On March 23, 2022, a North Korean hacking group named Lazarus compromised four of the nine validators. And worse, the proof-of-authority approach made the attack even easier. Unfortunately, the network had just nine validators, making it susceptible to a "51% attack" where an agreement among just five of them could forge transactions. The Ronin Network's validators confirm these transactions before adding them to the Ethereum blockchain. In this case, smart contracts handle conversions between ETH (cash) and "wrapped" ETH (chips).
You can think of a bridge as a casino where you deposit cash, gamble with chips, and then convert chips back into cash at the end of the day. Most Axie Infinity players use the Ronin bridge to convert SLP, AXS, and RON into Ethereum or fiat currency. After its launch in January, the token traded at around $3.75. This year, the company also launched the RON governance token, enabling users to pay for transactions on the Ronin Network and leverage decentralized finance (DeFi) features, like governance and potential staking through validators to earn rewards. The network uses a proof-of-authority consensus mechanism with a handful of "trusted entities" validating individual transactions and merging them back into the Ethereum blockchain in large blocks. Last year, Sky Mavis launched an Ethereum sidechain known as the Ronin Network to improve transaction speeds and eliminate gas fees. Then, players can use their Axies to battle others in Pokemon-style competitions to earn "smooth love potions," or SLPs, that they can use for breeding (and selling) Axies.Īxie Infinity has Pokemon-style gameplay. Each player starts by acquiring at least three "Axies" (NFTs) with different traits and strengths. Sky Mavis' Axie Infinity is a popular blockchain-based play-to-earn game. North Korean hackers stole roughly $625M worth of ETH and USDC from the Axie Infinity ecosystem-here's what happened behind the scenes and what players can expect next.
Let's look at how Axie Infinity works, how its mechanics led to a fatal flaw, and how the organization responded to losing $625 million. While the parent company, Sky Mavis, closed the security loopholes, players are still waiting to see if they'll be made whole and fascinating details continue to emerge surrounding the hack. A notorious North Korean hacker group stole roughly $625 million worth of ETH and USDC on March 23, 2022, sending the Axie Infinity ecosystem into chaos.
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