Hackers steal over US$600M from video game Axie Infinity's Ronin Network
The company behind the popular Axie Infinity crypto game said it will reimburse online participants who lost funds after hackers stole about US$600 million from a blockchain system underpinning the game.
“We are fully committed to reimbursing our players as soon as possible,” Aleksander Leonard Larsen, chief operating officer of the gaming studio Sky Mavis, said via text message. “We’re still working on a solution, that is an ongoing discussion.”
Hackers exploited a security weakness in a so-called bridge -- software that lets people convert tokens into ones that can be used on another network -- to drain it of 173,600 Ether and 25.5 million USDC tokens in two transactions. The breach happened on March 23, but was only discovered Tuesday, according to Ronin, the blockchain that supports Axie Infinity.
The funds swiped include the “deposits of players and speculators and the Axie Infinity Treasury revenue,” Larsen said. Of the Ether stolen, 56,000 belonged to the Axie Infinity treasury, he said. The company doesn’t suspect insider involvement in the heist, according to Larsen.
Axie Infinity is among the biggest of the so-called play-to-earn games, which allow participants to accumulate tradeable crypto coins. Daily active users swelled last year in developing countries hit hard by Covid, including the Philippines, Brazil and Venezuela. It continued to be played Wednesday.
The attack is the latest to show that bridges are often rife with problems. The computer code of many isn’t audited, allowing for hackers to exploit vulnerabilities. It’s often unclear who runs them and exactly how. Identities of validators, who are supposed to order transactions on bridges, are often shrouded in mystery. And yet there are thousands of bridges out there, and they move hundreds of million of dollars worth of crypto.
Among possible ways to raise funds, Sky Mavis could sell some of its Axie-related tokens in bulk at discount to major players, or sell the company’s equity to raise cash, said Sam Peurifoy, head of interactive at Hivemind Capital who also leads the play-to-earn guild Kapital DAO in Axie Infinity.
Alternatively, the Axie community could host a vote to approve liquidating enough funding from its “community treasury” -- which currently has a total net worth of US$1.6 billion -- for reimbursements of the hack, Peurifoy said.
AXS, a token used in Axie Infinity, fell as much as 11 per cent after the hack was announced before recouping some losses. It was down about 9 per cent on Wednesday, according to CoinMarketCap data. Ron, a token used on the Ronin blockchain, was down about 20 per cent.
“From our experience, the chances of recovery are low,” said Rishav Rai, lead investigator for Merkle Science, a blockchain data analysis company. “When we look at the biggest crypto hacks and heists out there, it’s very rare that the funds get returned.
Sky Mavis has said it keeps all its revenue from Axie Infinity -- including fees for joining the game, breeding its nonfungible token creatures, and other in-game payments -- in its treasury, and only uses outside investor money to maintain its real-world team’s operations. It generated US$1.3 billion in revenue in the 12 months through February.
“The easiest way to look at this is like the bridge is the bank for the Ronin Network,” Larsen said. “The heist that happened took out all the ETH and USDC. So the ETH/USDC on Ronin Network is not currently backed by anything. But we are looking at other options.”