Sky Mavis – the company behind the popular blockchain game ‘Axie Infinity’ – has promised to reimburse victims after $625 million in crypto was stolen from its underlying blockchain, Ronin.
Another Bridge Hack
Yesterday, the Ronin network suffered the largest DeFi hack in the history of crypto, with over $624 million in Ether and USDC being drained from a critical blockchain bridge.
A blockchain bridge allows holders of assets on one blockchain to swap out their tokens for equivalent assets on other chains (Ex. Swapping Ether on Ethereum for “Wrapped Ether” on Ronin).
Unfortunately, they also create massive honeypots for hackers to target in an otherwise “decentralized” ecosystem. In fact, Ethereum founder Vitalik Buterin has written at length about why the future will of crypto may be “multi-chain” but not “cross-chain” due to the security vulnerabilities of these bridges.
“We are fully committed to reimbursing our players as soon as possible,” said Aleksander Leonard Larsen – Chief Operating Officer at Sky Mavis – to Bloomberg via text message. “We’re still working on a solution, that is an ongoing discussion.”
The hacker gained access to the funds by compromising the private keys of a majority of Ronin’s 9 validator nodes. According to Larsen, many of the funds stolen from the bridge belonged to Axie players, and included Axie Infinity’s Treasury Revenue.
A whopping 56,000 ETH ($192,192,000 at current price) in stolen funds belonged to the treasury – almost a third of the total. As of now, Larsen said that none of the ETH or USDC on Ronin is backed by anything.
Axie Infinity is one of the largest “play to earn” games on the market right now, where players earn Axie Infinity Shards (AXS) in-game that can be traded on open markets. It resembles Pokemon, allowing players to battle and trade with their monsters called “Axies”.
Can the Funds be Recovered?
Sam Peurifoy – leader of Axie Infinity’s Kapital DAO – suggested that the company could sell some of its equity to raise the required funds for reimbursement. They could also sell some of their AXS tokens in bulk to the game’s major players at a discount rate, or liquidate funds from its $1.6 billion community treasury.
However, Rishav Rai – lead investigator for blockchain analyst Merkle Science – claims that the chance of recovery from this hack is low.
“When we look at the biggest crypto hacks and heists out there, it’s very rare that the funds get returned,” he said.
A similar hack took place last month when a Solana to Ethereum bridge called “Wormhole” was drained for over $300 million in ETH. However, the team has since claimed to recover all the lost funds.
After yesterday’s hack, AXS was down 11% in price. Meanwhile, Ronin’s RON token tanked as much as 25% within 15 minutes and is yet to recover.