In March, Sky Mavis – creator of blockchain game Axie Infinity – was the target of a hacker attack that resulted in a loss of US$ 625 million to the company’s coffers and also to the pockets of many players who invested in the game.
Now, three months later, players – who still haven’t seen the color of the money – will be able to redeem an ether token for each one they lost in the attack, Sky Mavis told Bloomberg.
The problem is that like other cryptocurrencies, the value of Ethereum has plummeted since the attack in March. Thus, only about $216 million will be returned to users.
Yes, the value of Ethereum may go up again, but at the moment, users who are hit will only get back a third of what they lost.
Photo: reproduction
Attack on Axie Infinity
In April, the developer of Axie Infinity received investments of $150 million from Binance, one of the largest marketplaces and provider of blockchain and cryptocurrency infrastructure to help pay victims of the attack. Sky Mavis plans to refund players on June 28, when it restarts the Ronin bridge the hackers targeted.
Axie Infinity, the premier play-to-earn game, generates game-specific cryptocurrencies for players. To play, you need to have NFT characters, non-fungible tokens, unique digital items authenticated on blockchain. In February, the blockchain game had raised $4 billion in NFT sales.
Image: reproduction
Sky Mavis will make Ronin network more robust
The root of the breach was the small set of validators that made it much easier to compromise the network. Sky Mavis will integrate up to 21 validators over the next three months, which will be divided among various stakeholders in the Axie community, and together they will manage an open source foundation.
The investments will be added to Sky Mavis’ reserve fund, so all users will be reimbursed, according to the company. Ronin will open once it goes through a security update and several audits, which can take several weeks. Meanwhile, Binance has opened withdrawals and deposits in Ethereum (ETH) and USD Coin (USDC), allowing transactions to be carried out by the majority of users.
Once the Ronin network bridge is open, all unique users will be able to withdraw their funds. The 56,000 ETH from Axie DAO’s treasury (acronym for Decentralized Autonomous Organization) pledged will remain under-guaranteed as Sky Mavis works with authorities to recover these funds. If they are not fully recovered within two years, Axie DAO will vote on the next steps for the appeals.
“Sky Mavis is committed to refunding all funds to our users and implementing strict internal security measures to prevent future attacks. With Binance’s support, we will be able to expand the pool of validators from five to 21 on an accelerated schedule, which ensures the security of the Ronin network. As a team, we’ve made the conscious decision to focus on what’s to come, starting with the April 7 release of Axie Infinity: Origin. We are also excited to collaborate with Binance NFT on future projects,” said Sky Mavis CEO Trung Nguyen.
In addition to the investment, Sky Mavis and Binance will work together on projects that include the exclusive sales of Land NFT (sales of land in the metaverse) and the permission of access to Binance through The Mavis Hub.
“For the global ecosystem to continue to thrive and mature, it is imperative that we work together, especially when it comes to security, which is our strength. We have seen tremendous commitment and growth from the Sky Mavis team since working together on the Axie Infinity project via Binance Launchpad. We strongly believe that Sky Mavis will bring much value and growth to the industry as a whole and we believe it is necessary to support them as they work hard to resolve the recent incident,” added Binance CEO Changpeng Zhao.
Katana, a decentralized exchange for Ronin that was also hit by the attacks, is now up and running.
The biggest attack involving cryptocurrencies
The $625 million loss occurred in USDC (digital US dollar) and ETH (Ethereum network currency). The damage was due to a hacker attack through an exploit that drained funds from the network.
The biggest previous loss recorded in DeFi (decentralized finance) attacks was on the Poly Network with a $611 million attack, making the new attack hit a record.
The announcement was made in a post on Ronin’s Substack. The value of the RON token fell by 27% at the time of the attack.
The criminal used private keys to perform fake withdrawals from Ronin’s intermediation between two transactions, with everything documented on Etherscan. The attack also used a backdoor of the RPC (remote procedure call, a use of subroutine) node gas-free (no brokerage fee).
