer noopener">Axie Infinity</a> players can earn crypto rewards that can later be sold and traded on secondary marketplaces. Founded in 2018, Axie users can trade, breed and battle non-fungible token (NFT) characters in the digital world.



Axie Infinity previously reported a $7.5 million Series A funding round in May, according to <a href="https://www.crunchbase.com/funding_round/axie-infinity-series-a--946acb04" target="_blank" rel="noreferrer noopener">Crunchbase</a>.



The funding news follows a string of announcements from Axie Infinity, including the launch of its <a href="https://cms.blockworks.co/axie-infinity-rolls-out-staking-program-shakes-up-gaming-business-model" target="_blank" rel="noreferrer noopener">staking program</a>, an airdrop of $60 million worth of its token (at that time) to early users of the game and more.&nbsp;&nbsp;



“I&#8217;m bullish on NFT&#8217;s,” <a href="https://twitter.com/Fwiz/status/1429108126234546182?s=20" target="_blank" rel="noreferrer noopener">tweeted</a> Youtube’s Head of Gaming Ryan Wyatt. “I believe play-to-earn is the next major gaming model, as well as an open market for in-game digital items; most in-game assets are illiquid, which is insane to me. All of this will change long-term through blockchain and NFT&#8217;s.”



Axie Infinity has surpassed 1.5 million active users during Q3 and has generated over $776 million in revenues. The game “became the most traded NFT collection ever”, breaching $2 billion in trading volume in September, according to a recent <a href="https://dappradar.com/blog/dapp-industry-report-q3-2021-overview" target="_blank" rel="noreferrer noopener">Dapp Industry Report</a>. But, as Blockworks previously <a href="https://cms.blockworks.co/axie-infinity-rolls-out-staking-program-shakes-up-gaming-business-model" target="_blank" rel="noreferrer noopener">reported</a>, revenue has been declining in recent months, potentially due to a <a href="https://axie.substack.com/p/breedingadjustment">change</a> in the cost to breed the in-game characters and steadier user growth.&nbsp;



<figure class="wp-block-image size-large"><img decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/2021-10-05-dappradar.com-dapp-industry-report-q3-2021-overview-axie-infinity-axs-price-trading-volumem-usd-1088x446-1-1024x420-1.jpg" alt="" class="wp-image-8960"/><figcaption>Source: DappRadar</figcaption></figure>



<h3 class="wp-block-heading">The P2E Revolution</h3>



Last week, DappRadar released a <a href="https://dappradar.com/blog/dapp-industry-report-q3-2021-overview">report</a> on industry-wide developments in the blockchain ecosystem, which includes data for NFTs and gaming from Q3 2021.&nbsp;



The report described Axie Infinity as “the spearhead of the P2E movement” that “dictates the pace of the game sector and it looks like it will just become stronger.”&nbsp;



“If I were to sum up Q3 in a single word, it would be ‘diversification,’” Modesta Jurgelevičienè, Head of Finance &amp; Research at DappRadar, said. “The play-to-earn movement became a key driver in the space, NFTs turned towards greater utility and secured record volumes.”&nbsp;



Overall, the non-fungible token space generated roughly $10.7 billion in trading volume, up 704% since the previous quarter.&nbsp;Axie Infinity’s <a href="https://www.coingecko.com/en/coins/axie-infinity">$AXS</a> token notched an all-time high on Monday of $155.88, but is down almost 15% from the peak, trading at $132, as of press time.