"Play-To-Earn" game Axie Infinity Hacked for 625 Million $

[05032-Mendicant-Bias]

Summary

Axie Infinity is pokemon style play-to-earn game from Sky Mavis, in which players buy cryptocurrencies (SLP, AXS) and NFT (axies) to play, and are rewarded crypto for playing.

On the 23 of march 2022, hackers stole all the crypto inside the bridge that connected the Ronin blockchain with the Ethereum blockchain for 173,600 ETH and 25.5M USDC.

On the 29 of march 2022, the developers noticed the hack after being notified by users unable to cash out from the game and took measures to contain the hack.

Quotes

Quote

Ronin Network

3/29/22 Key Points

• The Ronin bridge has been exploited for 173,600 Ethereum and 25.5M USDC.

• The Ronin bridge and Katana Dex have been halted.

• We are working with law enforcement officials, forensic cryptographers, and our investors to make sure all funds are recovered or reimbursed. All of the AXS, RON, and SLP on Ronin are safe right now.

Quote

My thoughts

About the tech:
A crypto bridge is meant to connect two blockchains, but can't move cryptocurrency from one blockchain to another blockchain, instead the bridge tags some of the crypto on both sides of the bridge as "this crypto is somewhere else, please do not move it". In this case, hackers were able to ignore this restriction and move ETH and USDC from the Ethereum side of the bridge, meaning the SLP, AXS and Axies on the Ronin side of the bridge are now partially unbacked. I think crypto bridges are inherently dangerous, with too many attack surfaces, even if implemented properly (not the case here). Below, tweet from Vitalik on the topic of crypto bridges:

About the game:

I think "play-to-earn" games are an abomination. The "earn" part of the game is often tauted as great because it allows high ranked players in impoverished countries to earn about a minimum wage while playing, but a part that is often glossed over is that to play, one needs to invest hundreds or thousands of dollars building a basic team, and that money coming in IS the source of revenue for high ranked players, the company and the share holders. Axie Infinity is the most successful "play-to-earn" game based on NFT, and it has middlmen called "Scholarship Programs" who buys the expensive NFT and hire workers to play with them, paying workers with a share of the SLP (Smooth Love Potion) crypto they earn while playing. "play-to-earn" games need a constant influx of new players to maintain the ingame economy, and when this influx wane, the economy crashes, which already happened to Axie Infinity last year, and caused earning of the player base to plummet.
I think this section of the great "Line Goes Up" video says it all:

Sources

Announcement from the developers: https://roninblockchain.substack.com/p/community-alert-ronin-validators

Detailed breakdown: https://blog.mollywhite.net/axie-hack/

[Spotty]

2 minutes ago, 05032-Mendicant-Bias said:

On the 23 of march 2022, hackers stole all the ETH inside the bridge that connected the Ronon blockchain with the Ethereum blockchain for 173,600 ETH and 25.5M USDC.

On the 29 of march 2022, the developers noticed the hack after being notified by users unable to cash out from the game and took measures to contain the hack.

Imagine losing 173,600 ETH and not noticing for 6 days.

Wait... How much?? 173,600 ETH is currently worth around $600 million USD. How much money was invested in to this game?

[mon1ka]

18 minutes ago, Spotty said:

Imagine losing 173,600 ETH and not noticing for 6 days.

Wait... How much?? 173,600 ETH is currently worth around $600 million USD. How much money was invested in to this game?

If the game was making enough that $600 million USD disappearing was not noticed, then my question is how much are they pulling in PER DAY to even get to that point?

 

and just out of my own morbid curiosity, what would that be per second?

[Needfuldoer]

Crypto bridge:

  

2 hours ago, 05032-Mendicant-Bias said:

"this crypto is somewhere else, please do not move it"

 

Hackers:

 

 

2 hours ago, mon1ka said:

and just out of my own morbid curiosity, what would that be per second?

$1,157 per second.

 

[Brooksie359]

1 hour ago, Spotty said:

Imagine losing 173,600 ETH and not noticing for 6 days.

Wait... How much?? 173,600 ETH is currently worth around $600 million USD. How much money was invested in to this game?

Honestly things like this makes me wonder what type of world we live in where a obviously scam can make so much money. It's a clear ponzi scheme where the only source of income to pay people with is new people investing. Once you run out of new people the whole thing will topple. Honestly if I see nft in the description of something I can be 99% certain it's a scam. 

