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 biggest DeFi hack in crypto history, with over $624 million in Ether and USDC 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 huge honeypots that hackers can 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 security vulnerabilities in 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, much of the funds stolen from the deck belonged to Axie players and included revenue from the Axie Infinity Treasury.
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 biggest “play to win” games on the market right now, where players earn in-game Axie Infinity Shards (AXS) 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 – says the chances of recovery from this hack are 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-Ethereum bridge called “Wormhole” was drained for over $300 million in ETH. However, the team has since claimed to have recovered all 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.
