For those who are not familiar with Axie Infinity, it is a blockchain-based game where players buy NFTs or little Pokemon-type creatures called Axies. Players can collect these Axies in this online universe and keep them as pets with the intention to breed, collect, raise, build kingdoms, and battle with one another.
Based on the Ethereum blockchain, players can use their own virtual assets and earn SLP tokens during their gameplay, which can be traded for money at selected exchanges. Such has been the popularity of Axie Infinity that a growing play-to-earn movement has emerged around the game – with a current fanbase running close to a million players around the globe.
With big money involved in such an exciting entertainment venture that has taken off unbelievably, there is always the risk of attracting unwanted attention. Regrettably, this is what happened recently as Axie Infinity suffered a $625 million loss from hackers who breached their systems – one of the biggest heists in the crypto industry to date.
Axie Infinity’s $625 million hack
Axie Infinity fell victim to a vicious cyber-attack when hackers breached blockchain company – Ronin Systems – and made off with approximately $625 million. The hack took place around 23 March 2022 when 173,600 Ether tokens and 25.5 million USD tokens were stolen. Incredibly, users began to notice their funds disappearing a whole six days before the news became public on 29 March 2022.
Ronin Systems revealed that the hackers had stolen private keys and passwords to access players’ crypto funds on the platform. Axie Infinity uses the NFT – AXS – that is powered by Ronin blockchain, and Ronin admitted that many AXS tokens were unlocked – perhaps as hackers wanted its price to plummet after news of the hack became public.
Ronin has since been working directly with various government entities to find the hackers and bring them to justice. Axie Infinity has received global support since the hack took place, with popular crypto exchange – Huobi – tweeting, “Huobi will fully support @AxieInfinity as it deals with the aftermath of the attack and theft on its Ronin chain. Any stolen crypto assets that have been discovered to have traversed our exchange and related networks will be dealt with expediently.”
This devastating breach came just days before Sky Mavis – developer of Axie Infinity – was due to release a new version of the game, Axie Infinity Origins – a free-to-play edition with improved graphics and gameplay.
According to Sky Mavis officials, the attack was a direct result of trade-offs due to the popularity of the game soaring in 2021. With such exponential growth, the platform struggled to keep pace with the increasing need for security – something the hackers knew all too well. While promises of improved security have since been played on repeat, gamers are feeling hard done by Axie Infinity’s lax security measures and subsequent silence when the breach occurred.
How Axie Infinity Creators is helping users
Sky Mavis – the Vietnam-based blockchain company that developed Axie Infinity – has publicly stated that they would reimburse the money lost by players due to this hack. This would be done through internal balance sheet funds as well as millions raised by global crypto exchange – Binance, amongst other contributors.
Sky Mavis has come under fierce criticism from all corners for not discovering and disclosing the cyber-attack sooner. However, the CEO of Sky Mavis – Trung Nguyen – reiterated the company’s stance by saying, “Sky Mavis is committed to reimbursing all of our users’ lost funds and implementing rigorous internal security measures to prevent future attacks.”
Sky Mavis has secured $150 million from Binance as well as existing backers that include Andreessen Horowitz, Accel, and Animoca Brands. The bulk of this $150 million investment will take the form of a secondary offering in which Sky Mavis founders sold their personal shares in the company.
Chief Operating Officer of Sky Mavis – Aleksander Larsen – claimed that the cash proceeds from the sale of those shares would be used primarily to pay back gamers who had their funds stolen. A dumbstruck Larsen said, “We are taking responsibility for this situation — we feel we should have done better.”
CEO of Animoca – Yat Siu – believes that this selfless gesture will help to win back the respect and trust of investors, while Andrei Brasoveanu – partner at Accel – was confident that Sky Mavis had made the right moves to secure its tech platform from future cyber-attacks and, in doing so, managed to retain the goodwill of a large number of its gamers. Brasoveanu said, “The team has been a class act and I’ve been really impressed with how they handled this.”
While all this sounds promising, the hackers have started to hide their tracks – shifting around 1,400 to Tornado Cash, a crypto mixing service.
While it is noble of Sky Mavis to take responsibility for this unprecedented hack and look at positive solutions to reimburse those who have lost funds, this is not the end of it by any stretch of the imagination.
There are concerns that if Axie Infinity’s developer does not provide clear timelines on reimbursements, players are likely to walk away from the brand as they would have lost trust in the platform and would likely move over to competitor games. Bad news, indeed, for Axie Infinity which has experienced an almost 45% decline in player numbers over the past few years.
Time will tell how successful this reimbursement process is, and if the hackers are eventually found. It is rumored that most of the stolen funds are still in the hacker’s crypto wallets, and considering the decentralized nature of the crypto market – finding them would be akin to finding a needle in a haystack. For the sake of the victims, we can only hope that things work out for the better. We watch with bated breath!