[05032-Mendicant-Bias]

2 hours ago, Spotty said:

How much money was invested in to this game?

The deeper you look, the uglier it gets. Each players need to buy at least three NFT "pokemon" priced at hundreds of dollars to play, and players need at least 20 NFT "pokemons" to get maximum energy and maximize their crypto gain. Plus additional NFT for breeding and playing the metagame and become high rank and actualy earn at least a minimum wage. The game had a peak of 2.7 million daily players/workers, and estimation was that 97% of players had the minimum of three NFT "pokemon" to actually play the game. So yes, LOTS of money went in to get past the entry barrier.

 

This is a research published when Axie Infinity was in the Pump phase (more player buying in than cashing out) and I find it already horrible:
https://joincolossus.com/research/axie_infinity.pdf

 

Axie Infinity took a turn for the worse during the Dump phase (more players cashing out than buying in:
https://cointelegraph.com/news/axie-infinity-token-axs-gains-40-after-taking-steps-to-avoid-permanent-economic-collapse

 

Now, an hack took out an enormous amount of "liquidity" backing the ingame tokens.

[mon1ka]

21 minutes ago, Needfuldoer said:

$1,157 per second.

The cost of my PC per second disappeared and they didn't notice? I sense a tax audit incoming

[Rauten]

3 minutes ago, 05032-Mendicant-Bias said:

This is a research published when Axie Infinity was in the Pump phase (more player buying in than cashing out) and I find it already horrible:
https://joincolossus.com/research/axie_infinity.pdf

I made it through page 3, and that was enough. Jesus Christ.

 

BURN THIS FILTH TO THE GROUND. LET NOTHING REMAIN.

[HenrySalayne]

26 minutes ago, Brooksie359 said:

Honestly things like this makes me wonder what type of world we live in where a obviously scam can make so much money. It's a clear ponzi scheme where the only source of income to pay people with is new people investing. Once you run out of new people the whole thing will topple. Honestly if I see nft in the description of something I can be 99% certain it's a scam. 

Crypto in a nutshell. That's what crypto always has been.

[Kilrah]

3 hours ago, Spotty said:

Imagine losing 173,600 ETH and not noticing for 6 days.

Wait... How much?? 173,600 ETH is currently worth around $600 million USD. How much money was invested in to this game?

Crypto and the associated numbers are ridiculous.

For example the company behind USDT is worth 80+ billion $, which puts it somewhere in the top 200 companies and around the biggest investment firms, with just 13 employees i.e. completely blowing the "worth per employee" out the window, yet nobody knows about it, it's not in the common lists of biggest companies, etc...

 

 

[05032-Mendicant-Bias]

6 hours ago, Kilrah said:

Crypto and the associated numbers are ridiculous.

A significant factor is that crypto are designed as deflationary, to give early adopters absolute power over late comers.

While 170000ETH now are worth 600M$, 170000ETH in 2016 were worth 680K$. It's part of the reason some firms have no problem putting down hundreds of ETH in their bet today, as they acquired it for a small fraction of today's price.

 

The deeper you look, the uglier it gets. Axie Infinity released a digital land project, with speculators rushing to get land, to charge late comers with rent to get ingame benefits. Analysts of ingame economies pointed out that EVE online made the same mistake, but was able to rectify it by reinventing land tax to drive speculators out of the digital land market. Axie Infinity learned none of the lessons, and the land price is driven by digital land speculators.

"It's tokens, all the way down."

[Brooksie359]

43 minutes ago, 05032-Mendicant-Bias said:

A significant factor is that crypto are designed as deflationary, to give early adopters absolute power over late comers.

While 170000ETH now are worth 600M$, 170000ETH in 2016 were worth 680K$. It's part of the reason some firms have no problem putting down hundreds of ETH in their bet today, as they acquired it for a small fraction of today's price.

 

Axie Infinity released a digital land project, with speculators rushing to get land, to charge late comers with rent to get ingame benefits. Analysts of ingame economies pointed out that EVE online made the same mistake, but was able to rectify it by reinventing land tax to drive speculators out of the digital land market. Axie Infinity learned none of the lessons, and the land price is driven by digital land speculators.

"It's tokens, all the way down."

Idk how someone can say that someone paid millions for an ingame price of property and that somehow makes the game great. This should be proof that the game is an astronomical waste of money and the project has gone out of control.